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UPDATE 1-Petronas' Canadian unit says looking to sell oil and gas asset in Alberta

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(Adds analyst comment, background)

KUALA LUMPUR, Oct 5 (Reuters) - Progress Energy, the Canadian unit of Malaysian state energy firm Petroliam Nasional Berhad, said on Thursday it was looking to sell its Deep Basin oil and gas asset in the Canadian province of Alberta.

Reuters reported on Wednesday that Petroliam Nasional, or Petronas, had enlisted BMO Capital Markets to advise on the sale of the asset, citing documents on the bank's website. "Progress regularly reviews its assets to ensure alignment with the company's strategy," it said in an emailed statement to Reuters, adding that it decided to sell its Deep Basin asset following the most recent evaluation.

The sale would allow Progress to focus on future investments in its North Montney assets in Canada's province of British Columbia, which represents "significant growth opportunity" for the company, it said.

The potential sale marks a further retreat by Petronas in Canada after it scrapped plans for the $29 billion Pacific NorthWest liquefied natural gas export project in British Columbia in July. While Progress' Alberta asset produces oil and gas, the North Montney asset is rich in gas resources. Petronas acquired Progress Energy for $5.87 billion in 2012.

After the cancellation of the Pacific NorthWest project, Petronas had said it was looking at other ways to generate revenue from its North American gas assets. "Despite what it looks like, Petronas' reported intent to sell off its Alberta oil and gas assets does not appear to signal that the firm is looking to exit from the Canadian upstream entirely," said Peter Lee, Asia oil and gas analyst at BMI Research.

He said the Alberta asset could be considered "non-core" as Petronas is focusing on developing its gas resources in Canada.

The funds raised from the Alberta sale will likely be re-invested in North Montney, Lee said.

(Reporting by A. Ananthalakshmi and Emily Chow; Editing by Christian Schmollinger)

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