In a filing with the Securities and Exchange Commission, Enron said a potential buyer had expressed an interest in acquiring Enron's 53.5 per cent stake in Enron Oil & Gas Co, which has a market value of $2.3 billion.

The potential buyer was also willing to make an offer for the rest of the outstanding shares of Enron Oil & Gas, it added.

Enron did not identify the suitor and said it was considering the approach along with other possible alternatives for its majority stake in the exploration and production company.

One market source, who asked not to be identified, reported hearing that Burlington Resources Inc was the company interested in Enron Oil & Gas. A Burlington spokesman declined to comment.

Enron is the biggest buyer and seller of electric power in the United Statesand ranks second in natural gas, according to rankings compiled by Energy Intelligence Group.

The Houston-based company has also entered the global water business by acquiring Wessex Water Plc in Britain this year and forming a new business unit named Azurix.

Enron Oil & Gas mainly produces natural gas and its output in the third quarter of this year amounted to the equivalent of over 1.2 billion cubic feet of gas a day. It is active in the United States, Canada, Trinidad and India.

Prudential Securities analyst Carol Coale said she was not surprised to hear that Enron might be about to sell its stake in Enron Oil & Gas but she predicted tough negotiations.

"Enron probably wants more than the buyer's willing to pay and it's just whether they can come to terms," she said, adding that a buyer would probably have to pay $20 or more per share.

Coale said Enron had long wanted to reduce the impact of swings in oil and gas prices on Enron's earnings and felt that the stake in the exploration andproduction company had impaired Enron's own share price performance.