LONDON/MILAN  - State-owned Abu Dhabi National Oil Co (ADNOC) is in advanced talks with more than one potential buyer, including Italy's ENI, as it prepares to sell minority stakes in its refining business, two sources familiar with the matter said.

ADNOC began a wide-ranging shake-up in 2016 to tackle competition from new producers such as U.S. shale firms. It listed 10 percent of its fuel distribution business last year and aims to expand its downstream business abroad.

The company also started a sale process for a stake in its $20 billion refining business, which the sources said it was likely to split between two or more parties.

One said that ADNOC would favour companies it already has partnerships with, including ENI and Austrian oil and gas group OMV.

OMV works with ADNOC on a number of projects, including a 40-year agreement for a 20 percent stake in the SARB and Umm Lulu offshore oil concession. ENI has a 10 percent stake in its Umm Shaif and Nasr offshore oil concession and a 5 percent stake in Lower Zakum.

"This strategy would give ADNOC the chance to bring in these companies' money and expertise without having a dominant partner," the source said.

An ENI spokesman said the company does not comment on market rumours. OMV was not immediately available to comment.

A second round of offers is expected to be presented as soon as next week, when the Gulf returns from a religious holiday, both sources said.

"ADNOC is looking for long term strategic partners that will contribute real value, such as: know how, differentiated technology, smart capital and market access," an ADNOC spokesman said.

Such partners would help the company grow in "strategic destinations," he said, adding that ADNOC has received "significant interest" from both new and existing partners.

ADNOC has partnerships with France's Total and PetroChina, among others.

ENI, the biggest foreign oil producer in Africa, is looking to build its presence in the Middle East to diversify risk and take advantage of business opportunities in the oil-rich region.

One of the sources said it is using U.S. investment bank Morgan Stanley to help with the offer for ADNOC's stake.

Morgan Stanley declined to comment.

(Reporting by Clara Denina, Stephen Jewkes and Dasha Afanasieva; additional reporting by Rania El Gamal in Dhahran; Editing by Elaine Hardcastle and Rosalba O'Brien) ((clara.denina@thomsonreuters.com)(+44 207 542 9420)(Reuters Messaging: clara.denina.thomsonreuters.com@reuters.net)(Twitter: @claradenina))