By Ron Bousso and Yantoultra Ngui

LONDON/SINGAPORE, Oct 20 (Reuters) - Abu Dhabi state fund Mubadala Investment and Japanese oil and gas explorer Inpex are among firms competing to acquire SapuraOMV in a deal expected to be worth about $1.2 billion, according to two sources with direct knowledge.

The sale of the Malaysian-headquartered oil and gas upstream company could help boost weak global merger and acquisition (M&A) activity buffeted by headwinds from a slowing world economy, higher interest rates and geopolitical tension.

Indonesian energy company Medco Energi is also vying for SapuraOMV, an equal joint venture of Sapura Energy and Austria's OMV, with bids due this week, the sources added.

They declined to be identified named as the matter was private.

Sapura Energy declined to comment. OMV and Inpex said they had no comment. Mubadala and Medco did not immediately respond to requests for comment.

M&A activity in the Asia Pacific region and Japan dropped 26% to a 10-year low of $624.4 billion for the first nine months of this year, versus the year-ago period, LSEG data shows.

Deal activity in the energy and power sectors in the region fell 44.9% to almost $53 billion, LSEG data shows.

SapuraOMV produced about 30,000 barrels of oil equivalent per day (kboepd) from its two Malaysian assets, SK310-B15 and SK408 – Gorek, Larak and Bakong, Sapura Energy said in its latest annual report for fiscal year 2023.

The planned stake divestment would help bring in fresh capital while paring debt, Sapura Energy said in the report.

With exploration interests in Australia, Mexico and New Zealand, SapuraOMV targets production of 100 kboepd through organic growth and M&A activity over the next five to eight years, according to OMV's website.

In November 2018, OMV said it was investing up to $975 million for its 50% share of the equity in SapuraOMV in a deal the intended to springboard its Asia expansion. (Reporting by Ron Bousso in London and Yantoultra Ngui in Singapore; Editing by Scott Murdoch and Clarence Fernandez)