UPDATE 1-INTERVIEW-Suez pushes Peru natgas pipeline

(Adds government comments on third bidder, paragraphs 11-13)

By Dana Ford

LIMA, May 15 (Reuters) - France's Suez (LYOE.PA: Quote, Profile, Research) is willing to be flexible over where it builds a natural gas pipeline in Peru and is confident its merger with Gaz de France (GAZ.PA: Quote, Profile, Research) is on track, a company executive said on Thursday.

The energy and water group originally expressed an interest in investing more than $800 million to build a natural gas pipeline linking the Andean country's Camisea field with its southern provinces via the Pacific coast. It would recoup the investment by operating the pipeline.

But Peru's government said last week it favors a potentially more expensive pipeline project planned by Kuntur Transportadora de Gas, owned by U.S. investment fund Conduit Capital Partners, which would run through the Andes mountains.

"It's not a battle between two projects. It's a battle between two different approaches," Dirk Beeuwsaert, chief executive of Suez Energy International, told Reuters in Lima.

"We are not pushing the country to do one and not the other. We are also open to do the other. That's not a problem," he said, suggesting the company is also interested in the Andean proposal.

The government, analysts say, can approve only one pipeline because there is not enough demand to support both of them. Suez was the only firm to make a bid for the Pacific route.

Peru wants to develop its gas fields to generate power for its vast mining sector, and develop a petrochemicals industry.