Tokyo Gas unit to buy U.S. natgas producer Rockcliff Energy for $2.7 bln

TOKYO, Dec 16 (Reuters) - A unit of Tokyo Gas has decided to buy Texas-based natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners for $2.7 billion to expand its overseas business, it said on Saturday.

The deal comes as part of the Japanese company's efforts to expand its North American shale gas operations to meet growing demand for natural gas as an energy transition fuel.

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Tokyo Gas, Japan's biggest city gas supplier, and other utilities are stepping up overseas expansion to counter falling demand in their domestic market. Japan has an ageing population and a declining birthrate, while energy market reform has spurred competition among old-guard utilities.

Under the deal, TG Natural Resources (TGNR) - 79% owned by Tokyo Gas - will buy all shares in Rockcliff Energy from Quantum Energy Partners. The deal is expected to close on Dec. 29, Tokyo Gas said.

With the acquisition, TGNR's natural gas production will quadruple to 1.3 billion cubic feet per day from about 330 million cubic feet per day, making it one of the largest shale gas producers in Texas and Louisiana, according to Tokyo Gas.

"We expect our gas production will be more efficient after the acquisition as Rockcliff Energy's output area is located adjacent to TGNR's blocks," Takashi Nakao, senior general manager of global business development at Tokyo Gas, told reporters.

The production is also close to new liquefied natural gas (LNG) export terminals and other facilities expected to increase demand for natural gas in the future, Nakao said.

Asked if the supply will be exported to Japan as LNG, Nakao said the current plan is to sell all the gas in the U.S. domestic market, though he did not rule out possibly sending it as LNG to Japan in the future.

Talks about the acquisition were reported by Reuters early this year.

(Reporting by Anton Bridge and Yuka Obayashi; Editing by Michael Perry and Tom Hogue)