Britain's largest gas retailer, Centrica Plc, which operates under the British Gas brand, made a $2 billion bid for North Sea gas producer Venture Production Plc on Friday as it seeks to increase its gas reserves.

Centrica said in a statement it increased its holding in Venture to 29 percent from 23.6 percent with the acquisition of a stake owned by private equity group 3i Group Plc.

The company has offered to buy the rest of Venture for 845 pence a share, valuing the oil and gas explorer at around 1.3 billion pounds ($2.11 billion).

Venture rejected the bid, saying the offer substantially undervalued the company.

Venture's shares closed at 785 pence on Friday.

Centrica Chief Executive Sam Laidlaw said the offer -- which is below what many analysts and dealers expected -- represented a significant premium over what Venture shares traded at prior to the utility's first approach earlier this year.

We are today making what we believe to be an attractive offer to Venture shareholders .... We are now making the offer directly to Venture's other shareholders, he said in a statement.

Richard Griffith, an oil analyst at Evo Securities, said earlier on Friday that 950 pence a share was the level he thought Venture management and investors might accept if Centrica made a bid.

The offer is conditional upon Centrica receiving enough shares to push its ownership above 50 percent.

Venture said its board had met and had unanimously concluded the offer was not in the best interest of shareholders.

In no way does this offer recognize the strategic position and high quality of our UK gas reserves and resources for which the markets have clearly and consistently established significantly higher values across a number of recent transactions, said Venture Chief Executive Mike Wagstaff.

Like other utilities around Europe, Centrica is eager to increase its gas reserves to hedge its supply obligations to gas users.

The company has been scanning to globe to secure gas and North Sea-focused Venture would be a particularly good fit to its portfolio, analysts said.

The UK's largest listed utility by market value added that its offer would not be increased, unless a rival bidder emerged, in which case Centrica reserved the right to up its offer.

In March, Centrica bought a 22 percent stake in Venture for 725 pence a share and said it was considering making a cash offer for the company.

Last month, the UK Takeover Panel gave Centrica a July 13 deadline to make a bid or to walk away and be precluded from making another bid for six months.

Centrica is being advised by Goldman Sachs, JP Morgan Cazenove and Royal Bank of Scotland.

(Reporting by Tom Bergin; Additional reporting by Tim Castle; Editing by Richard Chang)