* To spend $249 million for 35 pct stake in project
* Stake worth 250,000 T LNG equivalent per year of output
TOKYO, June 22 (Reuters) - Osaka Gas Co, Japan's second biggest supplier of city gas, will pay $249 million for a stake of 35 percent in a Texas shale gas and oil project run by Cabot Oil & Gas Corp, aiming to boost investment returns from the potentially lucrative upstream business.
As Asia's demand for liquefied natural gas (LNG) rises, several Japanese companies have already tapped shale gas projects in North America, with some companies aiming to deliver LNG to Japan.
But Asian LNG prices are well above those elsewhere, partly because prices for long-term supplies are traditionally linked to oil prices.
Osaka Gas will spend 20 billion yen ($249 million) for the stake, estimated to be worth 250,000 tonnes a year of LNG equivalent of natural gas, light crude oil and natural gas liquids when output stabilises, a company official said.
"We expect the project's contribution to our annual net profit to be a few billion yen," Hidetaka Matsuzaka, head of the company's energy resources and international business unit, told reporters in Osaka, referring to mid- to long-term prospects.
Drilling is set to start in July and the project, aimed at the U.S. market, is expected to run about 30 years, the company added.
Osaka Gas has said it keeps eyeing LNG projects in Australia and non-conventional gas in North America to help lower its LNG procurement costs in Asia.