* Centrica, QPI acquire Western Canada natural gas
* Pay C$1 bln for Suncor conventional operations
* Production of 250 mmcf/d from 978 bfc of reserves
* Suncor shifting focus to unconventional gas
* Proceeds could be used for share buyback
* Suncor shares down 3.6 pct (Recasts with details on acquisition, adds Suncor share-price move and analyst's comment)
April 15 (Reuters) - Britain's Centrica Plc and Qatar Petroleum International said on Monday they will buy Suncor Energy Inc's conventional natural-gas business in Western Canada for C$1 billion ($986.73 million), their first acquisition since they decided in 2011 to hunt jointly for international energy assets.
Centrica, Britain's biggest energy supplier and its partner, the international arm of the world's largest liquefied-natural gas exporter, will take control of Suncor gas assets in Alberta, British Columbia and Saskatchewan that produce 250 million cubic feet per day from reserves pegged at 978 billion cubic feet.
When combined with its other Canadian gas properties, the acquisition will give Centrica 60 percent of the gas needed for its Direct Energy unit, which delivers energy to six million customers in Canada and the United States, while Qatar gets its first exposure to the Canadian natural gas industry.
"The acquisition provides attractive returns in a region we know well, and significantly increases the size and quality of our portfolio," Sam Laidlaw, Centrica's chief executive, said in a statement.
The deal stands apart from of the recent foreign interest in Canada's natural gas sector, which has been aimed at the country's massive shale-gas deposits and feeding its nascent liquefied natural gas industry.
Recent acquisitions include PetroChina's C$2.2 billion purchase of a 49.9 stake in Encana Corp's Duvernay shale-gas property in Alberta, and Exxon Mobil Corp's C$2.6 billion buyout of Celtic Exploration Ltd for its unconventional gas properties in Alberta and British Columbia.
Indeed, North America's shale-gas boom over the last decade has forced Qatar Petroleum to find new buyers for millions of tonnes a year of LNG it had planned to sell to the United States.
"For Centrica, the transaction is primarily a hedge against its power business in Western Canada and has reasonable overlap with its existing Western Canadian production," Andrew Potter, an analyst at CIBC World Markets, said in a research note. "For Qatar, the motivation is a diversification strategy outside of its traditional core region."
Qatar has imposed a moratorium on further gas export projects from its vast North Field in the Middle East, prompting Qatar Petroleum International to look abroad for growth.
"This investment in the Western Canadian Sedimentary Basin is a significant step in the development of QPI's global upstream business," Nasser Al-Jaidah, QPI's chief executive officer, said in a statement.
Centrica will have a 60 percent stake in the Suncor properties, while Qatar will own the remainder. The acquisition is the first for the pair since they signed a memorandum of understanding in December 2011 to cooperate on energy-related investments.
The deal also includes more than 1 million acres of undeveloped land, including some that may have the potential for more production through the use of horizontal drilling and multi-stage fracturing, a technique used to flush out unconventional gas.
Suncor, Canada's No. 1 oil and gas company, has used its conventional natural-gas business as a hedge against the gas used in its extensive operations in the Alberta oil sands. However, the company's unconventional gas assets, including its holdings in the vast Montney shale gas region of northeastern British Columbia were not included in the sale and development could be speeded up if gas prices were to rise sharply.
"Natural gas is still an important part of our portfolio," said Sneh Seetal, a spokeswoman for Suncor. "This deal marks a shift from conventional gas production to a smaller portfolio of unconventional plays."
Suncor has not yet decided how it will use the proceeds from the sale of its conventional gas operations. While the money could be applied to its oil and gas business, Seetal said the cash could also be used to fund a stock repurchase program.
"One of our priorities is returning cash to shareholders through share buybacks and dividends," Seetal said.
Suncor's shares have fallen nearly 7 percent over the past year. There were down again on Monday along with most commodity stocks on fears that China's growth is slowing, falling C$1.04 to C$27.78 at midday on the Toronto Stock Exchange
Subject to regulatory approval, the acquisition will be made by a joint venture called CQ Energy Canada Partnership owned by Centrica's wholly owned subsidiary Direct Energy Resources Partnership and QPI Energy Canada Ltd.
The deal is expected to close in the third quarter of 2013.
$1=$1.02 Canadian Reporting by Scott Haggett in Calgary, Brenda Goh in London and Daniel Fineren in Dubai. Editing by Rhys Jones, Jane Merriman and Peter Galloway