UPDATE 2-Centrica makes $2 bln bid for Venture, ups stake

* Centrica lifts Venture stake to 29 percent

* Centrica bid values Venture at 1.3 billion pounds

* Offer will not be increased unless rival bidder emerges

* Venture rejects offer, says undervalues company (Adds Venture rejection of offer)

By Tom Bergin

LONDON, July 10 (Reuters) - Britain's largest gas retailer, Centrica Plc (CNA.L), which operates under the British Gas brand, made a $2 billion bid for North Sea gas producer Venture Production Plc (VPC.L) 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 (III.L).

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 recognise 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.