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UPDATE 1-El Paso to buy natural gas assets from Kinder Morgan for $2 bln

(Adds deal terms, CEO quote)

April 28 (Reuters) - El Paso Pipeline Partners LP said it would buy natural gas assets from Kinder Morgan Inc for about $2 billion, including $1.01 billion of debt.

El Paso Pipeline said as part of the deal, it would acquire a 50 percent interest in Ruby Pipeline, a 50 percent interest in Gulf LNG and a 47.5 percent interest in Young Gas Storage.

The deal, which was previously announced, is expected to close in May.

El Paso, a master limited partnership (MLP) with a general partner owned by Kinder Morgan Inc, plans to fund the deal with with EPB units issued to Kinder Morgan Inc as well as proceeds from debt or equity issues.

"These assets will generate substantial, stable cash flow to EPB unitholders for many years to come, and KMI will reduce its debt outstanding and continue to participate in the cash flows from these assets through its general and limited partner interests in EPB," Kinder Morgan Chief Executive Rich Kinder said in a statement.

MLPs pay no federal taxes and pass profits to investors called unitholders. The partnerships are favored by energy companies for tax efficiency, an advantage that lowers the cost of capital.

(Reporting by Ankit Ajmera in Bangalore; Editing by Savio D'Souza, Bernard Orr)

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