BG Group said it expects to sign a definitive sale agreement in the near term and is likely to close the deal by the end of 2012.

BG Group chief executive Frank Chapman said this memorandum of understanding is another important step in the company’s ongoing portfolio rationalisation and funding diversification programs, underpinning delivery of the wealth of opportunities it has across its global portfolio.

"We look forward to concluding this deal as part of our plans to release some $5 billion of capital in the next two years through strategic divestments," added Frank.

Cosan, which has an ethanol-distribution joint venture with Royal Dutch Shell, intends to diversify from sugar cane-based ethanol to fossil fuels supply business and expand abroad.

Cosan had also purchased the fuel distribution assets of ExxonMobil Corporation in Bolivia, Paraguay and Uruguay last year and acquired almost the latter’s distribution and sales assets in Brazil for $826m in 2008.

Royal Dutch Shell holds an 18.1% stake in Comgas, with the remaining 21.8% publicly held through a listing on the São Paulo stock exchange.

Comgas gas distribution network consists of more than 5,000km of pipelines that reach up to one million customers in 64 cities.

The company owns a concession for area, which covers 177 municipalities in the State of Sao Paulo, metropolitan Campinas, the coastal area around Santos in Baixada Santista and the Paraíba Valley.