BP has entered into an agreement to acquire 83% stake in Brazilian ethanol and sugar producer Companhia Nacional de Acucar e Alcool (CNAA) for $680m.

The British oil company will acquire two operational ethanol mills located in Goias and Minas Gerais states and a third that is currently under development in the Minas Gerais state.

The CNAA acquisition is expected to increase BP’s overall Brazilian production capacity to around 1.4 billion litres of ethanol equivalent per year.

BP chief executive Bob Dudley said that this strategic acquisition underlines BP’s commitment to building material businesses in growing economies and continued expansion in Brazil through exploration and production, as well as biofuels investments.

"This is the biggest acquisition to date for BP Alternative Energy as we continue to build a leading low carbon fuels business," Dudley said.