Sugar and ethanol producer Cosan has agreed to purchase Esso filling station chain in Brazil from ExxonMobil in a transaction valued at $826 million plus $198 million debt.

Cosan’s acquisition of the Esso filling station chain comes at a time when the sales of fuel ethanol have surpassed that of gasoline in Brazil. There is also an increasing use of ethanol as an additive in gasoline. In addition, approximately 90% of all new cars sold in Brazil have the so-called ‘flex fuel’ engines, able to run on ethanol or gasoline or a combination of the two.

Between 2003 and 2007, sales of ethanol in the country increased at an annual rate of more than 29%, compared with 2.7% for gasoline.

According to Cosan, the purchase of the Esso network, which has more than 1,500 filling stations, will assist in securing distribution for its products in Brazil, while allowing the company to take part in consolidation in the distribution sector.