Brazil's Cosan in talks to buy BG Group's stake in gas distributor Comgás

Cosan SA Industria e Comercio, Brazil's largest and the world's fifth-largest producer of ethanol is in talks to buy UK-based BG Group's stake in gas distributor Comgás, in a deal reportedly worth $1.7 billion.

Following a report by Brazilian magazine Exame that BG was in talks with Cosan over the sale of BG's 60.1 per cent stake in Comgas, both companies yesterday issued a statement confirming the negotiations.

Sao Paulo-based Comgás, which is 60.1-per cent owned by BG, 18.2 per cent by Royal Dutch Shell and the remaining with the public, is Brazil's largest natural-gas distribution company.

In 1999, Berkshire, UK-based BG and Shell acquired Comgás in auction for R$1.6 billion, the highest ever paid in Brazil at that time for a state-owned energy company.

Between 1999 and 2005 BG and Shell invested around R$1.5 billion in modernising and expanding the Comgás gas distribution network, which grew by more than 2,000km.

The Comgás network comprises more than 4,000km of pipelines that deliver natural gas to over 500,000 residential, retail and industrial customers in 57 cities.