Italian prime minister Romano Prodi has said Brazilian and Italian energy companies will jointly build four biodiesel plants in Brazil - the world's second largest ethanol producer after the US.

The combined value of the plants, estimated at $480 million, will be built as part of an agreement between Italian energy company Eni, which is 30 per cent government-owned, and Brazil's Petrobras, which is 60 per cent state-owned.

The Italian premier's announcement followed a meeting with the Sao Paulo Federation of Industries. Prodi is currently on a tour of Brazil, the world's biggest exporter of biodiesel. Vehicles in Brazil have been running on biofuels for several years

In Febuary, this year, European Union (EU) leaders agreed to to produce 20 per cent of their energy from renewable sources such as biodiesel and ethanol by 2020.

Prodi is also expected to sign agreements to build biofuel production facilities in Africa, probably starting in Angola.