Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR) expanded its presence in natural gas distribution Thursday, snapping up Gas Brasiliano Distribuidora S.A. in a $250 million deal.

Petrobras, as the world's second-largest oil company by market value is also known, purchased the Sao Paulo state natural gas supplier from Italian oil and gas company Eni SpA (E).

Gas Brasiliano serves Brazil 's key industrial heartland of Sao Paulo state, a market that Petrobras wants to further tap in an effort to boost natural gas consumption. Gas Brasiliano supplies natural gas to industrial, commercial, residential and transportation companies in 375 cities in towns in Brazil 's most populous state.

Petrobras has been ramping up its gas distribution assets in recent months as the company attempts to expand the use of natural gas in Brazil . The company also expects a surge in natural gas production as recently discovered offshore oil reserves, which are rich in natural gas, come onstream.

Earlier this year, Petrobras estimated average daily consumption in Brazil would reach 50 million cubic meters in 2010, up from 46 million cubic meters in 2009. The 2010 estimate, however, was still off 2008's peak of 58 million cubic meters a day--set before the financial crisis and global economic meltdown sapped growth around the world.

Petrobras recently completed several sections of a nationwide natural gas pipeline to improve distribution, as well as started auctions of natural gas to increase supplies of the clean-burning fuel.

"For Petrobras, this acquisition will position the company as a distributor in the largest Brazilian market for natural gas, the Sao Paulo region," Petrobras said in the filing.

The company also noted that the Sao Paulo market was close to the entry point for natural gas imported from neighboring Bolivia via the Gasbol pipeline. Brazil imports more than 30 million cubic meters of natural gas a day from Bolivia .

In 2009, Gas Brasiliano recorded sales volumes of 529,000 cubic meters a day, with a distribution network of 734 kilometers.

The sale is subject to adjustments based on net debt and working capital at closing.

Petrobras shares opened 1.9% higher at 27.56 Brazilian reals ($14.95) shortly after the opening bell on the Sao Paulo Stock Exchange, or Bovespa.

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