BP PLC took another step toward its goal of becoming a leading ethanol producer Friday, snapping up an 83% stake in Brazilian ethanol and sugar producer Companhia Nacional de Acucar e Alcool, or CNAA, for $680 million.

The deal, which BP said is the largest yet by biofuels unit BP Alternative Energy, represents "an important platform for growth in Brazil ," Mario Lindenhayn, president of BP Biofuels Brasil, said during a conference call. BP Biofuels Brasil is the local unit of BP Alternative Energy.

The CNAA acquisition will swell BP's installed ethanol production capacity to 1.4 billion liters annually, up from current output of 435 million liters. After the deal is completed, BP will operate ethanol mills in Goias and Minas Gerais states. A third mill is under development in Minas Gerais state.

BP was the first global oil major to make an acquisition in Brazil 's ethanol sector, buying a 50% stake in Tropical BioEnergia SA in 2008. Tropical also operates an ethanol mill in Goias state. Other oil majors have followed, including rival Royal Dutch Shell PLC, which undertook a $12 billion tie-up with Cosan Industria e Comercio SA, the world's largest sugar and ethanol group, in February last year.

Brazil has attracted increased attention from global oil majors seeking exposure to the domestic market, where more than 80% of all new cars sold are flex-fuel models that can run on any mixture of ethanol and gasoline. Latin America's largest country is also seen as a low-cost production base for key export markets such as the U.S., Europe and Asia, where use of biofuels is expected to rise as countries aim to reduce carbon emissions.

"BP is consolidating its position in Brazil ," said a sugar industry consultant who declined to be named. "The mills are very close to its other plant, so the acquisition should generate scale and reduce production costs for the company."

But BP isn't likely finished participating in the ongoing wave of consolidation in Brazil 's fractured ethanol market, which is dominated by small, family-run mills. BP Biofuels Brasil's Mr. Lindenhayn said the company will continue to look for growth opportunities in the world's largest sugarcane-based ethanol market. "We're open to other opportunities," he said.

The company's goal, according to Mr. Lindenhayn, is to become one of the leading players in Brazil . "Our objective is to become one of the primary producers of ethanol from sugarcane in the next 10 years."

BP has been in the spotlight since the Deepwater Horizon disaster last year, which killed 11 workers and led to a massive oil spill in the Gulf of Mexico . Since then, the company has sold some $22 billion in assets. It has also announced major ventures with OAO Rosneft and Reliance Industries Ltd. In February, BP increased by $1 billion the write-off of costs related to the Macondo oil spill in the Gulf of Mexico to $40.9 billion.

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