Brazil's state-owned oil and gas company Petrobras said Tuesday that the acquisition of fuel distributor Ipiranga was aimed at keeping foreign players out of the Brazilian market.

Maria das Gracas Foster, director of Petrobras' subsidiary oil and gas distributor BR, said that any threat of invasion of imported products was of concern to the company.

Petrobras Director of Supply Paulo Roberto Costa explained that fuel prices in Brazil's neighboring countries are usually lower than those within Brazilian territory.

In neighboring Venezuela, state-owned company PDVSA subsidizes oil and gas production, allowing fuel prices to remain at less than a U.S. dollar per liter.

Costa said the domestic petrol distribution situation was unique and could not withstand the introduction of products with internationally competitive prices. This was because companies that enjoy government subsidies, such as those in Venezuela, do not pay the entire cost of the refining process, as is the case in Brazil.

Foster and Costa denied that Petrobras will run the least profitable share of Ipiranga's fuel distribution chain.

Foster said the acquisition will increase BR's market share from nearly 34 percent to 38 percent.

Petrobras and two partners, petrochemical Braskem and distributor Ultra, announced a deal Monday to buy Ipiranga, for nearly 4 billion U.S. dollars in cash and stock.

Under the deal, the three firms will divide Ipiranga's operations, with Ultra taking over Ipiranga's fuel and lubricants business in the south and southeast and Petrobras absorbing the business in the north and mid-west regions.

Ipiranga has 4,240 gas stations around Brazil, second only to Petrobras, and produces 650,000 tons of petrochemical resins annually.