Oct. 19 (Bloomberg) -- Ultrapar Participacoes SA, the Brazilian fuels and petrochemicals group that bought Chevron Corp.’s Texaco-brand gasoline stations, will expand by buying smaller chains in the country as demand grows, Chief Executive Officer Pedro Wongtschowski said. The stock rose to a record.

The Sao Paulo-based company will focus its expansion on regional gas station networks and individual-owned outlets through next year as gasoline and ethanol consumption increases in Latin America’s biggest economy Wongtschowski said in an interview in New York.

“There is a lot of growth potential in the area of fuel distribution inside Brazil and we will explore these opportunities,” Wongtschowski said.

Ultrapar operates the second largest fuel distribution chain in Brazil, with more than 5,000 outlets, after acquiring Chevron’s Texaco-brand stations in Brazil in March for 1.1 billion reais ($645 million). Ultrapar said it has already converted 1,100 of the 1,300 Texaco outlets it acquired into its Ipiranga flag, and will have converted all of them by the first quarter 2010.

Ultrapar shares rose 3.2 percent to 79.39 reais, their highest level since the company started trading in 1999. The stock is up 56 percent this year, compared with a 79 percent gain in the benchmark Bovespa stock index.

Brazil’s economy may expand 0.12 percent this year, a central bank weekly survey of about 100 economists taken Oct. 16 and published today shows. Economists expect the economy to grow 4.41 percent next year.

Individual Owners

About 20 percent of Brazilian gas stations are still operated by individual owners, Wongtschowski said. These outlets tend to integrate into the larger networks, to take advantage of marketing and services synergies.

Ultrapar expects to benefit from the recovery in Brazil’s economy that will result from Petroleo Brasileiro SA’s oil discoveries and the choice of Rio de Janeiro for the 2016 Olympics, Wongtschowski said.

“These events will generate growth of the economic activity in Brazil and may benefit all of our businesses,” he said.

The economy’s expansion combined with tax incentives for auto purchases led fuel consumption to grow 8 percent in 2008. Demand will grow by the same amount this year, Wongtschowski said.

Brazil’s vehicle sales climbed to a record in September as registrations of new cars, trucks and buses jumped 15 percent to 308,718, the country’s automakers association said Oct. 7.

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

Last Updated: October 19, 2009 16:58 EDT