Agriterra, the African oil group which switched to farming earlier this year, has unveiled a further twist in its development by entering bid talks on a Liberian palm oil group.

Agriterra, which in February sealed the purchase of cattle ranching and grain processing operations in Mozambique, said it planned to pay about $12m in cash and shares for Equatorial Biofuels, which owns 169,000 hectares of land some 3,000 miles away in Liberia.

The acquisition would provide Agriterra with an "all important operational hub" in western Africa, Andrew Groves, chief executive said.

And, appearing to expand the group's territorial ambitions, Mr Groves said the deal would promote Agriterra's drive to become a "pan-African" business. The group has previously limited its focus to only central and southern Africa.

"By expanding our geographic reach to other countries and regions within Africa, we ultimately mitigate potential risks associated with individual commodity production and localised weather anomalies," he added.

'Vast untapped demand'

Equatorial Biofuels, aimed at producing palm oil for human consumption, offered the potential for "early cash flow" from bringing 10,000 hectares of plantations back into full production, Agriterra said.

Other land could be developed with "limited impact on virgin forests".

The company added that there was "vast untapped demand" for palm oil in Liberia, which is a net importer of the vegetable oil, and in West Africa.

Agriterra shares closed up 0.25p at 5.5p in London.

The company, chaired by former England cricketer Phil Edmonds, was formerly known as White Nile.