Malaysian palm-oil giant Sime Darby said Thursday it had made an offer to acquire Papua New Guinea's UK-listed New Britain Palm Oil (NBPOL) in a $1.7 billion deal.

The acquisition would give Sime Darby, the world's largest listed palm oil producer by acreage, control of one of the world's biggest producers of sustainably produced palm oil.

NBPOL also is a key supplier to the growing European market.

The deal reflects a growing push by producers to increase capacity as demand for palm oil soars worldwide.

One of the most versatile and cheaply produced edible oils, palm oil is a key ingredient in a vast range of products, from snack foods to shampoo to make-up.

Demand has fuelled rapid growth of the industry, particularly in world leaders Malaysia and Indonesia.

"This is a significant milestone for Sime Darby. We are acquiring a low-risk, well-managed, ongoing business concern that will add value to the group," Sime Darby said in a statement.

The acquisition will be made by its unit Sime Darby Plantation.

Sime Darby said NBPOL's directors had agreed to the deal.

The acquisition allows Sime Darby to burnish its environment image amid mounting pressure from environmental groups over the ecological costs of producing the oil.

Palm oil production typically requires the clearing of large expanses of tropical forests and it is considered one of the biggest drivers of rainforest destruction and a corresponding major contributor to global warming.

New Britain is a key supplier of palm oil to the European market.

Criticism over forest depletion triggered the creation in 2004 of the Roundtable on Sustainable Palm Oil by the palm oil industry, with the support of governments and non-governmental organisations.

The RSPO certifies operations that claim to respect the rights of indigenous peoples and adopt conservation policies.

But environmentalists say companies were not doing enough to follow through on the programme's requirements and that unsustainable production and violations of native land rights were continuing in the rush to acquire land for plantations.