Neighbour buys 75% of D1 Oil's biodiesel

Green fuel producer D1 Oils has clinched its first major commercial deal to sell its Teesside-made biodiesel.

Green fuel producer D1 Oils has clinched its first major commercial deal to sell its Teesside-made biodiesel. The Middlesbrough company will supply Teesside neighbour Petroplus with 24,000 tonnes of the environmentally-friendly fuel over the next 12 months.

The agreement means D1 has sold 75% of the 32,000 tonnes of commercial biofuel it expects its Middlesbrough refineries to produce this year.

It also leaves open the possibility of supplying Seal Sands company Petroplus Refining Teesside with more fuel as D1's production capacity increases.

D1 has 32,000 tonnes of operating refining capacity in Middlesbrough and expects to expand UK production capacity to 320,000 tonnes by the end of 2007 and 420,000 tonnes by the end of 2008.

Deliveries to Petroplus are expected to start before the end of the year and D1 is seeking other customers for its remaining 8,000 tonnes. D1 chief executive officer Elliott Mannis said: "We are proud to announce our first major UK offtake contract for biodiesel and to welcome Petroplus as our first major client. All four of our Middlesbrough refineries are now in beneficial operation and producing biodiesel for sale.

"We are delighted that our commercial product will be supplied to the market under one of the UK's established biodiesel brands. We aim to conclude further agreements in due course to sell out the balance of production of the Teesside site, which we have brought to full commercial operation in less than six months."

The fuel will be used for the B5 commercial blend supplied nationally by Petroplus, the UK's largest independent refiner of crude oil and distributor of petroleum products.

It is uncertain whether D1's supplies will be sold at the pump or go to commercial customers such as hauliers.

Petroplus Refining Teesside marketing director Stephen Thomason said: "Petroplus is very pleased to have concluded an offtake agreement with a local biodiesel manufacturer in the North-East. We are looking forward to a successful working relationship with D1 Oils plc."

D1 announced last week that former Shell chairman Lord Oxburgh would take over as chairman from company founder Karl Watkin next year. Mr Watkin will remain a D1 non-executive director and continue to champion biofuels globally in his role leading the United Nations' global bio-energy strategy.

Last week, the North entrepreneur appeared alongside US media tycoon Ted Turner, the UN Foundation chairman, at a World Trade Organisation forum in Geneva where they called for bioenergy to be put on the agenda for the Doha Round of the WTO trade talks.

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