Oxford Catalysts

A commercial demonstration in Gussing, Austria, of clean fuel innovator Oxford Catalysts’ Fischer-Tropsch technology for converting biomass, waste and coal to liquid fuel could lead to significant orders for the loss-making AIM-quoted company.

Portuguese entrepreneur Jao Coutinho’s renewables backer SGC Energia has funded the project to the tune of $35m (£23.6m) and Oxford Catalysts’ chief executive officer Roy Lipski sees SGC as a likely first customer, while some observers envisage a closer relationship in the future.

Equally significant could be a demonstration in Brazil next year of the technology’s application in gas-to-liquid conversion, supported by Brazilian oil giant Petrobras with Japan’s Kobe Steel providing reactors for the demonstration. Lipski argues Oxford Catalysts, which nearly doubled losses to £6.1m last year but upped revenues sevenfold to £8.6m and slashed its second half cash outflow from nearly £4m to £400,000, is poised to become a ‘fully commercial organisation’ in six to nine months time.

He claims the company is well placed to emerge as 'technological market leader’ in what he predicts will be ‘a synthetic fuel explosion’, propelled by the ever increasing cost and risks of discovering and tapping adequate new sources of oil and other natural hydrocarbons. Lipski contends hydrocarbons will continue to be more efficient energy carriers than wind or the sun, but synthetic hydrocarbons, as obtained with Oxford Catalysts’ patented technology, will be the preferred route.

He cites interest by the US Air Force in testing this technology to help meet its target of 50% ‘alternative’ fuel use by 2016. Lipski also argues the technology could have wider applications in the chemical field.

Profits are still some way off, but, if the demonstrations in Austria and Brazil go well, the longer-term possibilities could be exciting. Highlighted by Growth Company Investor in February at 49p, the shares now trade at 80p and, though by no means risk-free, they should have more mileage yet.