Quadrise Fuels, a British fuel technology firm expects to generate commercial revenues from Saudi Arabia within two years, after it signed a deal which it believes could transform the kingdom's power generation sector.

The London-based company said earlier on Wednesday that Saudi's state oil giant Saudi Aramco approved the use of Quadrise's technology in its refineries under a partnership deal it struck with Saudi-based company Rafid Group.

"This is a major milestone," said Quadrise Chairman Ian Williams in an interview with Reuters.

Shares in the company gained 53 percent, giving it a market capitalisation of about 67 million pounds ($106 million), as analysts at Westhouse said the deal signalled "tangible progress" and provided it with access to one of the world's largest fuel oil markets.

Quadrise's technology can produce a lower-cost version of heavy fuel oil, made when high-sulphur tarry residue left after the distillation of crude is blended with low-sulphur diesel, which in Saudi Arabia is used for power generation.

A special chemical process means Quadrise can produce fuel oil without using diesel, saving on costs, and potentially making power generation in Saudi Arabia cheaper, something which the company said can offer the kingdom "major economic benefits" as it currently imports some of the diesel used to make fuel oil.

The agreement with Rafid means that Quadrise's technology is a step closer to being put into a Saudi refinery, following which the company said it expects a larger scale programme to use its expertise in refineries across the country.

"It would be reasonable to expect commercial revenues in Saudi before the end of 2014," Williams said.

The candidate refinery selected for Quadrise's technology, which produces the substitute fuel, called MSAR, alone would represent "a company-maker" in terms of business, Williams added.

Westhouse analysts said the relationship with Saudi Aramco could also attract new potential customers in the shape of other oil companies looking to produce cheaper fuel oil, a product which is also used by the shipping industry, an area where Quadrise is also developing a customer base.

"Big oil companies tend to sit up and listen when they observe their competitors entering geographies or business streams," the analysts said. – Reuters