A BIOFUELS company moved closer to full production yesterday after successful trials of its environmentally-friendly diesel.

D1 Oils, based on Teesside, announced tests at its D1 20 refinery had proved it could convert crude vegetable oil into biodiesel that meets European quality standards.

The Stockton company sold the first batch of 140 tonnes of fuel to an unnamed UK transport company.

Chairman Karl Watkin said: "We have always believed it would work, it was just a question of proving it to a very dubious world."

The news pushed the share price up ten per cent to 437p. It closed at 427p.

The D1 refining process involves extracting vegetable oil from the seeds of the jatropha, a non-edible tree with a 30-year lifespan. The AIM-listed company has planted 90,000 hectares of jatropha, spread across Ghana, Africa and India, with an option on at least another four million hectares.

It is establishing a network of plantations and is building refineries in South Africa and Saudi Arabia.

The trial was conducted using rapeseed oil and further tests with jatropha will take place later this year when there is sufficient feedstock.

There will not be enough jatropha for mass production until 2008, but Mr Watkin said D1's refineries could start production soon, using vegetable oil from other sources.