(Yicai Global) Feb. 9 -- Shares in Jiaao Enprotech soared by as much as 7.25 percent today after the Chinese chemical product maker penned a CNY1 billion (USD155 million) biodiesel supply deal with the Singapore subsidiary of oil major Royal Dutch Shell.

Jiaao Enprotech’s stock price [SHA:603822] closed up 4.25 percent at CNY15.95 (USD2.48) today. Earlier in the day it had reached CNY16.41.

Shell International Eastern Trading will purchase a total of 150,000 tons of European Union-standard biodiesel fuel from Jiaao Enprotech over a three-year period starting from July, the Tongxiang, eastern Zhejiang province-based firm said yesterday.

The deal comes into effect once Jiaao Enprotech’s new production line of the renewable alternative to fossil fuels comes into operation. This will treble the firm’s current output of 50,000 tons a year and make Jiaao Enprotech one of the country’s largest producers of the biofuel.

Biodiesel, which is made from vegetable oils, animal fats and recycled restaurant grease, can be used to power diesel vehicles and industrial equipment such as boilers, kilns and thermal power generation. It is now compulsory in Europe and the US to add biodiesel to oil products to reduce carbon dioxide emissions.

The value of the contract is just under a third of the company’s revenue in 2019, Jiaao Enprotech said. The deal will have a positive effect on its production and operations, it added.

The two parties have collaborated before. Last year, Jiaao Enprotech supplied 3,042 tons of biodiesel to Shell International and in 2018 3,974 tons, it added.

Jiaao Enprotech's biodiesel is mainly used as a green raw material for biodegradable plastic products. The surplus is processed into biofuel products that meet EU standards for export.

Editor: Kim Taylor