Wellington, Nov 16 NZPA - Marlborough bio-energy entrepreneur Aquaflow Bionomic Corporation, has teamed up with a Chinese company Greenleaf Environmental of Sichuan.

The companies are investigating sites in China for the Blenheim-based company's approach to harvesting wild algae in sewage ponds to clean up the water, and refine the algae for biodiesel.

"This is a significant breakthrough as Sichuan is a leading clean technology centre and we believe Aquaflow is the first company of its kind to move into the region," said Aquaflow director, Nick Gerritsen.

Greenleaf's engineering director William Gormley said the technology could, potentially clean up contaminated water, and produce "green" crude oil.

Mr Gerritsen said the level of interest was "mind boggling".

The company will sort through opportunities to set up the first series of pilot plants offshore.

Aquaflow started in 2005 with plans to produce biodiesel from algae.

The use of wild or naturally-occurring algae and its low cost made Aquaflow's process more economically viable than rival systems, Mr Gerritsen said.

The Aquaflow system could be added to existing sewage works and water treatment centres without the expense of building an intensive "bio-reactor" to grow the algae.

Continuously harvesting wild algae growing in wastewater would not compete with food crops or agricultural land.

The company said last year it was offering up to 60 million new shares at 50c each, in a bid to raise at least $20m.

It has also talked of starting a fundraising programme in Australia for the first of up to 16 pilot plants.