Allied Petroleum will build and supply a biofuel depot in Dunedin which it says is the first of its kind in metropolitan New Zealand.
It supplies the country's first biofuel refuelling plant in Queenstown and it expects the Dunedin depot to fuel its aspirations to sell biodiesel elsewhere.
"Obviously, it is important to us to grow the market," Allied Petroleum general manager Mark Jordan said when asked whether Dunedin could be a test case for working in other big urban centres.
"Working in Queenstown has shown us there's a good tourism market there, and going into a city like Dunedin means we can expect to see how this might go for the commercial sector."
The Dunedin consortium behind the project announced the tender on Monday, but Otago Polytechnic Centre for Sustainable Practice manager Steve Henry, who is co-ordinating the project, said it had not decided where its depots should be built.
Last month, the consortium of big diesel users was looking for a site in Green Island, and one in the central city.
It was still considering a range of options which would stay confidential until a decision was made, Mr Henry said.
Allied Petroleum won the tender after its work with the Queenstown consortium's biofuel depot pilot project.
It built the facility and started supplying it with fuel in March.
Mr Jordan said his company would supply Dunedin with the same blend of 20% biofuel and 80% diesel it supplied in Queenstown.
The fuel was made by Solid Energy subsidiary Biodiesel New Zealand.
The depot would include an above-ground bulk-storage tank, a pump, and a swipe-card system to ensure only consortium members could get the fuel.
This would ensure vehicles that could run on the mix actually used it.
Overwhelmingly, they would most likely be heavy commercial vehicles, Mr Jordan said.
Allied Petroleum would work with the consortium to firm-up possible sites for the depot.
The project time-line rested on having a suitable site and the speed with which it could get through the resource consent process, Mr Jordan said.
Allied Petroleum is owned by the Invercargill-based Richardson Group.
It specialises in bulk fuel delivery to rural and commercial businesses, and supplies a network of provincial service stations and fuel stops.
