Management at a thriving green fuels company believe they are set to be market leaders in an “exploding” market following their takeover of an American firm.

Roy Lipski, chief executive of Oxford Catalysts, based at Milton Park, near Didcot, made the prediction after the £56m deal for Velocys which will go ahead subject to shareholder approval.

Velocys specialises in the production of synthetic fuels made from waste materials which are turned into liquids or from gases such as methane.

Mr Lipski said:”This is a transformational deal for Oxford Catalysts.

“It accelerates the time we will take to get to the market, reduces the risks of commercialising the technolgy and allows us to achieve a critical mass as a combined organisation with more than 90 staff.”

Velocys is a spin-out of the Battelle Memorial Institute a not for profit scientific research centre, while Oxford Catalysts is a product of Oxford University’s chemistry laboratory, spinning out of academia in 2004.

Mr Lipski believes the deal, which caused Oxford Catalysts’ shares to be suspended from October 29 until today will also help accelerate the development of smaller scale synthetic production plants which will ultimately see the alternative fuels on the forecourts.

Demonstrations of the technology will begin next year and buy the end of 2009, Mr Lipski is confident the company will be able to take orders.

Unlike the first generation of biofuels which have to be blended with conventional petrol or diesel and also impact on the production of food crops, the Oxford Catalysts product will be able to go straight into the tank.

The company is also working on harnessing waste gases which are burned off during the oil refining process.

Mr Lipski added: “I believe the synthetic fuels market is going to be exploding and we are positioning ourselves to be the market leader.”

Oxford Catalysts, which employs 23 people at Milton Park, won the Innovation category at this year’s Oxfordshire Business Awards.