The facility is expected to be located in Europe and will receive 100% funding from Lufthansa.

"Both parties will jointly develop a large-scale industrial algae oil production plant based on Algae.Tec’s technology and operating support, and Lufthansa’s offtake commitment for such algae oils," said the agreement.

Lufthansa will purchase at least 50% of the crude oil produced by the facility, at a price that will be agreed later; Algae.Tec in exchange will manage the facility and receive license fees and profits to accrue from the facility.

The agreement is an extension of the memorandum of understanding signed between the two companies in January 2012 and remains subject to approval from the boards of the respective companies.