"This venture is towards that target," Ong said.

Hyflux will have a 41.5 percent stake in the plant under a joint venture agreement with a private investment firm and an oil recycler, both based in Saudi Arabia.

The plant will treat used oil from the petrochemical and marine industries in order to produce base oil.

The plant, which will make use of Hyflux's membrane filtration technology, will begin operations in the first half of 2008. The facility will have a production capacity of 24,000 tonnes per year and Hyflux hopes to double this by mid-2009.

The new plant has already secured an order from state-owned oil firm Saudi Aramco, Ong said.

"The off-take would be about 80 percent of the 24,000 tonnes," he added.

The firm is in talks with investors to open more oil recycling facilities in Southeast Asia, with plans to develop palm oil refining, Chief Financial Officer Grace Goh said.

"Palm oil refining would be another area where we see membrane technology can be applied to," Goh said.

She added that Hyflux would continue to focus on organic growth this year. "Rather than acquiring entities, we will look at acquiring technology," Goh said.

Hyflux, which has a strong presence in China, sees the Middle East and North Africa as an emerging market.