The two companies have worked together for a number of years. But a spokesperson for Borregaard told NutraIngredients.com that while Denomega has used fish oils from other sources, that it has now tied itself in to exclusively sourcing crude oils from multiple fish species from Fjordlaks for long-term.
The construction of the refinery on Fjordlak's premises in ålesund, close to the seafood company's whitefish slaughter facility, will enable to the oil to be refined fresh - as well as improve logistics and render operations more cost-effective.
Denomega is also planning to considerably increase sales of its oils over the coming year; at present Denomega based on Fjordlak's crude fish oil is used in around 20 commercial food products, but this figure is expected to increase to over 100 by the end of 2007.
"We are in the early phase of building up this business and are making deliveries to a number of different companies worldwide, in Asia, Europe and the US," said the spokesperson. "We expect to grow much more in the future."
Although unspecified, the volumes of oil involved in the agreement are tied to demand for Denomega, and will thus increase in step.
Market research indicates that the global marine oil market is set to grow at a rate of 13 per cent per annum to be worth $993m in 2010. The predicted EU growth rate is 6 per cent per annum.
"The combination of Fjordlak's competency in fish and Denomega Nutritional Oil's leading position in oil refining and marketing enables us to take advantage of significant growth in this market," said Anders Pedersen, chairman and owner of Fjordlaks, which is expecting revenues of more €125m in 2006.
Bjørn Erik Amundsen, director of Borregaard Ingredients, concurred. "This gives us a good foundation to grown along with the market," he said.
In recent times there has been considerable interest in broadening out the use of fish oils from supplements to functional foods as well, as consumers and industry become more aware of the manifold health benefits of essential fatty acid omega-3, including cardiovascular health, cognitive function and inflammation.
The challenge has been to supply oils that do not compromise the taste and smell of their host food. Omega-3 is notoriously unstable, and when it oxidises can yield a strong and off-putting fishy flavour.
A number of companies have sought to get around this problem through technology such as microencapsulation, which protects the omega-3 from oxidation.
Leif Riege, business leader of Denomega, explained that the company's point of differentiatiation from other fish oil suppliers is down to its cold process extraction technology, which yields oils that are non-oxydised to begin with and have "close to perfect sensory status at birth".
This, he said, means that they do not rely on masking technologies when the oils are used in any foods with a lipid profile. The shelf-life of foods containing the fresh oil depends on a number of factors, including quality of packaging and storage conditions.
However in March, Denomega announced a partnership with GAT Food Essentials leveraging its fresh oils and the latter's microencapsulation technology.
This permits the oils to be used in products like orange juice, skimmed milk and some cereals that have no lipids - although Riege said it is always preferable to use the fresh oils where possible.