SINGAPORE, Oct 9 (Reuters) - Singapore water treatment firm Hyflux (HYFL.SI: Quote, Profile , Research) said on Tuesday it has teamed up with BP (BP.L: Quote, Profile , Research) and the Dalian Institute of Chemical Physics to develop and commercialise membranes used in the production of biofuels.

A first project involves using a sort of membrane called zeolite to "dewater", or separate water from, bio-ethanol, which is derived from plants such as corn and sugar cane.

Hyflux and its partners have set up a semi-commercial demonstration unit in Singapore that will have the capacity to produce 1,000 tons of membranes a year.

"With what we are able to see from the pilot stage ... we feel very comfortable to be moving ahead with our semi-commercial demonstration," Sam Ong, chief investment officer for Hyflux, told a briefing.

Hyflux expects to be able to sell the membranes commercially in 12-18 months to customers in the United States, Australia and Europe, he added.

"Dewatering ... is typically an energy-intensive and costly process," Hyflux said in a statement.

"By increasing the efficiency of the dewatering step, zeolite membranes have the potential to significantly reduce the energy costs of production of biofuels."

Zeolite membranes can also be used in the dehydration of solvents and recovery of used solvents, the company said.

Hyflux shares rose as much as 8.4 percent to a 10-week high of S$3.34, with 5 million shares traded, after the announcement.