Combine olive oil, butter, garlic, shallot, bay leaf and thyme in a non-stick saucepan. Sauté until shallot is soft and slightly golden. Add chopped tomatoes, tomato puree and sugar. Continue to cook over a very low heat for 45 minutes. Pour in tomato juice and water and bring to a boil. Lower the heat and simmer for 2025 minutes. Add salt and sugar to taste.
Remove sauce from the heat. Pour through a metal sieve. Use a ladle to press the sauce through the sieve.
Bring the smooth and rich-textured sauce back to a clean saucepan and cook for 12 minutes before serving.