Honeywell petchem bid raises P-LNG concern
Petronet-LNG has delayed its planned Rs14,200cr ($1.72bn) diversification into petrochemicals because the board has reservations over Engineers India's (EIL's) recommendation of Honeywell as the technology provider.
Petronet-LNG wanted to select a technology provider for the 750 kt/y Propane Dehydrogenation (PDH) installation by August 2023, but nobody has been chosen. Houston-based Lummus is the only other bidder to provide technology for the PDH facility, which Petronet-LNG wants to set up under its petchem project next to its 17.5m t/y Dahej LNG terminal.
"In June (2023), EIL completed the evaluation and recommended Honeywell to the (Petronet-LNG) board," says a well-placed source. "But the board has three major concerns."
First, Honeywell's price quote is way above Petronet-LNG's estimate. Second, Honeywell's technology is not proven.
Lastly and most importantly, there have been doubts about Honeywell since December (2022), when the US Securities and Exchange Commission (SEC) charged the company with bribing officials at Brazil's state-owned Petrobras and Algeria's state-owned Sonatrach. A source alleges that in its recommendation to Petronet-LNG, EIL has just done a "copy and paste" of a report it provided to GAIL in 2019 for its Usar petchem project in Maharashtra.
Then, too, EIL recommended Honeywell before Lummus. But when the recommendation went to GAIL's board, a vigilant ED pointed out that Honeywell had no experience in cryogenics, a critical PDH plant component.
GAIL demanded a reevaluation, and EIL changed the recommendation to Lummus. GAIL awarded the contract to Lummus in October (2021).
For Dahej, EIL published a pre-tender notice on July 15 (2022) to select licensors for the PDH and a 500 kt/y polypropylene (PP) unit. EIL held a pre-tender meeting on July 19 (2022) before publishing the tender on October 4 (2022) and receiving bids by January 5 (2023).
On January 9 (2023), Petronet-LNG opened bids for the PDH facility. For the PP installation, offers came in from Lummus and US-based WR Grace & Co.
A source claims Honeywell has been lobbying hard with Petronet-LNG and the oil ministry to ensure it does not lose out on the tender. But speculation is rife that Petronet-LNG might emulate GAIL and choose Lummus.