BP-Amoco promotes DME as rival to LNG

Vol 4, PW 6 (26 Apr 00) Midstream & Downstream

Another less publicised threat to LNG in southern India comes in the form of di-methyl ether (DME).

Petrowatch learns that BP Amoco is aggressively marketing DME in southern India and has made significant progress in selling the concept to a number of Independent Power Producers (IPPs). It is understood that at least four IPPs have signed MOUs with BP Amoco for the use of DME.

More are expected to sign in the months ahead. Pillaiperumal Nallur (PPN) in Tamil Nadu: 330-MW - gas/naphtha based.

Promoters: Apollo group of Chennai, PSEG of USA, El Paso of USA, Mitsubishi of Japan. PSEG is the O&M contractor and Mitsubishi is the EPC contractor.

Kannur project in Kerala: 513-MW. Promoters: KP Nambiar (a former bureaucrat).

Enron was a partner. Now, El Paso is negotiating to get into the consortium Vypeen project in Kerala: 1,200-MW.

Promoters: Siasin Energy of Malaysia, Energy Equity of Australia, Pembinan Redzai of Malaysia. Negotiations on with Woodside Petroleum to get into the project.

Thaneer Bhavi in Karnataka: 200-MW - barge mounted. GMR Vasavi (which has a 196 MW plant in Tamil Nadu) and PSEG.

Energy Equity of Australia is interested in acquiring a stake in the consortium. The terms of the MOUs are not known, but it is understood they include a commitment by the IPP to work with BP Amoco to use DME.

Also included is a 'performance guarantee' issued by BP Amoco and the turbine manufacturer, General Electric. These are accompanied by severe penalty clauses if DME fails to live up to its expectations.

"BP Amoco representatives are in India more frequently than ever before," writes aPetrowatch correspondent in Tamil Nadu, "They arepromoting the idea that DME is cheaper than naphtha and an attractive alternative to LNG." In Delhi, that's a view echoed by at least one foreign investment bank. "An LNG terminal of 2.5m t/y needs at least 2,500-MW of captive power to be viable," he said, "But 875,000 tonnes of DME needs only 875-MW of captive power." BP Amoco is also in talks with a number of IPPs in Andhra Pradesh, where DME has the backing of chief minister Chandrababu Naidu.