BP, IOC & Gail plan $600 mn venture

Another $100 million would be required for creating marketing infrastructure in India, he said, adding, that DME supplies as alternate to naphtha in power plants, would begin from early 2005. “DME is a cleaner and cheaper alternate fuel that can replace naphtha in power plants as feedstock, diesel as transport fuel and LPG as domestic cooking gas,†Puri said.

The alternate fuel would be up to 40 per cent cheaper than naphtha, besides being much energy efficient and eco-friendly, he said.

British Petroleum will hold 50 per cent in the joint venture, while IOC and Gail would have 24 per cent equity each in the project which will give the consortium the process licence of DME production worldwide. Deharadun-based Indian Institute of Petroleum would hold the remaining 2 per cent in the venture, Puri said.

Puri said the plant would be initially targeting powerants of upto 1000 MW which are not close to any source of Liquefied Natural Gas (LNG).

“Though DME (a liquid fuel) is produced from natural gas,we are working on a formula to dissociate its prices from movement in crude oil prices,†he said, adding unlike naphtha DME would have price stability and insulation from volatile price fluctuations in the international markets.

The plant, which would be constructed in less than three years of financial closure, would require about 250 million cubic metres of gas for producing 1.8 million tonne of DME, he said.

The DME plant would be set up at the source station of natural gas either in India or in one of the Middle-East countries, Puri said, adding DME is a gas-to-liquid (GTL) alternate hydrocarbon fuel that is extracted from natural gas.

BP-IOC-GAIL consortium would have the processing license for DME worldwide, implying that anybody wanting to set up similar plants for extracting DME fuel would have to pay the consortium licence fee, he added.