SHV Energy, a global distributor of LPG and LNG, and UGI International, a unit of UGI Corp., will launch a joint venture to promote the production and use of renewable dimethyl ether, or rDME, a low-carbon sustainable liquid gas, and boost renewable solutions for the LPG industry, SHV Energy said.
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Cadastre-se agoraThe aggregate investment is estimated at up to $1 billion, which is expected to involve third-party investment, Netherlands-based SHV Energy said in a statement.
The companies expect up to six production plants to be developed over five years, targeting total production capacity of 300 kilotons/year of rDME by 2027.
The planned 50:50 joint venture will bring scale and mass to the rDME market by developing investment opportunities in production capacity, SHV said.
The JV aims to advance de-fossilization of the entire LPG industry by making available some 20% of total rDME production to the sector.
rDME is a liquid gas -- chemically similar to propane and butane -- that can be produced from multiple renewable feedstocks, including waste streams and residues. It has a low greenhouse gas footprint and is compatible with LPG infrastructure and equipment for use in heating, cooking and transport.
"Liquid gas is an important, clean and efficient energy source used in over 1,000 different applications by millions of people around the world," SHV Energy CEO Bram Gräber said in the statement, adding that finding accessible, sustainable and affordable feedstock to produce alternative liquid renewable gas was a high priority for the LPG industry.
"As leading distributors of LPG, we jointly provide an even more extensive global distribution network through which to promote the use of rDME. Although US and EU regulations differ, we are convinced rDME will help LPG down the path of de-fossilization across jurisdictions," said Roger Perreault, Executive Vice President Global LPG of New York-listed UGI Corp., who will become CEO of UGI in June.
Alternative energy
SHV is also a major supplier of LPG to India. The company recently said it would invest in SunSource Energy, a provider of distributed energy for commercial and industrial customers in India with presence across Southeast Asia.
Its acquired majority stake will ensure growth of SunSource's solar portfolio to over 550 megawatt peak (MWp) by 2023, SHV Energy said, adding the overall goal was to expand to more than a 1 GW solar portfolio.
Indonesia also aims to mix coal-based dimethyl ether, or DME, and LPG for use as cooking fuel, energy ministry officials said in 2020, in an attempt to reduce the country's dependence on imported LPG.
The ministry said DME has similar components as propane and isobutane, which allows LPG-handling technology to be adapted to DME.
An official with state-run Pertamina said mixing 80% LPG with 20% DME would yield characteristics not much different to LPG.
Indonesia, Asia's fourth-largest LPG importer, consumes on average 6 million-7 million mt/year of LPG, 70% of which is imported via term contracts or spot tenders. The government is working on reducing its subsidy burden from LPG, imports of which are growing at 5%-6%/year.