Oil Search, Papua New Guinea’s biggest oil and gas producer, has signed a deal with Mitsubishi Gas Chemical and Itochu Corp to begin preparing a $US500 million ($640 million) plant to supply dimethyl ether—a clean-burning synthetic substitute for diesel—to Japan. (Earlier post on DME here.)

The planned plant, near Port Moresby, could start up in 2008.  The plant could produce up to 86 PJ (PetaJoules) equivalent of DME per year, or about 14.8 million barrels of oil equivalent (MBOE).

DME has been under research and development in Japan since 1989, when NKK, one of Japan’s leading steel companies, took the initiative. Since then, there have been a variety of production tests, but it was only in Feb 2002 that the first DME trial vehicle was certified for road testing by the government. Nevertheless, DME is increasingly emerging in the strategic energy planning of many Asian nations. (Earlier post.)