Exhibit 16.1




February 25, 2002


Securities and Exchange Commission
Washington, D.C.  20549


Ladies and Gentlemen:

We were previously principal  accountants for Blue Dolphin Energy Company ("Blue
Dolphin") and, under the date of March 23, 2001, we reported on the consolidated
financial  statements of Blue Dolphin as of and for the years ended December 31,
2000 and 1999. On February 15, 2002, our  appointment  as principal  accountants
was terminated.  We have read Blue Dolphin's statements included under Item 4 of
its Form 8-K dated February 25, 2002, and we agree with such  statements  except
as follows:

o        We are not in a  position  to agree or  disagree  with  Blue  Dolphin's
         statement that Blue Dolphin's  board of directors  decided not to renew
         the  engagement of KPMG LLP as principal  accountant  and selected Mann
         Frankfort Stein & Lipp CPAs, LLP as KPMG LLP's  replacement  based upon
         the recommendation of Blue Dolphin's Audit Committee, and

o        We are not in a  position  to agree or  disagree  with  Blue  Dolphin's
         statements  that Mann  Frankfort  Stein & Lipp  CPAs,  LLP had not been
         consulted  regarding  the  application  of  accounting  principles to a
         specified  transaction  or the  type of  audit  opinion  that  might be
         rendered on Blue Dolphin's consolidated financial statements.


Very truly yours,

                                                                   /s/ KPMG LLP
                                                                  -------------
                                                                  KPMG LLP