Dow backs off of Kuwaiti joint ventures

Dow Chemical announced plans to cut its stake in Kuwaiti joint ventures a year ago, and is now pressing ahead with this goal. Dow has just said it will restructure its participation in a group of Kuwaiti joint ventures in order to optimise its investment and expand its relationship with Equate on the US gulf coast. Equate annually produces more than 4.5 million tonnes of petrochemical products that are marketed throughout the Middle East, Asia, Africa and Europe.

As a first step toward towards Dow’s rearrangement, Equate will acquire MEGlobal – a joint initiative of Dow and the Petrochemical Industries Company (PIC) of Kuwait that manufactures and supplies ethylene glycol and diethylene glycol – for $3.2 billion (£2.1 billion) by the end of the year. MEGlobal is currently a 50/50 joint venture between Dow and PIC. The new deal is expected to provide Dow with $1.5 billion in pre-tax proceeds, and allow the company to retain its 42.5% stake in MEGlobal through its ownership of Equate.

Headquartered in Dubai in the United Arab Emirates, MEGlobal is building a new ethylene glycol plant in Freeport, Texas in the US. The company, which is awaiting final approvals, anticipates that the plant will come online in early 2019, and that it will provide MEGlobal with ‘an integrated ethylene cost position’ as well as ‘feedstock advantages’. The facility will serve customers in US and Asian markets.

MEGlobal says Dow is a key partner in the new ethylene glycol plant, providing assistance with site logistics and the planning process. Meanwhile, Dow plans to further reduce its overall ownership interest in EQUATE by mid-2016.