Just when sceptics were beginning to doubt that the “asset light” strategy announced by Dow Chemical (Midland / Michigan / USA; www.dow.com) was making any substantial progress – see Plasteurope.com of 31.10.2007 –, plans for an extended cooperation with Kuwait’s Petrochemical Industries Company (PIC, Sabahiya; www.pic.com.kw) have been revealed. The strategy foresees linking Dow assets with companies that have access to raw materials.

The two companies said on 13 December 2007 they had signed a memorandum of understanding (MOU) calling for a 50:50 joint venture to produce ethylene and derivatives, PE, PP and PC. The transaction, which Dow said would create the world’s largest producer of polyolefins, as well as the largest manufacturer of ethylene oxide (EO) ethylene glycol and EO derivatives, is projected to close at the end of 2008.

To establish the new US-based company with pro forma sales of USD 11 bn and 5,000 employees worldwide, Dow has agreed to sell to its Middle East partner a 50% stake in five of its existing global petrochemical businesses valued at USD 19 bn, in exchange for a USD 9.5 bn cash payment. At a press conference to announce the plans, CEO Andrew Liveris said negotiations with the Kuwaitis had been in progress for 18 months.

The pro forma sales figure does not include revenues of Dow’s existing joint ventures with PIC – the 50:50 jv Equipolymers (Horgen / Switzerland; www.equipolymers.com) and MEGlobal for PET and Equate for ethylene. Including these, the total would rise to USD 14 bn and the number of employees to 6,300 at 14 sites worldwide, according to the Dow presentation.

Up to now, the only concrete venture to emerge from Dow’s asset light strategy was a polystyrene company in North and South America with ChevronPhillips. However, the US chemical giant recently signed a letter of intent with Russian gas giant Gazprom (Moscow; www.gazprom.com) on joint exploitation of gas deposits in Siberia – see Plasteurope.com of 30.11.2007.