Petrochemical Industries Co of Kuwait (PIC), a unit of Kuwait Petroleum Corp, was yesterday ordered by the International Court of Arbitration to pay $2.48 billion to Dow Chemical Co for cancelling a planned equal joint venture in 2008.
In May 2012, the arbitrator had awarded Dow Chemical a partial payment of $2.16 billion, but added another $318 million as interest and costs yesterday, increasing the full and final payment to $2.48 billion.
In late 2008, Michigan-based Dow Chemical and PIC agreed to set up a $17.4 billion joint venture to be known as K-Dow. Under the deal, Dow Chemical was to transfer its basics plastics business and other assets into the venture, in exchange for about $9 billion in cash.
The JV would have manufactured polyethylene (PE), polypropylene (PP), and polycarbonate and related licensing and catalyst technologies. PE and PP comprise more than half of global polymer demand.
PE is the most widely used of all plastics and can be found in everyday products from food packaging, milk jugs and plastic containers to pipes and liners, while PP is a versatile plastic used in fibres, packaging films, durable goods, automotive parts, and consumer applications.
The deal had not gone down too well with some Kuwaiti lawmakers who said the project was not economically viable in view of the global financial crisis and slumping petrochemical sales.