Kuwait scraps $17-billion Dow deal

In a crippling blow to its plans, the Kuwait Petroleum Corporation and Petrochemicals Industries Company has verbally informed The Dow Chemical Company, its partner in a $17.4-billion petrochemical deal that the Kuwait Supreme Petroleum Council (SPC), had asked it pull out of the previously approved deal.

The project was to have been executed through a 50:50 joint venture company, K-Dow Petrochemicals, for which approvals had already been granted.

Dow expects an official written notification of the decision within the next few days.

In a statement released by Dow Chemicals, it said, "Dow is extremely disappointed with the decision, and is in the process of evaluating its options pursuant to the joint venture formation agreement. While disappointed in this outcome, Dow remains committed to its Middle East strategy."

Kuwait and Dow lowered the value of the joint-venture by more than 8 per cent to $17.4 billion earlier this month after the government asked the Kuwaiti company to cut its contribution, in view of a sharp slowdown in global demand.

This deal was conceived over a year ago in December 2007 and was then considered a positive move with shares of Dow Chemical jumping more than 6 per cent.