Kuwait Cancels $17.4 Billion Venture With Dow Chemical
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Monday, December 29, 2008
KUWAIT CITY, Dec. 28 -- Kuwait's government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical after criticism from lawmakers that could have led to a political crisis in this small oil-rich state.
The Cabinet, in a statement carried by the state-owned Kuwait News Agency, said the venture, known as K-Dow Petrochemicals, was "very risky" in light of the global financial crisis and low oil prices. The move came just days before the Jan. 1 startup date for the joint venture.
Dow, one of the world's largest chemical companies, and Kuwait's Petrochemical Industries, a subsidiary of Kuwait Petroleum, had hoped the joint venture would help them capture a larger share of the global chemicals market and boost profitability. The company was to be headquartered in the Detroit area.
In its statement, the Cabinet said the "limits of the effects" of the meltdown on international companies cannot be forecast. KUNA said the contract was canceled by the Supreme Petroleum Council, the country's highest oil authority.
Dow Chemical, of Midland, Mich., said it was "extremely disappointed" with the Kuwaiti government's decision and was evaluating its options under the joint-venture agreement.
