The US’ Dow Chemical has said it is “highly offended” by allegations of wrongdoing in its collapsed K-Dow joint venture with Kuwait’s Petroleum Industries Company (PIC).
In a statement released to the Wall Street Journal on 29 January, the company reacts to Kuwait state media reports that a parliamentary review of the deal and Dow’s conduct was to be initiated.
The Kuwait Times reports “‘suspicions of profiteering and accepting all forms of commissions by oil executives’ who were involved in the four issues, especially in the deal with Dow” will be investigated in coming months.
“With due respect to the internal events in Kuwait, The Dow Chemical Company is highly offended about any suggestion of improper actions of Dow Chemical,” Dow says in the statement.
“The contract between Dow Chemical and PIC was entirely appropriate, as was Dow’s conduct. Any investigation should be focused on PIC’s failure to close the transaction. PIC needs to be responsible for its failure to close the transaction and we intend to hold those that interfered with this obligation accountable.”
Dow, the second largest chemicals producer in the world, was verbally informed on 28 December that the K-Dow deal had been cancelled by Kuwait's Supreme Petroleum Council (SPC) following opposition in parliament (MEED 29:12:09). The final agreement to form the company, which was valued at about $17.4bn, had only been announced on 4 December.
Dow continues to work with PIC on several other projects, including the local Equate Petrochemical Company, a joint venture between the two. The company has said that it is preparing to start legal proceedings against PIC to claim as much as $2.5bn, which is the value of a break clause in the parties’ original contract.
Political pressures in Kuwait are increasingly seen as holding back development of the country’s oil and gas industry, with international oil companies reportedly looking to scale back their involvement in the country (MEED 25:1:09).
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