Kuwait is planning to sell shares divested by Dow Chemical to the public as the US chemicals company prepares to reduce its stake in Kuwaiti joint ventures.
On 12 November, Dow Chemical announced it is planning to reduce its equity position in all of its Kuwait joint ventures, saying the move would release capital for other strategic purposes.
Speaking at a news conference in Kuwait, Asaad al-Saad, CEO of state-owned Petrochemical Industries Company (PIC), said the shares sold by Dow would be offered to Kuwaiti citizens in initial public offerings (IPOs).
Dow Chemicals Kuwaiti joint ventures include The Kuwait Olefins Company (TKOC), which was formed in 2004.
TKOC is an international joint venture and its owners are:
- PIC 42.5 per cent;
- Dow Chemical 42.5 per cent;
- Boubyan Petrochemical Company 9 per cent;
- Al-Qurain Petrochemical Industries Company 6 per cent.
TKOC is part of a larger joint venture called Equate. Equate is made up of TKOC, The Kuwait Styrene Company (TKSC) and Kuwait Paraxylene Production Company (KPPC).
As part of these joint ventures, Dow Chemical has stakes in Kuwaits two olefin facilities Olefins 1 and Olefins 2 which are both located in the Shuaiba industrial zone in the countrys east.
Olefins 1 started production in 1997 and Olefins 2 was completed in 2009.
Olefins 2 was a $2bn petrochemicals project that included the construction of:
- 850,000 tonne-a-year (t/y) ethane cracker;
- 600,000-t/y ethylene glycol unit;
- 450,000- t/y ethyl benzene/styrene monomer unit;
- Expansion of the existing 600,000-t/y polyethylene complex in Shuaiba to 825,000 t/y.
The plans for Olefins 3 are currently in their early stages, with PIC yet to acquire land for the project or carry out detailed studies.
It is unlikely that Dow Chemical will be involved in the Olefins 3 development.
Dow Chemical has had a turbulent relationship with PIC since it formed its joint venture in 2004. It took the state-controlled petrochemicals company to court after the collapse of K-Dow in 2008, one of the petrochemicals sectors biggest deals.
The deal would have involved Kuwait paying $7.5bn to take a 50 per cent stake in a joint venture with the US firm, but it fell apart due to political infighting.
The subsequent legal battle resulted in Dow Chemical receiving $2.2bn in damages from the Gulf country in 2013.