PIC is assuming a new role with Dow

The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), have announced plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.

“We’re creating a petrochemicals company that will be a global leader from its first day of operation, an $11 billion company that is well positioned to grow profitably across the industry cycle,” said Andrew N Liveris, Dow chairman and CEO.  “For Dow, this marks an important milestone in our transformational strategy: growing our Basics businesses through joint ventures; reducing our capital intensity; and, freeing up cash to invest in our portfolio of Performance and Market Facing businesses.”
The joint venture, to be headquartered in the United States, will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene, and polycarbonate.  The JV is expected to have revenues of more than $11 billion (pro forma) and employ more than 5,000 people worldwide.
“The new venture will build upon PIC’s feedstock position and commitment to global petrochemicals growth, KPC’s position as one of the world’s top-10 energy/hydrocarbons companies, and Dow’s technology and market leadership – including its number one position in polyethylene, ethyleneamines and ethanolamines.,” a Dow statement said.
“Dow will also maintain its world-class security, environment, health and safety standards in the new venture. Customers, in turn, will benefit from an even stronger supplier having feedstock integration, global supply chain, advanced technologies, resources to grow with customer demand, and an ongoing commitment to the future of the petrochemical industry.” 
Saad Al-Shuwaib, CEO of Kuwait Petroleum Corporation, remarked:  “Through this joint venture, KPC enters a new arena of specialty products based on leading global technologies.”
 He said the JV would enable PIC to expand and diversify its international petrochemicals presence, while building on its long-standing relationship with Dow. 
“By selectively investing in downstream petrochemical businesses, we are maximising the value of Kuwait’s hydrocarbons resources while diversifying our national economy and increasing job opportunities.”
The transaction is subject to the completion of definitive agreements, customary conditions and regulatory approvals, and is anticipated to close in late 2008.  To form the new company, Dow will sell to PIC a 50 per cent interest in the business assets included in the transaction. In turn, both PIC and Dow will place their share of the assets into the joint venture, with each party then taking a 50 per cent equity interest in the new company. The value of the five Dow global businesses that will form the joint venture is approximately $19 billion. Dow will receive approximately $9.5 billion (pre-tax) from PIC for the 50 per cent interest.
“Dow and PIC have a great track record as partners, and we are excited to form this landmark joint venture that brings sustainable, long-term value to our companies and customers,” said Michael R. Gambrell, Dow executive vice president for Basic Plastics and Chemicals.
“The joint venture between PIC and Dow will be positioned to flourish in high-growth economies through access to feedstock offtakes from future KPC refineries in emerging regions,” said Maha Mulla Hussain, managing director of Petrochemical Industries Company of Kuwait. “This will give the new JV company the distinct advantage of full integration from feedstocks to derivatives, while meeting growing customer demand in emerging markets.”  
Polyethylene (PE) and polypropylene (PP) comprise more than half of world 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.  PP is a versatile plastic used in fibres, packaging films, non-wovens, durable goods, automotive parts, and consumer applications. Polycarbonate is an engineering thermoplastic used in applications such as optical media, electrical and lighting. Amines are a family of chemicals with a broad range of properties, used in various applications from wood treating and pharmaceutical processing, to coatings and consumer products.