On November 28, 2008, The Dow Chemical Company entered into a Joint Venture with State of Kuwait run Petrochemical Industries Company ("PIC"). “PIC” is a wholly owned subsidiary of State owned Kuwait Petroleum Corporation ("KPC"). to launch K-Dow Petrochemicals, a planned joint venture. PIC was to have paid pay Dow $7.5 billion US dollars for its stake. The deal was approved by Kuwait’s Supreme Petroleum Council (SPC). The head of the SPC is the Prime Minister of Kuwait The venture was to manufacture and market polyethylene (PE), ethyleneamines, ethanolamines, polypropylene (PP), and polycarbonate and related licensing and catalyst technologies. PE and PP comprise more than half of world polymer demand.2 With annual sales of $54 billion and 46,000 employees worldwide, Dow is a diversified chemical company that combines the power of science and technology with the “ Human Element ” to constantly improve what is essential to human progress. The Company delivers a broad range of products and services to customers in around 160 countries, connecting chemistry and innovation with the principles of sustainability to help provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. References to “Dow” or the “Company” mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.2 As part of the Kuwait Petroleum Corporation family, PIC is at the heart of the national strategy to maximize the value of Kuwait's hydrocarbon resources, and is focused on increasing its petrochemical contributions. It is focused on strategic growth inside and outside Kuwait through diversification, further use of strategic alliances, as well as pursuing successful joint ventures such as EQUATE, GPIC and MEGlobal.2 Kuwait Petroleum Corporation (KPC) is the state-owned entity responsible for Kuwait's hydrocarbon interests throughout the world. As part of the global energy industry, we help to supply the world with its vital oil and gas needs by exploring for, producing, refining, transporting and marketing these precious natural resources both in our home country and internationally2
Almost immediately after the deal was signed, it began to meet with trouble as members of the Kuwait Parliament sought to renegotiate the terms of the deal based on falling oil prices and met with political obstacles as members of Kuwait’s National Assembly voiced their objection to the deal. As such, The original value of the deal was cut by more than 8 percent by Kuwait.. State-Run Petrochemical Industries Co (PIC) then announced that it would go ahead with the venture, in turn triggering further anger among lawmakers who now said it was no longer viable in light of the global financial crisis and slumping petrochemicals sales and publicly questioned the personal interests and ethics of members of the SPC and PIC.3 Following much debate with back and forth accusations between Kuwaiti Parliamentarians and members of the Kuwait’s cabinet, the Kuwaiti Prime Minister, under threat of parliamentary of questioning scrapped the deal with Dow Chemical on December 28, 2008, effectively ending what would have been a major political confrontation between the government and the National Assembly.
On January 7, 2009 it was reported in the Kuwait Times that Dow Chemical will pursue legal action against the state-owned Kuwaiti company that pulled out of a joint venture. Dow hopes to potentially recoup $2.5 billion from Petrochemical Industries Co under a contract clause.
As a result of Kuwait backing out of the deal, Dow said it would lay off 11 percent of its work force, close 20 plants and divest a number of businesses. Dow had expected to get more than $7 billion in cash from the transaction, some of which would have helped pay for its $15.3 billion buyout of Philadelphia-based Rohm & Haas Co. Dow had also...