The Dow Chemical Company (NYSE: DOW) announced today an initial agreement for a long-term ethylene off-take agreement with a new joint venture to be formed between Idemitsu Kosan Co., Ltd., and Mitsui & Co., Ltd., of Tokyo, Japan. Idemitsu and Mitsui will form the joint venture to construct and operate a world-scale, Linear Alpha Olefins unit on the U.S. Gulf Coast. This agreement marks the next milestone in Dow’s strategy to integrate cost-advantaged feedstocks to support the profitable growth of the Company’s high value Performance Plastics franchise. The joint venture will utilize an integrated supply of ethylene from Dow’s production grid on the U.S. Gulf Coast to produce Linear Alpha Olefins used as comonomers throughout Dow’s high value Performance Plastics franchise, and will contribute significant capital for these rights.
“Today’s announcement further illustrates Dow’s commitment to invest in high-return projects that deliver advantaged feedstocks for our differentiated, downstream derivatives, while simultaneously building strategic partnerships that drive economies of scale and improved capital efficiency,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “Taken on the whole, positive disruptive trends in U.S. shale gas have led us to make different decisions about where and how we invest for global growth. Our comprehensive U.S. Gulf Coast investments will enable our enterprise to deliver higher and more sustainable value from our existing premier U.S. base to supply domestic and global growth.”
Dow is a large consumer of Linear Alpha Olefins and utilizes them within the Company’s Performance Plastics franchise for the production of high performance materials such as DOWLEX™, ELITE™, NORDEL™, AFFINITY™ and ENGAGE™. Dow expects the agreement with the JV will enable a long-term supply and purchase relationship for Linear Alpha Olefins, which will enhance Dow’s high value Performance Plastics franchise, better enabling it to serve several of the Company’s fastest growing market segments, including Packaging; Hygiene and Medical; Electrical and Telecommunications; Transportation, Sports and Leisure and Consumer Durables.