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US petchems firm Dow is to reduce its exposure to Kuwait, a country where it has a checkered history. It will raise $3bn from reducing its stake in its key MEGlobal and Equate joint ventures, with state firm Petroleum Industries Company (PIC), a subsidiary of Kuwait Petroleum, becoming the majority partner.
In “Phase 1” of the deal, which Dow expects to complete by end-2015, Equate will pay $3.2bn for MEGlobal, a 50:50 JV between Dow and PIC. Dow and PIC will each receive $1.5bn, with the remaining $200mn going to pay down MEGlobal debt. The deal “will drive efficiencies and cost savings due to existing synergies between MEGlobal and Equate,” Dow says, adding that it will help advance MEGlobal’s plans to build a Mono-ethylene glycol (MEG) plant on the US Gulf coast. Dubai-based MEGlobal is a world leader in the production of ethylene glycol with three plants totaling 1mn tons/year capacity all in Canada.
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