Kuwait said Sunday it is terminating plans for its $17.4 billion dollar joint venture with Dow Chemical Co. amid political opposition. Dow confirmed reports of the cancellation, saying its partners in the deal verbally informed it of the decision by Kuwait's top energy body, the Supreme Petroleum Council.
The move to scrap the petrochemical venture, which was to be known as "K-Dow," is a severe blow to Dow. Forming K-Dow was a key part of Chief Executive Officer Andrew Liveris' plan to reduce Dow's reliance on commodity products and gain access to lower-cost petroleum, used to make chemicals, according to a Bloomberg News report.
Kuwait's state-run Petrochemical Industries Co. signed the K-Dow deal last month, agreeing to pay $7.5 billion to form the joint venture. If Kuwait had canceled the agreement after the start of the New Year, it would have been liable to pay a penalty of up to $2.5 billion, according to a Reuters report.