Dow terminates long-term ethylene off-take agreement as Japanese JV to cancel US linear alpha olefins unit

03-May-14

Dow Chemical Co. has terminated a long-term ethylene off-take agreement with a joint venture of Idemitsu Kosan Co. Ltd. and Mitsui & Co. Ltd. following the Japanese companies’ decision to cancel plans for a proposed linear alpha olefins (LAO) unit at the US Gulf Coast, as per OGJ.com. Despite the termination of the agreement, Dow Chemical’s strategic growth investments in the region continue to progress, with several high-return, alternative uses for the ethylene that was included in the cancelled arrangement currently under evaluation, the company said in a May 2 release Idemitsu Kosan and Mitsui first announced their proposed 50:50 joint venture as well as the ethylene off-take agreement with Dow Chemical in March 2013. At the time, Mitsui said the LAO project was driven by the US shale production revolution, which the Japanese firms believed would secure access to cost-advantaged ethylene feedstocks. While no precise location along the US Gulf Coast had been selected for the proposed 330,000 tpa LAO unit, the joint venture had entered the front-end engineering and design phase for the project and expected a final investment decision in 2014.