UPDATE: Oman JV set to be cancelled - Deutsche

06 July 2007 16:10  [Source: ICIS news]

(Adds Dow comment in paragraphs 2 and 3, share price in paragraph 7).

 

TORONTO (ICIS news)--Dow Chemical’s planned petrochemical joint venture in Oman will likely be cancelled due to high construction costs and insufficient natural gas supplies, Deutsche Bank said in a research note on Friday, citing press reports.

 

But a spokeswoman at Dow’s headquarters in Midland, Michigan, said her company would not comment on analysts' or press speculation regarding the status of the project with the Sultanate of Oman and Oman Oil Company (OOC).

 

"The project, which began in 2005, is currently in the engineering design phase," Dow spokeswoman Jennifer Heronema said.

 

According to Deutsche, concerns over construction costs and gas availability had already pushed back the project’s anticipated start-up date from 2008 to 2011.

 

“The cancellation … confirms that the JV's value to Dow has deteriorated since the project was first announced in July 2004,” Deutsche said.

 

The cancellation was mildly positive for the industry, Deutsche said, adding it removed a world-scale ethylene project and thus helped to soften the impact of a trough in the cycle expected for 2009-2011.

 

Dow's share price was practically unchanged from Thursday's closing, trading at $45.72, down 0.15%, in Friday morning trading in New York.

By: Stefan Baumgarten
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