31 July 2009 10:13 [Source: ICIS news]
By Bohan Loh
SINGAPORE (ICIS news)--US producer Dow Chemical will still market the bulk of Optimal Group’s petrochemical products for the time being even after it had decided to divest from this Malaysian joint venture with Petronas, company spokespersons said on Friday.
Dow announced on Thursday it will sell its entire stake in three Optimal companies to its partner -Malaysian state-owned oil company Petronas for $660m (€468.6m).
The deal covers Optimal Glycols and Optimal Chemicals, both 50:50 joint ventures between Dow subsidiary Union Carbide Corp (UCC) and Petronas; and Optimal Olefins, where Dow has a 23.75% interest, also held through UCC.
Petronas has a 64.25% stake in Optimal Olefins while South African producer Sasol owns the remaining 12% in the company.
“Dow will continue to market Optimal’s basic and performance chemicals products to our existing customer base in Asia-Pacific,” said Dow spokesperson Linda Lim.
MITCO, the trading arm of Petronas, shares in the marketing responsibility to a smaller degree under the existing joint venture arrangement.
“It is too early to say if MITCO would be taking on additional products to sell in the market,” said Nasarudin Md Idris, a media relations officer at Petronas.
“Petronas has only acquired Dow’s equity stake in Optimal. Nothing else has been discussed yet,” he added.
Customers of Dow Chemical said the company was in negotiations to continue the current sales and marketing arrangement.
But with Dow exiting Optimal, discussions are under way for Petronas to eventually take over all the marketing responsibility for the products, a source close to Petronas told ICIS news.
“It is a huge coup for them (Petronas). The Optimal joint ventures will for now still maintain its operating structure. Early next year they may change the marketing [arrangement], but I think they still have to maintain a big portion of EG/EO sales to [Dow’s affiliated units],” said a Singapore-based trader.
Dow’s divestment of Optimal is expected to be completed by the third quarter of the year.
The move was part of the company's strategy announced in March to embark on an aggressive divestment programme involving olefins and derivative businesses in southeast Asia. It was meant to improve Dow’s financial position after sealing the $18.8bn acquisition of ?xml:namespace>
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With additional reporting by Steve Tan
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