Dow in Oman

Dow Chemical has signed an agreement with Oman's government and its national oil company to build an ethylene cracker and three world-scale--each greater than 300,000 metric tons per year of capacity--polyethylene units in the Sohar Industrial Port Area of Oman.

The joint venture will be owned 50% by Dow and 25% each by Oman's government and Oman Oil Co. Construction is set to begin next year.

This cracker project is the second that Dow has planned in the Middle East, where huge advantages in feedstock prices virtually ensure high profitability. Dow is building Equate II--an ethylene cracker with downstream plants--in Kuwait with Petrochemical Industries Co. of Kuwait, which is Dow's partner in their existing Equate joint venture.

"This project is another important step in achieving Dow's strategy of having cost-competitive geographic and product positions that will enable value growth," Dow CEO William S. Stavropoulos says. Donald D. Carson, a chemical stock analyst with Merrill Lynch, expects that Dow will serve China and the rest of Asia with ethylene crackers built in places with feedstock advantages, rather than install less competitive plants in Asia itself.

The Dow venture is the latest in a series of new cracker projects announced for the Middle East. Others include Sumitomo Chemical's joint venture with Saudi Aramco and an ExxonMobil Chemical study in Qatar.

Andrew Spiers, a consultant with Nexant/Chem Systems, sees many opportunities for new plants in the region after the most recent projects are completed--even in Qatar, Saudi Arabia, and Iran, where multiple projects are under construction.