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Environment

Dow And Gazprom

Venture with Russian natural gas producer is Dow's latest bid for low-cost feedstocks and access to emerging markets.

by Alexander Tullo
December 3, 2007 | A version of this story appeared in Volume 85, Issue 49

In its latest bid for low-cost chemical feedstocks and access to emerging markets, Dow Chemical is teaming up with Russia's Gazprom, the world's largest producer of natural gas. The companies, along with Sibur, Gazprom's chemical arm, have signed a letter of intent to cooperate in hydrocarbon processing and petrochemicals.

Dow and Gazprom will study the feasibility of forming a joint venture to process gas extracted from the Valangin deposits in the Yamalo-Nenets autonomous area in western Siberia. The companies are considering using the gas to feed a new ethylene cracker that could be built at one of Dow's German sites. They are also weighing the option of building a petrochemical complex in Russia based on the gas.

A Dow spokesman cautions that the cooperation is in its early stages. "We have been talking to Gazprom for some time about what we may do together; this is another step in that process," he says. He notes that Dow could opt for only the Russian petrochemical project, the German one, or both.

Dow has been aggressively advancing plans for new petrochemical plants in regions with plentiful raw materials or expanding markets. In the Middle East, which offers low-cost raw materials, the company is planning joint ventures with state oil companies in Saudi Arabia, Libya, and Oman. The Oman project, Dow acknowledges, has been languishing.

In China, the company is working with local mining firm Shenhua to study the feasibility of a coal-based chemical complex. It is also expanding a joint venture in Thailand with Siam Cement. Last week, Siam Cement announced that it is moving forward with a 350,000-metric-ton-per-year linear low-density polyethylene plant to be constructed with Dow.

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