Japanese firms cancel plans for US linear alpha olefins unit

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.

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 (OGJ Online, July 29, 2013; July 1, 2013; May 2, 2013; Jan. 14, 2013).

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, according to separate releases from Dow Chemical and Mitsui on Mar. 18, 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-tonnes/year 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, according to the Dow Chemical and Mitsui releases.

Had the now-cancelled project been approved, construction and start-up of the new unit was targeted for 2016, Dow Chemical and Mitsui said.

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