Dow Chemical (NYSE:DOW) inked a $20 billion deal on Monday with Saudi Aramco to build a massive $20 billion chemical complex in Saudi Arabia eventually seen raking in $10 billion in annual revenue.
The joint venture, which would be called Sadara Chemical Co., is poised to be one of the worlds largest petrochemical facilities and would take advantage of Saudi Arabias rich natural resources.
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The project, which was first unveiled in 2007, has long been delayed as the companies undertook an extensive feasibility study and engineering effort and moved the location to Jubail.
This premier partnership is the right economic ownership model with the right partner, Dow CEO Andrew Liberis said in a statement. It is designed to capture growth in the rapidly growing sectors of energy, transportation and infrastructure, and consumer products by creating a manufacturing hub that will provide a differentiated product slate and an advantaged cost position.
Dow said construction is to begin immediately, with the first production units coming on line in the second half of 2015 and all units up and running in 2016.
After an initial public offering of the joint venture, the project will be 50/50 owned by Dow and Saudi Aramco. Including third-party investments, total investment between the two companies is seen at roughly $20 billion.
Under the agreement, Sadara will have responsibility for product marketing within a local zone of eight countries, while Dow will market and sell on behalf of Sadara outside the Middle East.
Shares of Dow Chemical slid 1.38% to $35.09 Monday morning, trimming their 2011 gain to 4.2%.