Wednesday, May 09, 2007

Dow & Aramco To Build Major PetroChem Plant in Saudi Arabia

Big Oil and Gas:

Dow/Aramco Venture
U.S. Dow Chemical Co. and the Saudi oil company Aramco are set to ink a major agreement to construct a large petrochemical plant with a $20 billion investment value, Reuters reported May 9, citing industry sources. Aramco said it will make a major business announcement with a business partner May 12, but did not provide any further details. Officials from both companies refused to comment.
In an interview with Dow Chemical's Australian CEO Andrew Liveris, he announces the building of a mega-complex in Ras Tanura, Saudi Arabia.

Two companies, the world’s largest oil and gas company, Saudi Aramco, and the world’s largest chemical company, Dow Chemical, will put in place in Ras Tanura what we currently have in place in Freeport, Texas: the world’s largest industrial petrochemical complex. We are working on at least three others, of which the most visible one is with Gazprom in Russia. And you can see our strat­egy: we are going into low-cost feedstock locations.Reading a snippet from his interview, you will see why these billion-dollar megaplants are being built in foreign nations and no longer in America.

Liveris admits that, in the United States, Dow has shut down over 60 assets in the U.S. and has dropped their employee headcount from the year 2002 to the year 2007 by over 7,000 jobs. Liveris bemoans the fact that, due to the protection of the environment by EPA and President Clinton, that his company was unable to take advantage of [rape?] America's prime natural resources, saying that most of the new areas that were promising in terms of natural gas were in so-called environmentally sen­sitive areas such as the northwest shelf of Alaska, the Colorado Rockies, and, in particular, the Outer Continental Shelf. It seems as if Liveris is saying, unless you submit to business raping the land and unless you agree to having a filthy environment and laws that run against your democratic interest, business will tell your country and its workers to bugger off.

Isn't it nice to know that our own government won't lift a moral finger to regulate this type of activity? Read on and tell me anything patriotic you see about our government allowing this to get worse as hard-working Americans lose opportunity.
Q: Your decision to move these operations into other countries is not the result of lower labor costs?

A: Absolutely not. We would not be doing this if the energy economy in the United States were balanced to include not only the increased natural gas we have talked about but also diversity of supply. Why is electricity not generated by nuclear and clean coal in this country? Why is that not at the table to take the pressure off our oil and gas resources? Also, we need efficiency of use—not just in the industrial sec­tor but clearly in the transportation sector.

Q: You said in a speech that America’s “self-imposed structural costs put U.S. manufac­turers at a disadvantage... even with compet­itors in mature economies” like Europe and Japan. Besides energy, what are some of those costs?

A: America has not changed its corporate tax policy; other countries have in the last decade. There is the cost of healthcare and the cost of federal regula­tions. Then, there is the civil justice system, which is neither civil nor just nor a system. Companies like mine are constantly litigating in judicial hellholes and having to settle. This is a cost that other coun­tries do not have to put up with.

In an UPDATE, I noticed that Dow Chemical investors have dumped board member J. Pedro Reinhard. Read the rumor, which is that Dow is being eyeballed for sale by Middle Eastern investors.
Grist for rumors

For Dow Chemical, a 43,000-employee company that started off making bleach in the late 19th century and posted $49.1 billion in revenue last year, the palace intrigue of recent weeks follows months of media reports that the company would soon be bought out or broken apart by unnamed investors.

The latest report, which sent shares up 5%, suggested that private-equity firms and Middle Eastern buyers were gearing up for a deal. The report triggered denials from the company and prompted Liveris to ask a major bank's chief executive (whom Kreinberg's suit identifies as James Dimon, the head of J.P. Morgan Chase & Co. whether he knew about any such discussions. See full story. The unnamed banker, according to Dow Chemical, later called Liveris and said that Kreinberg, an executive vice president, and Reinhard had been involved in discussions with third-parties about a major transaction involving Dow. The banker also said the pair had held discussions with representatives of the bank's London affiliate, which had been working for "certain Middle Eastern investors" on potential major transactions with Dow Chemical, according to Dow's suit against the two.


Larry said...

When you put oil men in charge of the government you get uncontrollable oil price increases, and businesses selling their souls to foreign interest.

Jude Nagurney Camwell said...

Wouldn't it be smart of them to hedge their bets - knowing that a Democratic president will likely soon replace the one that has allowed this type of rewarding of unpatriotic activity (which is normal for corporations who are chartered to swear by the bottom line) to go on? Is Dow creating any opportunity for American workers here on American soil? Wouldn't you think they'd look better bragging about good will toward America and its workers rather than knocking the government for their concerns about social and environmental responsibility? Even the ISO is setting standards today for corporate social responsibility. Some of these companies are going to be exposed - with egg all over their corporate faces - er...banners - when people really begin to examine how they've treated America and American workers - for all the American government has done for them!

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