Dow Chemical 2013 Annual Report Download - page 36

14
Joint Ventures
Joint ventures play an integral role within the Feedstocks and Energy segment by dampening earnings cyclicality, improving
earnings growth and enabling access to high growth markets. Key joint ventures are listed below:
Aligned 100 percent with Feedstocks and Energy
• MEGlobal - headquartered in Dubai, United Arab Emirates and manufactures and markets monoethylene glycol,
diethylene glycol and polyethylene terephthalate resins; owned 50 percent by the Company.
Feedstocks and Energy includes a portion of the results of:
• EQUATE Petrochemicals Company K.S.C. - a Kuwait-based company that manufactures ethylene, polyethylene
and ethylene glycol; owned 42.5 percent by the Company.
• The Kuwait Olefins Company K.S.C. - a Kuwait-based company that manfactures ethylene and ethylene glycol;
owned 42.5 percent by the Company.
• The SCG-Dow Group consists of Siam Polyethylene Company Limited - owned 50 percent; Siam Polystyrene
Company Limited - owned 50 percent; Siam Styrene Monomer Co., Ltd. - owned 50 percent; and Siam Synthetic
Latex Company Limited - owned 50 percent. These Thailand-based companies manufacture polyethylene,
polystyrene, styrene and latex.
Freeport LNG
Dow has a long-term agreement with Freeport LNG Development, L.P. ("FLNG") to use 0.5 billion cubic-feet-per-day of
regasification capacity at FLNG's 1.6 billion cubic-feet-per-day liquified natural gas ("LNG") receiving terminal in Quintana,
Texas. In addition, Texas LNG Holdings LLC, a subsidiary of Dow, owns a 7.5 percent limited partner interest in FLNG. The
initial investment in FLNG was made in 2004 when the cost of developing oil and gas reserves in the United States was
sufficiently high that LNG was a competitive alternative for securing natural gas, an essential raw material and energy source
for Dow's operations. Current market conditions favor the flow of LNG to overseas markets; therefore, Dow's utilization of the
FLNG's terminal is expected to be limited. Dow is responsible for monthly process-or-pay payments to FLNG irrespective of
whether it utilizes the terminal for regasification. The financial impact of this capacity underutilization is not expected to be
material to the Company's future earnings or cash flows.
On November 25, 2013, the Company sold 50 percent of its 15 percent limited partner interest in FLNG.
CORPORATE
Corporate includes results of the Company's insurance company operations, the results of Ventures (which includes new
business incubation platforms focused on identifying and pursuing new commercial opportunities); Venture Capital; non-
business aligned technology licensing and catalyst activities; environmental operations; enterprise level mega project activities;
gains and losses on sales of financial assets; stock-based compensation expense and severance costs; asbestos-related defense
and resolution costs; foreign exchange results; and certain corporate overhead costs and cost recovery variances not allocated to
the operating segments.
INDUSTRY SEGMENTS AND GEOGRAPHIC AREA RESULTS
See Note 24 to the Consolidated Financial Statements for information regarding sales, EBITDA and total assets by segment as
well as sales and total assets by geographic area.
SIGNIFICANT CUSTOMERS AND PRODUCTS
All products and services are marketed primarily through the Company’s sales force, although in some instances more
emphasis is placed on sales through distributors.
Thirteen percent of the sales of the Feedstocks and Energy segment in 2013 were to one customer with which the Company has
ongoing supply contracts. Other than sales to this customer, no significant portion of any operating segment's sales is dependent
upon a single customer.
No single product accounted for more than 5 percent of the Company’s consolidated net sales in 2013.