The deal provides additional value to both parties through attractive economics and strengthens the supply chain for key petrochemical products like Ethylene Glycol, which are vital for polyester, PET packaging, and antifreeze markets.
Global materials science leader Dow and MEGlobal, a leading manufacturer of ethylene glycol (EG) products, have announced the finalization of a significant expansion to their existing strategic ethylene supply agreement. The new deal commits Dow to supplying an additional equivalent to 100 KTA (kilotonnes per annum) of ethylene from its Gulf Coast operations, securing vital feedstock for MEGlobal's world-scale EG manufacturing facility co-located at the Oyster Creek site in Texas.
The expansion is a strategic move designed to deliver additional value for both petrochemical giants. The agreement locks in the supplemental ethylene supply at what is described as "attractive economics for both parties," demonstrating a continuation of their successful, long-standing commercial relationship.
For Dow, the expanded agreement is a direct benefit of its strategic advantage in the U.S. market. “Dow’s low conversion costs and feedstock flexibility allow us to leverage cost-advantaged U.S. shale gas,” stated Isam Shomaly, Dow’s Vice President of Feedstocks. He emphasized that the deal serves the dual purpose of "delivering additional value for our shareholders while continuing to reliably serve and innovate with our partners.”
The ethylene supplied under the new terms will be a key raw material for MEGlobal’s ethylene glycol production. Ethylene glycol is a foundational chemical used across a wide spectrum of essential market applications, including the manufacture of polyester fibers for textiles, polyethylene terephthalate (PET) for bottles and packaging, antifreeze and coolants, paints, resins, and deicing fluids.
MEGlobal, a subsidiary of EQUATE Petrochemical Company, is part of the EQUATE Group, which stands as the world’s second-largest producer of ethylene glycol. Dow maintains a significant 42.5% shareholding in EQUATE, further intertwining the strategic interests of the two companies.
The MEGlobal EG manufacturing facility at Oyster Creek is a world-scale plant that began commercial production in 2019. This U.S. Gulf Coast site is a critical component of MEGlobal's global strategy, as it provides the company with greater operational flexibility. "MEGlobal’s Oyster Creek site provides us with greater flexibility to serve our customers with consistent and reliable delivery of ethylene glycol products in the growing U.S. and Asian markets,” said Scott Daigle, MEGlobal’s U.S. Production Director.
The additional 100 KTA of ethylene supply is set to enhance the operating efficiency and reliability of the Oyster Creek EG plant, ensuring a stable, long-term source of feedstock to meet increasing demand in key global markets for MEGlobal's products.
