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Thu 8 Jan 2009 12:14 PM

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Kuwait ready for legal fight over $17.4bn deal

Gov't minister quoted as saying Gulf state will battle Dow Chemical over $2.5bn claim.

Kuwait is ready to counter any legal action by Dow Chemical to avoid paying a break fee of up to $2.5 billion over a scrapped $17.4 billion deal, a government minister was quoted saying on Thursday.

Last month, the OPEC country cancelled a petrochemicals joint venture with the largest US chemicals firm after parliament voiced opposition, just weeks after signing the deal.

Dow said on Tuesday it would take legal action against Petrochemical Industries Co (PCI) which was due to contribute $7.5 billion for its stake in the project.

PCI is a unit of Kuwait Petroleum Corp (KPC), the top state oil firm in the world's seventh-largest oil exporter.

"The state of Kuwait has undertaken all necessary measures to counter the case Dow Chemical is pursuing against KPC for not concluding a deal by Petrochemicals Industries Co with Dow," al-Watan quoted Commerce & Industry Minister Ahmad Baqer as saying.

Baqer did not elaborate.

Several Kuwaiti officials have told Reuters that under the agreement Dow would need a court ruling proving that Kuwait had violated the deal to qualify for a break fee.

The deal was key for Dow to help fund its takeover of US rival Rohm & Haas.

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