Dow Chemical is considering exiting Sadara Chemical Co., a chemical joint venture formed with Saudi Aramco and valued at as much as $20 billion, according to people familiar with the matter. Dow holds a 35% stake in the joint venture, while Saudi Aramco holds the remaining 65%.
The move is part of the U.S. company’s efforts to cope with a prolonged industry downturn and accelerate the optimization of its asset portfolio.
Saudi Aramco may take this opportunity to acquire Dow’s stake, further increasing its controlling interest in the project. Other strategic or financial investors could also join the bidding. Discussions are still at an early stage, and no final decision has been made.
Sadara was established in 2011 to build an integrated chemicals complex with total investment of more than $20 billion. It operates 26 production units and produces more than 3 million metric tons of chemicals and plastics annually.
During the investment process, Dow gradually accumulated debt exposure related to the joint venture, including a guarantee for a $500 million revolving credit facility to help address possible funding shortfalls.
According to Dow’s disclosures, Sadara drew $80 million from the facility in the fourth quarter of 2025. As of June 30, 2026, Dow’s investment balance in Sadara was negative $793 million, and in the first quarter of 2026 it suspended recognition of losses from the joint venture.
Against the backdrop of an industry downturn lasting several years, Dow has been reviewing its portfolio and capital allocation, aiming to focus on core business areas that can deliver higher returns.
The joint venture with Saudi Aramco is one of Dow’s most important partnerships in the Middle East. An eventual exit would mark a significant shift in the company’s strategic focus in the region.
Meanwhile, Sadara remains a key part of Saudi Aramco’s strategy to expand its chemicals business and increase the value added of hydrocarbons. This direction is also closely aligned with Saudi Arabia’s national goals of promoting economic diversification, reducing dependence on oil, and growing the non-oil economy.
The exit from a $20 billion-class joint venture is a massive capital development in the global chemicals industry. With Dow’s investment balance in Sadara having fallen to negative $793 million, compounded by $500 million in credit guarantee exposure and a prolonged industry downturn, the exit is not only a strategic adjustment but also a financially forced choice. Under the industry downturn, Dow is being forced to “cut off an arm,” which could trigger a chain reaction across the global chemical investment landscape.
