NOVA $1 bil Dow Alberta cracker dispute - Arhive
NOVA $1 bil Dow Alberta cracker dispute
NOVA vows to appeal $1 bil judgment for Dow in Alberta cracker dispute
Houston (Platts)-
A Canadian court ruled this week that Canada’s NOVA Chemicals owes Dow Chemical more than $1 billion for failing to run their joint venture 1.3 million mt/year steam cracker in Alberta at full rates and deliver Dow its share of ethylene over more than a decade.
NOVA said it would appeal the ruling within a month.
Justice B.E. Romaine of the Court of Queen’s Bench in Alberta sided with Dow’s argument that from 2001 to 2012, NOVA took some ethylene and other products produced by the plant that were due to Dow for its own use and failed to run the cracker at full rates as required by joint venture agreements. The judge ordered NOVA to pay Dow $1.06 billion, and potentially more for actions beyond 2012.
“Nova was contractually required to run the co-owned ethylene facility at full productive capability and to provide Dow its 50% share of ethylene and co-product production,” Dow’s lead trial lawyer Blair Yorke-Slader said in a statement. “The Court has ruled that Nova breached its obligations, resulting in reduced productivity and reduced sales of Dow’s downstream derivatives for more than 10 years.”
He said Dow looks forward to the restoration of the cracker’s full rates and the company’s access to its share of ethylene.NOVA $1 bil Dow Alberta cracker dispute
NOVA said in a statement it was “extremely disappointed” with the ruling and noted it would have no impact on its growth plans. These include a 350,000 mt/year expansion of its 816,466 mt/year cracker in Corunna, Ontario, and a 625,000 mt/year polyethylene joint venture with France’s Total and Austria’s Borealis.
NOVA said potential payouts for the period beyond 2012 will be determined later by the court, and it does not expect that issue to be resolved before mid- to late 2019.
Romaine dismissed NOVA’s counterclaim in the dispute. NOVA had argued that an ethane shortage justified its practice of allocating ethane among three crackers at the Joffre complex, and that Dow knew about it and did not object. NOVA argued further that it operated the joint venture cracker at rates as high as the plant was capable of amid mechanical issues that constrained its output.
The judge said Dow sufficiently demonstrated at trial that there was no ethane shortage and that the cracker could have run at higher rates than NOVA claimed.
–Kristen Hays, kristen.hays@spglobal.com
–Edited by Wendy Wells, wendy.wells@spglobal.com