Mitsui & Co., Ltd. and Idemitsu Kosan Co., Ltd. have signed a basic agreement to commence studies for the establishment of a 50-50 joint venture in the United States to produce Linear Alpha Olefins with a newly built world-scale unit.

Mitsui and Idemitsu have also reached initial agreement with The Dow Chemical Co. regarding procurement of feedstocks for the production of alpha olefins and the supply of a part of its production. The final investment decision is expected to be made by Mitsui and Idemitsu in 2014.

A news release associated with the announcement noted that the project is driven by the shale gas/oil revolution in the United States, where sustainable cost advantage is expected.

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Mitsui and Idemitsu will create an alliance to produce functional chemicals by sharing strengths that include Idemitsu's technical expertise in the field of alpha olefins, Mitsui's partnerships with overseas companies capable of supplying cost-advantaged feedstocks and both companies' marketing capabilities.

The joint venture will secure access to producer cost-based ethylene from Dow's U.S. Gulf Coast production grid. The schedule calls for the commencement of alpha olefin production in 2016 with an annual output of 330,000 tons. Part of this output will be utilized by Dow, supporting the stable operation of the alpha olefins unit.

Alpha olefins are used as additives in polyethylene and other synthetic resins. They are also widely used in products ranging from detergents to high-performance lubricants and paper-making chemicals. World demand is in excess of 3 million tons and is expected to remain on a steady growth trend.

Plant location and total investment amount have not yet been determined.