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September 23, 2019 12:46 PM

Canadian court orders Nova to pay Dow $1.08B for damages in feedstock dispute

Frank Esposito
Plastics News Staff
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    Nova Chemicals
    Calgary-based Nova Chemicals is ordered to pay $1.08 billion to Dow Chemical sof Midland, Mich. The two companies jointly owned an ethylene plant in Joffre, Alberta.

    A Canadian court has ordered Nova Chemicals to pay Dow more than $1 billion by Oct. 11 as a settlement in an ethylene feedstock dispute between the two petrochemicals firms.

    The Court of the Queen's Bench in Alberta signed the judgment ordering Calgary-based Nova to pay C$1.43 billion (US$1.08 billion) to Dow of Midland, Mich., Dow officials said in a Sept. 23 news release. The judgment is for damages Dow incurred through 2012 related to the companies' jointly owned ethylene asset in Joffre, Alberta.

    The court initially ruled in June 2018 that Nova had failed to operate the ethylene asset at full capacity for more than 10 years and that Nova also violated several contractual agreements related to Dow receiving its share of the asset's ethylene production, Dow officials said. These actions resulted in reduced productivity and sales for Dow, they added.

    The signed judgment relates to damages Dow incurred through 2012. Dow anticipates receiving an additional judgment for damages owed by Nova for the post-2012 period. The ethylene asset is now running at a higher utilization rate and giving Dow more ethylene from an advantaged feedstock position.

    The judgment is subject to appeal. Nova officials could not be reached for comment.

    When the initial judgment was released last year, Nova officials said they were "extremely disappointed," but added that the judgment would have no impact on their expansion plans in Ontario and on the U.S. Gulf Coast.

    A previous court summary said that Dow and Nova had claimed and counterclaimed against each other for damages in the hundreds of millions of dollars for the period from 2001-12. In the summary, Nova said that an ethane feedstock shortage justified its development and use of ethane allocation among the three ethylene production units at the Joffre site. They added that Dow knew about this allocation as it was occurring and failed to object to it.

    Nova also claimed in the summary that it operated the plant to its productive capability, in spite of mechanical issues that constrained production.

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