Dow Chemical has entered into a joint venture with the state-owned Kuwaiti Petrochemical Industries Co. under which the Kuwait firm will pay $9.5 billion to own 50% of several Dow business units in the venture.

The joint venture will be headquartered in the U.S. and manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene, and polycarbonate. The move is part of Dow's transformation that relies on more joint ventures to lessen its exposure to price and demand volatility in the chemicals and petroleum markets. In a statement, Dow Chemical CEO Andrew Liveris said, "This marks an important milestone in our transformational strategy: growing our basics businesses through joint ventures; reducing our capital intensity; and, freeing up cash to invest in our portfolio of performance and market facing businesses."

Liveris later told Reuters that "Particularly for growth, the Middle East oil and gas position Kuwait Petroleum has will serve us well as we build refinery-integrated petrochemical plays in places like China, India, generally throughout Asia and maybe in Europe."

Following Dow's third-quarter earnings statement, Liveris hinted at the most recent deal when he said Dow's "most pressing challenge remains high and volatile feedstock and energy costs. We will mitigate these headwinds...through a focus on aggressive actions to maintain margins, and through our joint ventures, which have competitive feedstock positions."

Dow has announced joint ventures this year with firms in Saudi Arabia, China, Libya and Brazil, adding to alliances in Kuwait and Malaysia, according to a Bloomberg report.

Companies in the Persian Gulf and Middle East have been using additional revenue from high oil prices to double overseas investments to a record $74.5 billion this year, including the Dow deal, Bloomberg says.