KUWAIT CITY - Kuwait's government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical after criticism from lawmakers.

The Cabinet, in a statement carried by the state-owned Kuwait News Agency (KUNA), said the venture, known as K-Dow Petrochemicals, was "very risky" in light of the global financial crisis and low oil prices. The move came just days before the Jan. 1 startup date for the joint venture.

In its statement, the cabinet said the "limits of the effects" of the meltdown on international companies cannot be forecast. KUNA said the contract was canceled by the Supreme Petroleum Council, the country's highest oil authority.

Dow Chemical said it was "extremely disappointed" with the Kuwaiti government's decision and was evaluating its options under the joint-venture agreement.

"While disappointed in this outcome, Dow remains committed to its Middle East strategy," said Dow, which is based in Midland, Mich.,

The project, in which Kuwait was to hold a $7.5 billion stake, had been criticized as a waste of public funds, and it could have sparked a government crisis.

Dow had hoped the joint venture would help capture a larger share of the global chemicals market and boost profitability. The company was to be headquartered in the Detroit area.

ASSOCIATED PRESS