Sasol boosts Lake Charles Project Price
Petrochemicals company Sasol Ltd on Tuesday raised the price tag of its U.S. ethane cracker project to $11 billion from $8.9 billion, in line with an estimate it flagged to the market in June.
Details of the situation are as follows:
- Project is under construction near Lake Charles, Louisiana adjacent to Sasol's existing chemical operations.
- An independent third party review of the estimate has been carried out.
- Detailed review has confirmed that the total capital cost for the project is expected to be $11 billion, which includes site infrastructure and utility improvements. This is an increase of $2.1 bln from its original estimate in October 2014.
- Sasol says there has been a significant increase in costs due to much more ground works required to establish the site compared to what was estimated previously.
- The total labour cost is expected to increase by around $670 million.
- There have been weather delays over the site construction period.
- Cash savings that have been achieved from company's low oil price response plan, and cost savings resulting from a business performance enhancement programme, are both well ahead of previously communicated targets
- As of June 30, capital expenditure on LCCP was $4.8 bln, and the overall project completion was around 50 pct
- The schedule for LCCP remains same as communicated on June 6.
- The first, linear low-density polyethylene unit is expected to achieve beneficial operation in second half of calendar year 2018
- An impairment of $65 mln has been recognised for the 2016 financial year pertaining to the low-density polyethylene unit.
- Sasol will report its full-year results on Sept 12.
Reporting by Ed Stoddard
