Sasol Maintains Timing for New Louisiana Ethane Cracker, Pushes Back Some Derivatives Units

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Researched by Industrial Info Resources (Sugar Land, Texas)--When famed humorist Mark Twain spoofed Benjamin Franklin nearly 150 years ago by saying, "Never put off till tomorrow what you can do the day after tomorrow just as well," he definitely did not have Sasol Limited (NYSE:SSL) in mind. But the Johannesburg, South Africa-based energy and chemical company seems to have taken the adage to heart by pushing back parts of a massive petrochemical project in Louisiana.

Faced with a 59% drop in after-tax profits for the first-half of Sasol's 2016 fiscal year due to low oil prices, the company announced plans last month to clamp down on expenses.

Chief Executive Officer David Constable said the company will "pace the execution" of some of the projects that will comprise the petrochemical complex at Sasol's 400-acre Lake Charles site. Completion of some of the units has been pushed from 2018 to 2019. When completed, the $8.1 billion project will roughly triple the company's U.S. chemical production.

At the heart of the project is an ethane cracker that will produce 1.5 million tons of ethylene per year. Construction of the cracker is on track for completion in 2018, along with low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) unit additions.

However, Industrial Info is also tracking four related projects with a combined worth of $725 billion in which completion has been moved back to 2019.

These include an ethylene oxide/ethylene glycol unit, two alcohol units and an ethoxylation unit expansion.

Constable said the timing shifts will allow Sasol to "focus on minimizing any potential cost increases" and help the company maintain its credit rating and balance sheet. According to news accounts, he also said he did not anticipate any further changes in the project schedule.

Early last year, Sasol said it would delay an investment decision on a $14 billion gas-to-liquids plant at the Westlake site.

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