Sasol Maintains Focus on Louisiana Petchem Project, 81% Complete

Researched by Industrial Info Resources (Sugar Land, Texas)--Sasol Limited (NYSE:SSL) (Johannesburg, South Africa) remains focused on starting up the first units of its Lake Charles Chemical Project (LCCP) in Louisiana in the second half of 2018, the company reported Monday. As of December 31, the project was 81% complete, the company said.

Sasol said it has so far spent $8.8 billion on the $11.2 billion project.

"With the priority on business readiness, Sasol continues to engage new markets and prospective customers, with around 90% of LCCP's specialty chemicals products to be placed with existing customers," the company said in its earnings release. "Contracts are also in place for all major distribution channel partners."

The company added that U.S. tax reforms, which were put in place in December, will benefit the project to the tune of $400 million to $500 million. TechnipFMC plc (London, England), Fluor Corporation (NYSE:FLR) (Irving, Texas) and WorleyParsons (North Sydney, Australia) are participating in the project.

Located in Westlake, Louisiana, the LCCP ethylene unit addition will consume ethane to produce 1.5 million metric tons per year of ethylene. Planned downstream units include low-density polyethylene and linear low-density polyethylene units and an ethylene oxide/ethylene glycol plant. Smaller downstream units will produce specialty alcohols, ethoxylates and other products. For more information on the ethylene unit, see Industrial Info's project report.

"Once commissioned, this world-scale petrochemicals complex will triple our chemical capacity in the U.S., enabling Sasol to further strengthen our position in a growing global chemicals market," said Sasol Chief Executive Officer Stephen Cornell. "It will also add up to 20% to EBITDA [earnings before interest, taxes, depreciation and amortization], or $1.3 billion, by financial year 2022."

Cornell added that project productivity has improved following Hurricane Harvey, which blew across the region in late August last year.

Sasol Chief Financial Officer Paul Victor estimated capital expenditures for the LCCP will amount to $2.54 billion in fiscal year 2018, and $1.1 billion in fiscal year 2019.

The company also noted the operational start-up in November of the Gemini high density polyethylene (HDPE) project in La Porte, Texas. The plant, a 50:50 joint venture with INEOS (London, England), has the capacity to produce 470,000 tons per year. For more information, see Industrial Info's project report and August 22, 2017, article - Sasol's Louisiana Petrochemical Project Reaches Milestone.

Sasol reported that earnings for the six months ended December 31 had decreased by 20% to Rand 6.9 billion (US$600 million) from the previous reporting period. Earnings were diminished by Sasol's scrapping of its U.S. gas-to-liquids project in Westlake. For more information, see November 28, 2017, article - Sasol Drops Westlake GTL Project, Exits Canadian Shale Plays as it Shifts Focus.

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