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Sasol U.S. plant cost estimate jumps to USD12.9 bn

May 24/2019

MOSCOW (MRC) -- Sasol Ltd., the world�s biggest maker of fuel from coal, said the cost of its giant Lake Charles chemicals project in Louisiana will balloon to as much as USD12.9 billion, or about 50% more than initially planned, said Bloomberg.

The cost blowout is a further setback for the development that�s part of the South African company�s plan to expand internationally. It has already suffered a number of budget increases because of factors including weather delays. Sasol shares slumped the most in 20 years after the announcement on Wednesday.

�We�re extremely disappointed with the increase� in costs, co-Chief Executive Officer Bongani Nqwababa said on a conference call Wednesday. The company said in a statement it�s taken measures since February to �further strengthen the oversight, leadership for the project and frequency of reporting,� and will accelerate a previously announced asset-sale program.

The Lake Charles Chemical Project -- dubbed LCCP -- will, once completed, boost the portion of chemicals in Sasol�s sales mix to 70%. It�s one of two massive plants originally planned in the U.S., but the second -- a gas-to-liquids project -- was abandoned during the oil-price crash. The chemical plant was approved in 2014.

Sasol announced on Wednesday a new cost range of USD12.6 billion to USD12.9 billion for the LCCP project, about USD1 billion more than it forecast three months ago. Back in 2016, then-CEO David Constable had said an increase to USD11 billion was a �worst-case scenario.� The company attributed the latest hike to a �correction for duplication of investment allowances,� higher contract expenses, unanticipated work and defective materials.

In last June, Honeywell announced that Secunda Synfuels Operations, an operating division of Sasol South Africa Ltd., will use a Honeywell Connected Plant service to monitor the operating reliability of its two Honeywell UOP CCR Platforming units at its refinery in Secunda.
Author:Anna Larionova
Category:General News
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