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Sasol prioritizes sale of stake in Lake Charles chemicals project

June 26/2020

MOSCOW (MRC) -- Sasol (Johannesburg) has accelerated an ongoing asset disposal program that could eliminate more than half of the South African company�s debt, with the proposed sale of a stake in its Lake Charles Chemicals Project (LCCP) in Louisiana of the �highest priority�, reported Chemweek.

The company is trying to raise cash amid cost overruns and lower oil prices, with the overall process to be completed possibly within one year and generating up to USD5 billion, which would help prevent a last-resort rights offering, according to a report by Bloomberg.

�The best possible value and the highest possible chance of a divestment, they go first,� says Paul Victor, Sasol�s chief financial officer in an interview. While each asset has its own timeline for disposal, the company intends to complete all sales by June 2021. A decision on the rights offer is due in the next few months.

Sasol�s �highest priority� in the sales process is a stake in its Lake Charles petrochemical complex, which has increased in cost to almost USD13 billion, Victor says. The company has received multiple bids and aims to have that sale �at a well-developed stage by the end of December,� he says. Specialties chemical production is considered part of Sasol�s core business, while base chemicals take a lot of volume to stay competitive and the preference is to sell a portion of that, he adds.

Sasol is still evaluating whether to sell its share in the Natref crude oil refinery in South Africa, a joint venture in which it owns 64%, with Total holding the remainder. Keeping the plant, where production has been suspended since April, could require investing in upgrades to produce cleaner fuel. The company�s West African oil assets will be sold, while natural gas operations in Mozambique will be retained. �Mozambique is part of our future - it helps us to decarbonize our footprint,� Victor says. Sasol�s shale gas assets in Canada were on the block earlier than anything else and a buyer could take them �at value,� he says.

Sasol has reportedly received offers for a large stake in its LCCP from companies including CPChem, LyondellBasell, and Ineos, with these and other companies now moving into a second round of bidding. The stake sale could raise more than 29 billion South African rand ($1.69 billion) for Sasol. The cost of the Lake Charles project has soared from original estimates of $8.9 billion to USD12.9 billion.

Earlier this week Sasol announced a 30,000-metric tons/year Guerbet alcohol unit at the LCCP had achieved beneficial operations, following on from beneficial operations starting at its Ziegler alcohol unit on the same site a few days before. The only remaining unit to be brought online at the complex is a 420,000-metric tons/year low-density polyethylene (LDPE) plant, which was damaged by an explosion earlier this year while in the final stages of commissioning. The plant is expected to be online by the end of September.

As MRC reported earlier, Sasol"s world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol�s new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to our six new derivative units at the company"s Lake Charles multi-asset site.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim.  At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, LDPE, ethylene, petrochemistry, Sasol, Rossiya, USA, South Africa.
Category:General News
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