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Sasol’s chem facility delayed, capital costs increase

HOUSTON, June 6, 2016 (PCW) –- Sasol said early Monday it was delaying the start-up of its overall chemical facility in Lake Charles and its capital cost had increased to as much as $11 billion.

The South African company is undertaking a review of the project due to lower oil prices.

The project consists of a world-scale 1.5 million mt/yr (3.3 billion lb/yr) ethane cracker, an LDPE and LLDPE unit and and an ethylene oxide/ethylene glycol plant, which would consume around two-thirds of the ethylene produced by the cracker. Additionally there would be three smaller, higher-value derivative plants producing specialty alcohols, ethoxylates and other products.

Sasol said the increase in capital cost is due to “construction delays caused by higher-than-expected rainfall, higher labour costs, certain of the lump sum bid contract prices being higher than originally estimated, as well as quantities of bulk materials being in excess of those included in the original estimate.”

The company said the cracker would start up in 2H 2018, which would enable “around 80% of the total output from [the project] to reach beneficial operation” in late 2018 into early 2019. The remaining volumes from the other derivative units will reach “beneficial operation” by 2H 2019.

Sasol’s detailed review of the Lake Charles project is expected to be completed during 3Q 2016 and its details will be released with the company’s annual results on September 12. -- Samanatha Hartke

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