Sasol raises cost estimate of Lake Charles chemical project by 24%

Sasol Ltd. raised the cost estimate for its Lake Charles, La., U.S.A. chemical project by 24% to USD 11 billion, from USD 8.9 billion, following an independent third-party review.

The project is located adjacent to Sasol’s existing chemical operations. The chemicals complex, which includes a 1.5 million-tonne-a-year ethane cracker, is more than 50% complete, Sasol said. As of June 30, capital expenditure on the project was USD 4.8 billion.

Sasol said there has been a significant increase in costs due to much more ground works required to establish the site, weather delays and higher labor costs, the Johannesburg-based company said in a statement. The total labor cost alone is expected to increase by around USD 670 million.

The first, linear low-density polyethylene unit is expected to start production in the second half of 2018, while most units are expected start production in early 2019, with the remainder of the units to be completed by the end of that year.

The funding is in place and will not change Sasol’s debt-to-equity gearing target, according to Sasol joint Chief Executive Officer Bongani Nqwababa.

Last year, Sasol announced that it was postponing its final investment decision on the construction of the USD 6 billion gas-to-liquid (GTL) plant. The GTL refinery is the other half of Sasol’s chemicals complex at Lake Charles, La.