USA: Lake Charles Chemicals Project Sasol Expects Costs for LCCP Project to Increase up to $ 11 Billion
A preliminary finding from the ongoing detailed LCCP review is that the expected total capital expenditure for the project could increase up to US$ 11 billion, including site infrastructure and utility improvements.
Lake Charles/USA – Sasol announced that a detailed review is still in progress. However, the estimated capital expenditure increase was mostly 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 LCCP consists of a world-scale 1,5 million ton per year ethane cracker, and six downstream chemical projects – two large polymers plants (low-density and linear low-density polyethylene) and an ethylene oxide/ethylene glycol plant, which together will consume around two thirds of the ethylene produced by the cracker; and three smaller, higher-value derivative plants, which will produce speciality alcohols, ethoxylates and other products. The project is under construction near Lake Charles, Louisiana in the USA, adjacent to Sasol’s current chemical operations.
The increase in the estimated LCCP capital cost and extended schedule will reduce the expected project returns by approximately the same amount as the company’s lower long-term price assumptions.
Although the capital expenditure for LCCP is expected to increase, Sasol does not expect this to result in the Company exceeding its self-imposed gearing targets.
The detailed LCCP review is expected to be completed during the third quarter of 2016, and further details will be communicated together with Sasol’s annual results announcement on 12 September 2016.