sasol lake charles project cost

Fax: +27(0) 11 788 5092, Telephone: +27(0) 860 335 444 Photo: Simphiwe Mbokazi/African News Agency (ANA) Sasol’s balance sheet is sufficiently robust and management actions are focused on deleveraging the balance sheet, simplifying the asset portfolio and executing our value based strategy. Sasol Limited (JSE: SOL; NYSE: SSL) will today be hosting a site visit for analysts and investors to its Lake Charles Chemicals Project (LCCP) in Louisiana. By Paul Burkhardt. Over this period the anticipated contribution from the LCCP has been negatively impacted by a change in the short and medium term pricing outlook. This team became concerned regarding the accuracy of the project’s cost forecast and, as a consequence, our third quarter Business Performance Metrics announcement in April 2019 indicated that the LCCP’s cost was tracking the upper end of the range. Instead it says it will focus on finishing its ethane cracker and chemical plant – which was now expected to cost $11.1 billion. The principal factors that impacted the revised cost estimate to complete LCCP are adjustments to the February 2019 cost forecast of approximately $530 million and additional events and remaining work impacting February 2019 cost forecast – approximately $470 million. The first derivative unit, Linear Low Density Polyethylene (LLDPE), achieved beneficial operation on 13 February 2019 and the plant continues to ramp up in line with expectations. Following the review noted above, the cost estimate for LCCP has been revised to a range of $12,6 – $12,9 billion which includes a contingency of $300 million. Actions include segregation of duties between project controls and finance functions and assigning a Senior Vice President to have responsibility for the LCCP project controls. In May 2019 Sasol reveals that the cost will, in fact, rise to $12.9 billion. The reviews and investigations initiated by management to date indicate that the underlying control weaknesses are limited to LCCP. Cost overruns at the mega-project prompted the firing of its co-CEOs in 2019 and caused the group to delay its financial results twice. Sasol remains confident that the longer term EBITDA outlook for the LCCP remains robust. Sasol also says that should the gas-to-liquids plant also proceed, the total cost of the combined project will climb to $22 billion, touted as the biggest industrial undertaking in Louisiana’s history. * The forecast total capital cost for the project has increased to $12,6 â 12,9 billion, including a $300 million contingency. The safeguarding value will be prioritised through this process, and the financial metrics disclosed above do not rely on any asset disposals. In May 2011, Sasol announces the appointment of David Constable as CEO to replace Pat Davies. Sasol remains confident that the longer term EBITDA outlook for the LCCP remains robust. On 28 October 2019 Sasol announces that joint CEOs Bongani Nqwababa and Stephen Cornell will leave the company by the end of the month following a review that found serious mismanagement related to the rising cost at Lake Charles. Sasol has raised its overall capital cost estimate for the Lake Charles Chemical Project (LCCP) from $11.13 billion to a range of $11.6 to $11.8 billion, the company noted in a trading statement on February 8, for the six-month period ending Dec. 31, 2018. This process forms a key part of the portfolio optimisation strategy, and has now progressed to the stage where the disposal of larger non-core assets can be accelerated. The Board has also commissioned a review to be conducted by independent external experts. Trauma of the day - Sasol delays announcement of its 2019 financial results until independent review and external audit has been completed. On inception in 2014 it was expected to cost $8.9bn and to be in operation by 2018. A contingency of $300 million has also been included. Sasol’s share price almost halves in early March 2020 due to a plunge in oil prices following Saudi Arabia’s decision to escalate an oil price war with Russia. LCCP’s schedule remains on track with the Ethylene Glycol/Ethylene Oxide Unit due to achieve beneficial operation within days. The new project leadership has been instrumental in identifying and remediating these issues. By August 2016 Sasol says it had raised its cost estimate to a “worst case” $11 billion, up a quarter from the $8.9 billion shareholders had originally expected. CEO Constable says a review of the facility’s costs is being conducted, and would be completed by the end of the year. They are replaced by Fleetwood Grobler, an executive vice president for chemicals. * This article has been updated to reflect that LyondellBasell is buying a 50% stake in the three key Lake Charles units. By February 2019 Sasol says the Lake Charles Chemical Plant project will now cost $11.8 billion. In September 2011, Sasol’s managing director for new business development, Ernest Oberholster and Louisiana Governor Bobby Jindal visit the Lake Charles Chemical complex and jointly announce that Sasol has approved an 18-month feasibility study for a gas-to-liquids plant, which is expected to begin operating in 2017. The project has encountered cost overruns, mismanagement and delays including heavy rainfall from Tropical Storm Harvey in 2017. By September 2012 Sasol says feasibility studies for the gas-to-liquids and chemicals plant, as well as the ethane cracker and ethylene derivatives plant, are in progress, and will be completed by the end of the year. By November of that year Sasol begins construction of the world’s first tetramerisation unit to produce monomers at Lake Charles, which it expects to be operational in 2014. A file photo of construction at Sasol's ethane cracker plant at the Lake Charles Chemicals Project in Louisiana. Sasol has increased the total cost estimate for its Lake Charles, Louisiana ethane cracker and derivatives project from $8.9 billion to up to $11 billion, including site infrastructure and utility improvements, the company announced on June 6. This broadly relates to investigation into cost overruns and delays at Lake Charles project in Louisiana. Here is how Sasol's Lake Charles project developed, over a decade, from a first-of-its-kind plant to a mega-complex – and into a debt millstone around its neck. Operating costs for the LCCP, although projected to be slightly elevated during start-up, are otherwise still in line with previous guidance. Sasol raises Lake Charles project cost estimate by $2.1B. The combined cost is estimated at more than $14 billion. Relevant disposals will therefore further support the deleveraging of the balance sheet, as well as simplification of the investment portfolio, 29 Brickfield Road, Salt River, Cape Town, Shop 4, Corner Voortrekker Rd & Durban RD, Bellville, Unit number 3 access park, Chichester road, Kenilworth, (021)9031294 061 287 3980, Cnr Grimsby & Leicester Rd, Mobeni, Durban, (031)4620540 W\House (031) 469 9409, 21A Pier 14, Shopping Centre, Port Elizabeth, (041)4841575 083 5176 728, 13 Sparten Crescent ,Marlboro , Ext 3 Johannesburg, Maponya Shop 200 2127 Chris hani Road, klipspruit ext5 Soweto, Shop 155 Umlazi Mega City 50 Griffiths Mxenge Highway Umlazi, Lifes on Kloof, 50 Kloof Street, Gardens ,Cape Town, shop G-15, Shop 619 Canal Walk , Century BLVD, Century City , Cape Town 7441, Shop 80B Montecasino, No1 Monticasino Bouelvard Fourways , 2191 Magents, Shop UF 42 & 43 cnr atterbury road & lois avenue , menlo park , Pretoria, SHOP 608 LEONORA DRIVE,DOLPHIN COAST,BALLITO,4399, Shop GF08, The Zone, Rosebank mall, Oxford Street, Johannesburg, Shop 08 , Century Blvd , Century City 7441, (021) 551 2533 JP CELL: 064 686 4026, Shop 21 Montecasino, No1 Monticasino Bouelvard Fourways , 2191 Magents, (011) 465 6721 074 669 6310 073 804 4352 079 884 7607, MENLYN MALL , SHOP G190 CNR ATTERBURY ROAD & LOIS AVENUE,MENLO PARK,PRETORIA, (012) 348 4725 073 8677 468 - Sieya , kiley , OUPA, Micheal, MENLYN MALL ,LF41A CNR ATTERBURY ROAD & LOIS AVENUE,MENLO PARK,PRETORIA, Vicky - 078 816 1921 land line - 012 348 4766, Sasol Place50 Katherine StreetSandtonSouth Africa2196, Telephone: +27(0) 10 344 5000 Bloomberg According to the new plan, the cost estimate for the project has been revised to a range of 12.6 â 12.9 billion dollars which includes a contingency of 300 million dollars. Sasolâs R190bn Lake Charles blunder costs co-CEOs their jobs Senior executive previously in charge of the project is facing disciplinary action and three executives involved in Lake Charles â¦ The plan remains to reduce balance sheet gearing towards 30% followed by an increase in the dividend pay-out ratio to 40% and remains on track to occur between financial years 2020 to 2023. Moodyâs on Thursday lowered the groupâs long-term rating to Ba1, the first non-investment grade level, saying the cost overruns at Lake Charles have burdened Sasol with high financial leverage. In February Sasol had said it expected the project to cost between $11.6bn to $11.8bn, but yesterday revised the figure to $12.9bn. Deleveraging amid market volatility. Sasol’s board announces plans to build a new unit at the Lake Charles Chemical Complex in Westlake, Louisiana. The Company will target the disposal of assets which have an aggregate net asset value exceeding $2 billion. The market did not take well to the update, with the Sasol share price falling about 13% on the day to R375.00. Sasol has recently shared an update on the Lake Charles Chemicals Project (LCCP), which is situated in Louisiana, USA. Email: sasolqueries&enquiries@sasol.com, Telephone: +27(0) 10 344 9280 This increase in the anticipated LCCP capital costs is extremely disappointing. Sasolâs $13 Billion US Blunder Costs Co-CEOs Their Jobs Sasol fired both of its CEOs after finding that they had seriously mismanaged the development of the Lake Charles chemical plant project. The LCCP consists of a world-scale 1,5 million ton per year ethane cracker, and six downstream chemical units and is currently under construction near Lake Charles, Louisiana in the USA, adjacent to Sasolâs existing chemical operations In February, Sasol projected the Lake Charles complex would cost between $11.6 billion and $11.8 billion. Then it grew more complex, more complicated and – ultimately – more than Sasol could handle on its own. Sasol said last month it plans to raise $6bn by the end of its 2021 financial year, mainly through asset sales, as it â¦ They rose as much as 2.1% on Tuesday after news of the planned Lake Charles stake sale, before trading 1.1% lower at the close in Johannesburg. The oil and chemicals group now expects the project to cost between $12.6 billion and $12.9 billion, including a â¦ Lake Charles now has an estimated cost of $13 billion. In November 2017 Sasol abandons plans to build a gas-to-liquids plant at Lake Charles, which would have cost as much as $15 billion, as the lower than anticipated cost of oil has rendered the project non-viable. Sasol announces in March 2016 that some units at its ethane cracker plant would only open in the second half of 2019, a year later than originally planned, due to the impact of lower oil prices on its finances. The cost of the Lake Charles Chemicals Project (LCCP) has almost doubled to â¦ Completed in late 2020, the project is one of the largest economic impact projects in the stateâs history. In October 2014 Sasol says it has approval for the construction of the ethane cracker and chemical plant, at $8.9 billion. The long term market pricing outlook is still in support of a long term run rate EBITDA contribution from the LCCP of $1,3 billion. By December 2015 Sasol announces that Constable will be replaced by Bongani Nqwababa and Stephen Cornell. The Lake Charles project is the only US megaproject Sasol has pushed ahead with, after canvelling its $15bn Louisiana gas-to-liquids (GTL) project. Underscoring this is that the revised Lake Charles cost of up to $12.9 billion (R185 billion) is about 78% of Sasolâs market capitalisation (R238 billion at the time of writing). In June 2015 Sasol announces that President and CEO David Constable will not renew his contract with the company, due to expire on 31 May 2016. The cancellation of that project and the ongoing issues with the Lake Charles investment has led the company to rethink large-scale capital projects in favour of smaller $500m-1bn ventures. Executive management has implemented several changes since February 2019 to further strengthen the oversight, leadership for the project and frequency of reporting. Upon conclusion of the review the Board will take appropriate action to address the findings. It is now estimated that Sasolâs Louisiana Lake Charles Chemicals Project will cost between $12.6-billion and $12.9-billion, 45% more than originally envisioned in 2014. In March 2015 Sasol announces plans to cut 1,500 jobs across all its operations, although the majority would be in South Africa, in an effort to preserve cash in the midst of plunging oil prices. On 16 August 2019 Sasol shares plunge 16% after the company says it will delay publishing its annual financial results, which had been due on 19 August, to allow it to complete an in-depth investigation of Lake Charles. We have achieved beneficial operation of the Ethylene Glycol unit (EG), with beneficial operation of the Ethylene Oxide unit (EO) expected in the coming days. The debt spiral was mostly sparked by the cost overruns incurred at the Lake Charles Chemicals Project in the US. As a result the earnings before interest, tax, depreciation and amortisation (EBITDA) for financial year 2022 of $1,3 billion have been revised to approximately $1 billion. By February 2019 Sasol says the Lake Charles Chemical Plant project will now cost $11.8 billion. Initiatives to improve decision making, transparency and documentation within the project management team are also in progress. The contract for the engineering, procurement and construction management of the ethane cracker and derivatives plant is awarded to a joint venture between Technip and Fluor, CEO David Constable’s former employer. By early September 2019 Sasol delays its results for a second time, to no later than 31 October 2019, saying it needs more time to complete its investigation. In October 2020 Sasol announces a plan to sell a $2 billion stake to LyondellBasell Industries to help with its debt – making it a 50% shareholder in the three key Lake Charles units, the project's ethane cracker as well as two polyethylene plants,. The unit will use a first-of-a-kind technology designed by Sasol engineers to produce hexane from ethylene, it says. The forecast total capital cost for the project has increased to $12,6 – 12,9 billion, including a $300 million contingency. Rough ride in Louisiana. In December 2012 Sasol says its board granted approval to proceed to front-end engineering and design phase for the facilities. Sasol also says it will begin studying the construction of a giant ethane cracker in the same area. This week saw Sasolâs joint CEOs, Bongani Nqwababa and Stephen Cornell agree to resign following a damning independent review as to why its US project has run so far over time and over budget. In the Company’s trading statement, released by the Stock Exchange News Service on 8 February 2019, updated guidance was provided for LCCP’s schedule and capital costs, which were estimated in the range of $11,6 - $11,8 billion. In March 2020, Sasol management put forward balance-sheet deleveraging and a rights issue, among others, as part of â¦ As previously communicated to the market, management has substantially completed the detailed asset review programme. The forecast total capital cost for the project has increased to $12,6 â â¦ The remainder of the LCCP schedule for beneficial operation is as previously indicated in February 2019 apart from the beneficial operation of the last derivative plant (Guerbet unit), which is expected to be one month later in February 2020. On Friday Sasol announced it would sell 50% of key Lake Charles assets to LyondellBasell Industries. In the latter market, its Lake Charles Chemical Project in Louisiana has incurred massive cost overruns and a troublesome internal company culture. (Photo: Sasol), *Copyright © 2021 Business Insider Inc.All rights reserved.Registration on or use of this site constitutes acceptance of our, Sasol should survive its 95% crash - but may have to sell its disastrous US project, If Sasol can't raise its own money it may need state pension cash â if Gauteng wants petrol, Why Sasol crashed: The oil collapse could trigger a debt emergency, Sasol announces a plan to sell a $2 billion stake to LyondellBasell Industries. The projectâs costs have ballooned to $12.9bn (R196bn). The Ethane Cracker is still expected to achieve beneficial operation in July 2019. In May 2019 Sasol reveals that the cost will, in fact, rise to $12.9 billion. Sasol is completing a major expansion of Lake Charles. It started, a decade ago, with a plan to make hexane from ethylene. As a result, Sasol â¦ Management also initiated a full review of the costs and schedule until project completion with input from independent technical and financial advisers. This review will cover the circumstances that may have delayed the prompt identification and reporting of the above-mentioned matters. As at the end of March 2019 project completion was at 96% with construction completion at 89%. Shares at R245 - down 12%.-- â¦ In August 2020 Sasol reports a full-year loss of R91.3 billion and says it suffered R112 billion in asset writedowns related to Lake Charles. The short term market outlook for ethane and product pricing remains volatile and estimates will be updated periodically. The only revision to the schedule is the Guerbet Unit which will now be on stream in February 2020. Johannesburg, South Africa – Sasol has today updated its guidance for LCCP following a review process to assess the project costs and schedule. The revised Lake Charles cost of up to R185bn is about 78% of Sasolâs market cap (R238bn at time of writing). Picture: Derick Hingle, Bloomberg Sasolâs share price is discounting any value from the Lake Charles project At the time Constable was Group President of Operations at Fluor Corporation where he had worked for almost 30 years. The increase in the LCCP’s cost does not alter Sasol’s capital allocation strategy. Get the best of our site emailed to your inbox daily. In January 2015 Sasol says it will delay its decision on the gas-to-liquids plant, which by now is estimated will cost an additional $14 billion over and above the $8.9 billion earmarked for the ethane cracker and chemical plant, due to a collapse in oil prices. This review identified significant additional concerns related to the LCCP forecasting process and a marked increase in the projected total cost. The drivers of the changes in capital costs are understood and a series of mitigating actions are being taken to ensure delivery within the revised parameters. Sasol has a presence in Canada and the US. Email: investor.relations@sasol.com, www.sasolinsport.com/wheelchair-basketball, Updated on the Lake Charles Chemical Project. Sasol says it will make a decision on the gas-to-liquids project within two years. Following this announcement a number of changes were made to the management of LCCP, with project accountability immediately reassigned to the Executive Vice President of Chemicals, Fleetwood Grobler and the strengthening of our project controls organisation. The review also confirmed that the actual project expenditure as at 31 December 2018 amounting to $10,9 billion was accurate and complete. Sasol's shares slumped almost 15% at their worst yesterday after it upped the cost of its Lake Charles Chemicals Project (LCCP) yet again, adding a further $1.1 billion to its final bill. (Bloomberg) â Sasol named a new chief executive officer to replace co-CEOs Bongani Nqwababa and Stephen Cornell as the company seeks to draw a line under the disastrous development of an almost-$13bn chemicals plant in the US. Weaknesses in the project’s integrated controls were identified and are being remediated. As of the end of March 2019, overall project completion was at 96%, with construction completion at 89% and capital expenditure on the project amounted to $11,4 billion. Sasol has raised by nearly $1 billion the estimated cost of its chemical project under construction near Lake Charles to a range of between $12.6 billion and $12.9 billion. Sasol has since consistently grown its Louisiana operations, most recently with the construction of its historic $12.9 billion Lake Charles Chemicals Project.

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