Oil and Gas

Sasol gives final investment nod to $8.1B Lake Charles complex

by Leslie Turk

Despite a decline in global oil prices affecting the outlook for domestic ethylene producers, South African company moves forward.

Despite a decline in global oil prices that led Goldman Sachs Group to cut its outlook for U.S. ethylene producers, South African fuel maker Sasol Limited on Monday announced final approval of an $8.1 billion ethane cracker and derivatives complex at its existing site in Lake Charles.

Rendering of Sasol's planned $8.1 billion complex in Lake Charles

"Sasol's decision to move forward with this project is a defining moment in our company's history, and an important milestone in the execution of our growth strategy," David Constable, president and CEO of Sasol Limited (JSE: SOL; NYSE: SSL), said in a news release. "Once commissioned, this world-scale petrochemicals complex will roughly triple our chemical production capacity in the United States, enabling Sasol to further strengthen its position in a growing global chemicals market. The U.S. Gulf Coast's robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in our decision to invest in America."

At the heart of the project, according to the company, is an ethane cracker that will produce 1.5 million tons of ethylene annually. Ethane is a natural gas liquid.

The complex also includes six chemical manufacturing plants that will then use the ethylene to make chemicals that go into antifreeze, water bottle, detergents and tires.

Sasol has joint-ventured with Fluor Technip Integrated, which will serve as the primary engineering, procurement, and construction management contractor for this project. Sasol's project management team is also supported by WorleyParsons, which has significant mega-project experience.

The company says in the press release that an additional $800 million will be invested in infrastructure and utility improvements, as well as land acquisition, "to establish the Lake Charles location as an integrated, multi-asset site that will enable growth for decades to come."

Sasol says it is "well-advanced" in raising capital for construction and will utilise a variety of international U.S. dollar-based sources. Site preparation is underway, and the company expects the facility to be operational in 2018.