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Sasol raises cost estimate for US plant by around $1bn

The cost estimate for the Lake Charles plant has been raised to a range of $12.6-12.9 billion, which includes a contingency of $300 million, Sasol said in a stock exchange announcement.

A file picture shows the logo of Sasol at its headquarters in Johannesburg. Picture: AFP

JOHANNESBURG – Sasol has raised the expected cost of its US ethane cracker project by around $1 billion following a review by the project’s new management, the South African petrochemical firm said on Wednesday.

The cost estimate for the Lake Charles plant has been raised to a range of $12.6-12.9 billion, which includes a contingency of $300 million, Sasol said in a stock exchange announcement.

The company had said in February that the plant in Louisiana, which saw the first of seven units start production earlier this year, was expected to cost up to $11.8 billion.

Sasol said a review of the project’s costs and schedule identified concerns relating to its forecasting process and an increase in the projected total cost.

The world’s biggest maker of motor fuel from coal said the return from the project would also be lower, decreasing to 6-6.5% from 7.5% due to the increase in capital costs and the outlook for market pricing.

Sasol has also lowered the project’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the financial year 2022 to $1 billion from $1.3 billion.

The firm said overall project completion was at 96% with capital expenditure at $11.4 billion as of the end of March.

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