Name and Location
Lake Charles Chemicals Project (LCCP), Louisiana, US.

Client
Sasol.

Project Description
The project proposes the development of a world-scale 1.5-million-ton-a-year ethane cracker and derivatives complex near Lake Charles, in the southern US state of Louisiana.

Besides the ethane cracker, the project includes six downstream chemical projects. Two large polymers plants – low-density and linear low-density polyethylene – and an ethylene oxide/ethylene glycol plant will consume around two-thirds of the ethylene produced, while three smaller, higher-value derivative plants will consume the balance to produce speciality alcohols, ethoxylates and other products.

Once commissioned the petrochemicals complex will almost triple Sasol’s chemical production capacity in the US.

Value
The cost of the LCCP has increased from $8.9-billion to a forecast $11-billion.

Duration
The project schedule has been extended. The ethane cracker portion of the project is expected to achieve beneficial operation in the second half of 2018, with 80% of the total LCCP expected to enter beneficial operation in 2018 and early 2019. The remaining volumes from the derivative units are expected to achieve beneficial operation by the second half of 2019.

Latest Developments
Sasol has reported that the capital cost of its LCCP has been revised upwards and that, following a review of the US investment programme, the project schedule has also been extended.

The LCCP review was initiated in March 2016 in light of Sasol’s ‘Response Plan’ to the low oil price.

A preliminary finding from the review, which is ongoing, indicates that the total capital expenditure (capex) associated with the project could increase from $8.9-billion to $11-billion.

The expected project returns have also been reduced as a result of “changes in long-term price assumptions and the higher capital estimates, and are now expected to be around Sasol's weighted average cost of capital, compared to returns approximating hurdle rate at the time of Final Investment Decision in October 2014”.

Sasol does not expect the capital expenditure (capex) changes to result in it breaching its self-imposed gearing targets and the funding strategy remains intact.

The group has also stressed that there are no “material or unexpected” scope changes, with overall construction continuing on all fronts and most engineering activities nearing completion. As of April 30, the capex on LCCP was at $4.5-billion and the overall project completion had progressed beyond 40%.

The detailed LCCP review should be completed during the third quarter of 2016, with further details to be communicated when Sasol releases its results on September 12.

Key Contracts and Suppliers
Fluor Corporation and Technip joint venture (engineering, procurement and construction management contract).

On Budget and on Time?
The cost of the project has increased from $8.9-billion to $11-billion.
“While the detailed review is still in progress, current indications are that the estimated capex increase is 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,” Sasol has said in a statement.

Contact Details for Project Information
Sasol director of public affairs (US) Russell Johnson, tel +1 281 588 3027 or email media@us.sasol.com.
Sasol (South Africa) head of group media relations, Alex Anderson, tel +27 11 441 3295 or email alex.anderson@sasol.com.
Fluor Corporation media relations, Brian Mershon, tel +1 469 398 7621.
Technip public relations, Christophe Bélorgeot, tel +33 1 47 78 39 92 or email press@technip.com.