Energy and chemicals group Sasol will delay making a final investment decision on a proposed 96 000 bl/d gas-to-liquids (GTL) plant in the US state of Louisiana, as the group announces plans to cut costs in response to lower international oil prices.
Sasol on Wednesday said it was formulating a comprehensive plan to conserve cash in response to lower oil prices, which have come down to about $50 a barrel.
“While the detailed actions underpinning Sasol’s response plan are being refined, certain decisive measures have already been agreed to and are being implemented. These include identifying opportunities for additional cash savings targeted over the next 30 months.
“The focus areas are capital portfolio phasing and reductions, capital restructuring, working capital improvements, margin enhancement and further fixed-cost reductions,” it outlined.
As a result of the ongoing capital investment reprioritisation exercise, Sasol would delay making an investment decision on the GTL plant, which it previously indicated would require an investment of between $11-billion and $14-billion and which would be developed at its Lake Charles complex, where it was developing a 1.5-million-ton-a-year ethane cracker and derivatives complex at a cost of $8.1-billion.
Construction on the ethane cracker and derivatives complex would continue.
“Given the robust project economics, the Sasol team is confident that this facility is the first step in developing the site near Lake Charles into an integrated multi-asset, multi-business hub, which will enable future growth for several decades to come,” the group said.
It would also continue to advance its investments in Southern Africa, including the mine replacement programme and various gas and chemicals projects.