Sasol Raises Cost Estimate for Lake Charles Project Again
May 22 2019 - 2:02AM
Dow Jones News
By Adam Clark
Sasol Ltd. (SOL.JO) on Wednesday raised the cost estimate for
its troubled Lake Charles chemicals operation in Louisiana and
launched an independent review into poor controls over the
project.
The South Africa-based petrochemical and energy company said it
now expects the Lake Charles project to cost between $12.6 billion
and $12.9 billion.
The project, intended to more than triple Sasol's chemical
production capacity in the U.S, has been hit by repeated cost
increases. Sasol's previous estimate in February was for a cost of
up to $11.8 billion, compared with around $9 billion when the
project was approved in 2015.
As of the end of March, Sasol said Lake Charles is 96% completed
and that it has spent a total of $11.4 billion.
"This increase in the anticipated LCCP capital costs is
extremely disappointing. Executive management has implemented
several changes since February 2019 to further strengthen the
oversight, leadership for the project and frequency of reporting,"
Sasol said.
The company said the independent review will look at the poor
accuracy of previous cost forecasts but that it believes any issues
with underlying controls are limited to the Lake Charles
project.
Sasol cut its projections for earnings contributions from the
project to $1.0 billion in fiscal 2022 from $1.3 billion and said
its net debt levels will remain elevated for up to 24 months. Sasol
said it is seeking to conserve cash over the next 12 to 18 months
and will look to sell assets worth more than $2 billion.
Write to Adam Clark at adam.clark@dowjones.com
(END) Dow Jones Newswires
May 22, 2019 01:47 ET (05:47 GMT)
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