SSL Sasol Ltd

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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