Ineos Among Bidders for Sasol Project Stake?
South African petrochemicals giant Sasol has reportedly received offers from companies, including Ineos, Chevron Phillips Chemical and LyondellBasell, to take a stake it hopes to sell in its glitch-plagued Lake Charles, Louisiana, chemical complex (LCCP).
Sources speaking to the Bloomberg news agency said the three named chemical producers have advanced to the second round of bidding for a slice of the project, which some thought could fetch more than $2 billion.
Sasol has said only that it has developed a package of measures to reposition its business, including the potential for exploring partnering options at its “world-class US base chemicals business,” and that the asset disposal process has yielded “good interest by strong contenders.”
In October 2019, the LCCP project’s repeated delays and major cost overruns led to the resignations of co-CEOs Bongani Nqwababa and Stephen Cornell, who had served in the positions since July 2016. The Johannesburg group said the chain of errors had led to “a serious erosion of confidence in the leadership of the company and weakened the company financially.“
The last cost estimate for the Louisiana ethane-based complex, which comprises a 1.5 million t/y ethylene plant and six derivative units, was in the range of $12.6-12.9 billion. The original estimate was $8.9 billion.
After a series of glitches, Sasol said in January this year that the site’s LDPE plant had been ready to go onstream in December 2019, but for undisclosed reasons did not. Early in 2020, then, a fire in a high-pressure section of the facility further postponed the start. A new start date was not announced.
Speculation over the LDPE facility’s then-newest delay focused on problems with the site’s cracker. That unit went onstream in July 2019 but had to be taken offline temporarily before being ramped up a month later. It was expected to run only at half capacity for the rest of the year, to avoid an ethylene surplus.
Bloomberg said Sasol is likely in dire need of cash, as its share price has fallen 54% during 2020, giving it a market value of around $5.1 billion. In March, the South African group suggested it would try to repay $6 billion in outstanding debt by the end of its next fiscal year, which ends in June 2021 – mostly through asset sales.