MOSCOW (MRC) -- Cash-strapped Sasol (Johannesburg) has received offers from companies including CP Chem, LyondellBasell, and Ineos for a large stake in Sasol’s Lake Charles, Louisiana, petrochemical complex, reported Chemweek with reference to Bloomberg citing people familiar with the matter.
The companies are among those moving into a second round of bidding for a stake in the nearly completed complex, which could raise more than 29 billion South African rand (USD1.68 billion) for Sasol, according to Bloomberg.
In response to CW’s enquiry, Sasol says that the company does “not comment on ongoing commercially sensitive and/or M&A processes and we do not react to market speculation.” Sasol adds, however, that its expanded asset-disposal process has yielded good interest by strong contenders.
On 12 March 2020, Sasol announced that it was reviewing a variety of actions to address the challenges created by the impact of COVID-19 and the recent decline in the oil and chemical prices. “A package of measures have been developed that are intended to reposition the company over the following 24 months. One of these measures will be our existing asset disposal program… This includes the potential for exploring partnering options at Sasol’s…US-based chemicals business.”
The cost of the Lake Charles complex has sharply risen from early estimates to R192 billion and this, together with falling oil prices, has hurt Sasol’s finances. The Lake Charles complex is based on a 1.54-million metric tons/year ethane cracker, which started production last year. The ethylene will be used in six downstream plants on site to produce ethylene oxide, ethylene glycol, ethoxylates, and low-density and linear low-density polyethylene (PE), as well as Ziegler and Guerbet alcohols. About 10% of the ethylene will be surplus to requirement and sold on the merchant market as well as supply Sasol’s share of its high-density PE joint venture (JV) with Ineos in Texas. The 50/50 JV is designed to produce 470,000 metric tons/year.
Sasol recently warned of a loss on the Lake Charles project in 2020. Despite the continuing ramp-up of the project, further price weakness means that the EBITDA contribution from Lake Charles for financial year 2020 has been revised to a loss of USD50–100 million, the company said.
As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to under performance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.