South African chemical and energy company Sasol reported that with the project 40% completed, the cost to construct its Lake Charles, Louisiana, chemical complex project, jumped 23.6%, to $11b from $8.9b, with the company stretching the project’s completion timeline, Business Day Live reported.
According to the company, the hike in costs was due to construction delays. “While the detailed review is still in progress, current indications are that the estimated capital expenditure increase is mostly due to construction delays caused by higher-than-expected rainfall, higher labour costs, (and) certain of the lump-sum bid contract prices being higher than originally estimated, as well as quantities of bulk materials being in excess of those included in the original estimate,” the company said.
The ethane cracker portion of the project is expected to begin operations in the second half of 2018, with 80% of the total project projected to come online the 2018-early 2019 timeframe.
In addition to the 1.5-million-ton-per-year cracker, the project includes two polymer plants (low-density and linear low-density polyethylene), an ethylene oxide/ethylene glycol plant, and three higher-value derivative facilities, Kallanish Energy published.
Furthermore, Sasol had reduced its expected project return on investment as a result of “changes in long-term price assumptions and the higher capital estimates.