SASOL has sold half its stake in its Lake Charles petrochemicals complex in the US to LyondellBasell for US$2bn as it continues its drive to pay down debt.
LyondellBasell will operate the assets in Louisiana which include a 1.5m t/y ethane cracker and 900,000 t/y low and linear-low density polyethylene plants. The complex is among a wave of investments by chemicals firms to use cheap US shale gas as a feedstock. However, Sasol struggled to complete the project on time and budget, seeing the cost of the complex balloon to US$12.8bn from the US$8.1bn investment that Sasol approved in 2014.
The overrun contributed to the downfall of the company’s joint CEOs who left last year after an independent investigation found the project team lacked competence and was not transparent.
On top of this, the Covid-19 pandemic has depressed demand for chemicals and pushed down the cost of oil, eroding the relative advantage of low shale gas prices.
Sasol will retain full ownership and operational control of other assets at the complex, including its Lake Charles Research and Development site, East Plant ethane cracker and US Performance Chemicals Business assets, which produce Ziegler alcohols and alumina, ethoxylates, Guerbet alcohols, paraffins, co-monomers, linear alkyl benzene, ethylene oxide and ethylene glycol.
Sasol noted that the performance chemicals business is key to plans to increase its focus on specialty chemicals.
“LyondellBasell is the ideal partner to ensure the success of these world-class assets with its deep expertise in commodity chemicals,” said Sasol CEO Fleetwood Grobler.
Sasol said in a statement announcing the venture that it represents a significant step in its push to reduce net debt. It follows the sale in August of its world-scale oxygen production operations in South Africa to Air Liquide.
The deal is expected to close at the end of the year.
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