Sasol's decision on Louisiana GTL project depends on costs of new cracker

By JACK KASKEY and PAUL BURKHARDT
Bloomberg

Sasol said a decision on whether to proceed with a US facility to turn natural gas into transportation fuels will depend on cost overruns at an $8.1 billion chemical plant it’s building in Louisiana.

Sasol will decide in 2016 whether to build a gas-to- liquids, or GTL, plant at the site of the planned ethane cracker in Lake Charles, Louisiana, CEO David Constable said in an interview.

A decision to proceed, on what would be the first plant of its kind in the US, will depend on costs at the chemical project, the price of oil, diesel and gas and the health of the global economy, he said.

Both projects are being proposed to capitalize on a jump in North American gas output from shale formations. The GTL project, which Constable last year estimated would cost $14 billion, would produce diesel fuel and waxes. The project is in the front-end engineering and design phase, the CEO of the Johannesburg-based company said.

“We need to get much more accurate project estimates, keep a close eye on the cracker and what its capex does in construction and then take a view on the GTL with that information and the macroeconomics at the time,” Constable said.

Sasol yesterday approved the final investment decision for the construction of the ethylene plant in Lake Charles. The GTL plant may produce 96,000 bpd of fuel.

The company has been looking to sell almost half of a 44.5% stake in a planned GTL plant with Uzbekneftgas in Uzbekistan. Constable said last month that Sasol might have to step back from the project and confine its participation to the provision of technology and training.

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