JOHANNESBURG - Sasol's share price yesterday shot up more than 12percent as the petroleum company reported that a resolution of the acetylene removal system of the ethane cracker at the Lake Charles chemicals project (LCCP) in the US had been reached, easing investor concerns over the project.
Sasol announced yesterday that the LCCP ethane cracker was increasing production rates, following the successful replacement of the acetylene reactor catalyst. The ethane cracker achieved beneficial operation in August 2019, but has run at 50 to 60percent of capacity due to under-performance of the plant’s acetylene removal system.
“This issue has now been resolved,” Sasol said.
Sasol said the outage to replace the catalyst was successfully completed on schedule and within budget.
“Following the outage, the unit was started up smoothly and ethylene production rates were approximately 85 to 90percent of nameplate capacity and are increasing. Ethylene quality meets US Gulf Coast ethylene pipeline specifications.”
Sasol was now looking forward to the completion of the LCCP Low Density Polyethylene unit, which was being commissioned with beneficial operation expected later this month.
“The remaining three downstream units under construction to complete the integrated LCCP site, Ziegler Alcohols and Alumina, Alcohol Ethoxylates and Guerbet Alcohols, remain on cost and schedule as per our previous guidance,” it said.
The ethane cracker at Lake Charles is one of the largest in the world, with a nameplate capacity of 1.54million tons a year.
About 90percent of the cracker’s ethylene output would be further processed into commodity and high-margin speciality chemicals.
The group, which has had a tough time with the Lake Charles Project in the US, which saw cost over-runs and completion delays, has previously had to come before shareholders with its cap in hand to beg for an extension of financial support.
But the share price in Sasol, the world’s biggest maker of fuel from coal, yesterday closed 11.69percent higher on news that the Lake Charles ethane cracker was increasing production rates.
Seleho Tsatsi, an investment analyst at Anchor Capital, said: “After all the capex overruns and delays at Lake Charles, investors are understandably nervous and eager to see the project ramp up without any further issues. Today’s (yesterday's) announcement helps to alleviate that concern.”