July 23, 2020 / 8:02 AM / 15 days ago

UPDATE 1-Sasol expects delay in last unit in U.S. project to come onstream

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JOHANNESBURG, July 23 (Reuters) - South Africa's Sasol said on Thursday a unit damaged by fire at its Lake Charles Chemical Project (LCCP) should reach meaningful output by October, a month later than previous guidance.

Even before a fire earlier this year, the Louisiana plant, which converts natural gas into plastics ingredient ethylene, had been hit by delays and cost overruns that led to the company's joint CEOs stepping down last October.

On Thursday, the world's top producer of motor fuel from coal said work at the last unit to be repaired from fire damage had experienced "some challenges" and meaningful output was delayed from previous guidance of September.

Six downstream chemical units at the 1.5 million ton per year ethane cracker feed into each other, and can only produce commercially viable output once a meaningful level of production is achieved.

Sasol, which is in talks for a potential partner at its U.S. Base Chemicals assets, said project expenditure is currently $12.7 billion.

Shares in Sasol fell 2.43% to 138.55 rand by 0730 GMT as dampened global fuel demand, concerns about the LCCP project and lower than expect output weighed.

"They are just reminding the market that they have some execution risk with Lake Charles," Cratos Capital equities trader Greg Davies said.

Also on Thursday, Sasol gave its sales and production update for the year to June.

Saleable production from its mining business was flat at 36.1 million tonnes versus a year earlier.

Sales of liquid fuels and natural gas fell by 12% and 8% respectively following lower demand because of lockdown restrictions.

Total sales volumes at its performance chemicals business rose 8% compared to the prior year.

Sasol said the novel coronavirus had also impacted production at its organic chemicals operations in Terranova, Italy, and its Nanjing surfactant producing plant in China. Both were both temporarily shut during the third quarter.

Sasol has recorded 774 coronavirus infections, most of which have been in South Africa where two employees have died. (Reporting by Shanima A in Bengaluru and Tanisha Heiberg in Johannesburg; editing by Barbara Lewis)

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