Houston — Sasol on Friday said the steam cracker at its Lake Charles Chemicals Project in Louisiana was behind schedule in its initial startup, and as a result the release of the company's 2019 financial results would be delayed.
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On July 25, the company had said beneficial operation of the cracker was expected at the end of July or soon thereafter. Sasol defines "beneficial operation" as 72 consecutive hours of on-spec production.
"The startup has now resumed" and an update on the achievement of beneficial operation will be provided on or before August 26, the company said Friday.
In its Friday statement, the company mentioned details of a report that pointed to potential Lakes Charles control weaknesses. "A preliminary report from the independent review was presented to the board on [Wednesday]. The report contains observations which point to possible LCCP control weaknesses," the company said.
Those possible control weaknesses will delay the release of the company's financial results.
"The board has decided to delay the announcement of Sasol's 2019 financial results until the independent review and external audit has been completed," the company added. It said the company's full-year 2019 financial results would be released on September 19.
Despite the challenges, the company said its previous cost guidance for Lake Charles, a range of $12.6 billion to $12.9 billion, remained unchanged.
Sources said the startup problem for the cracker was one of the main reasons behind a rise in spot ethylene prices at the Choctaw hub in the Baton Rouge area.
Spot ethylene at Choctaw was last traded Thursday at 24 cents/lb for August delivery, 7 cents above S&P Global Platts' Thursday assessment of the spot price for August delivery at Mont Belvieu-Nova. The spread between the spot prices at Choctaw and Nova remained at the 0.25-0.50 cent/lb range in 2019 until the recent outages, according to sources.
The outage at Nova Chemical Corp.'s ethane cracker, located in Geismar, Louisiana, and a turnaround at Shell's ethane cracker in Norco, Louisiana, have also helped in tightening the ethylene market at the Choctaw hub, but both crackers are expected to restart very soon, which should ease supply concerns at the hub, a source said.
-- Ali Oktay, ali.oktay@spglobal.com
-- Kristen Hays, kristen.hays@spglobal.com
-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com