South Africa’s Sasol tightens purse strings for new projects

Bloomberg

Sasol Ltd. said it will steer clear of big new investments as the world’s largest maker of fuel from coal
reviews existing assets and focusses on completing its $11.13
billion US chemicals plant.
Sasol won’t invest in further new gas-to-liquids or crude-oil refining capacity, according to a statement on its website ahead of an investor day being held in Johannesburg. The company won’t entertain
new, wholly owned mega-projects such as the Lake Charles chemical project in Louisiana either.
“The risk profile to execute such projects alone, in the future, is larger than what Sasol wishes to undertake,” co-Chief Executive
Officer Stephen Cornell said in
the statement. The company’s strategy going forward will be “underpinned by increased discipline in capital allocation.”
Sasol said in August it was reviewing its assets around the world, at the same time that it lowered its estimate for returns at Lake Charles. The company announced an almost 25 percent jump in the project’s cost last year to $11 billion, which prompted it to make cuts elsewhere. It’s added a further $130 million to the budget because of costs related to Hurricane
Harvey, the company said.
The company has completed reviews on more than half of its global assets and decided that most of those will be retained. However, the company intends to exit its Canadian shale-gas project and will start a structured sale process.
Between now and 2022, the company will focus on completing Lake Charles and its production-sharing agreement in Mozambique, it said. “Beyond 2022, we will
focus on building an investment portfolio of smaller to medium-sized organic and inorganic opportunities, in the range of $500
million to $1 billion,” said Chief
Financial Officer Paul Victor.