South Africa energy and chemical company Sasol Ltd. is selling a 50% stake for $2 billion in three of its plants inside a sprawling Lake Charles petrochemical complex to Houston-based LyondellBasell.
LyondellBasell will buy a 50% stake in Sasol's new 1.5 million-ton ethane cracker and its nearly 1 million-ton low and linear low density polyethylene plants. The three units included in the joint venture, known as Louisiana Integrated PolyEthylene JV LLC, manufacture ethylene and polyethylene.
LyondellBasell is expected to operate the three units on behalf of Sasol. LyondellBasell already operates a plant within 10 miles, known as the Equistar Chemicals LP Westlake facility.
Sasol will continue to own its Lake Charles research and development center and 11 other facilities within its Lake Charles site. Sasol will still own undeveloped land on the site, which the company has previously pitched to state leaders as a site for future production growth.
Sasol will continue paying down $10 billion in debt it incurred during the construction phase of the Lake Charles site, the cost of which swelled to nearly $13 billion as it neared completion from about $8.1 billion initially projected in 2014. The cost overruns prompted the company's co-CEOs to step down. Sasol already had sold an air separation unit to Air Liquide for $509 million in September.
Sasol employs 1,200 employees across the entire Lake Charles Chemical Complex, which includes its research and development arm and 14 chemical manufacturing units. Some of those employees are expected to work for the joint venture subsidiary with LyondellBasell after the deal closes.
"Sasol remains committed to its Lake Charles complex as the company’s Gulf Coast regional operations and growth hub," said Kim Cusimano, spokesperson for Sasol. “The (joint-venture) organizational design, leadership structure and workforce staffing plan, which will include specifics about employees to transfer, will be developed by Sasol and LyondellBasell between now and close.”
The deal is subject to a vote by shareholders and is expected to close by the end of the year.
LyondellBasell already has 250 workers, split between employees and contractors, at the 260-acre Westlake plant it operates. The plant manufactures polypropylene and Catalloy resins, which are used to make clothing, food packaging, vehicle parts and home goods.
LyondellBasell CEO Bob Patel described the deal as a “unique opportunity” and that the petrochemical hub was world-scale and strategically located in Louisiana.
Patel projected that within one year it would add to LyondellBasell’s bottom line and cash flow.
Sasol, which hired Bank of America to scout for a joint venture partner to co-own and operate some of the Lake Charles units, described the Houston-based chemical company as the “ideal partner” due to its “deep expertise in commodity chemicals."
The Sasol complex and LyondellBasell's Westlake facility both suffered damage from Hurricane Laura at the end of August, and repairs are being made, according to reports filed with the state Department of Environmental Quality.
Among the thousands of residents in Cameron and Calcasieu parishes racing to evacuate ahead Hurricane Laura are workers at port, petrochemical…