Sasol Ltd. and LyondellBasell Industries NV have entered an agreement to form a 50-50 joint venture (JV) for ownership and operation of certain assets that form part of Sasol’s Lake Charles Chemicals Project (LCCP), an integrated ethane cracker and downstream derivatives complex under progressive commissioning since 2019 in Westlake, La., near Lake Charles (OGJ Online, Jan. 14, 2020; Aug. 30, 2019).
As part of the proposed $2-billion deal, LyondellBasell will acquire 50% interest in act as operator of LCCP’s 1.54-million tonnes/year ethane cracker, 420,000-tpy low-density polyethylene (LDPE) unit, 471,000-tpy linear low-density polyethylene (LLDPE) unit, and associated infrastructure, LyondellBasell and Sasol said on Oct. 2.
Following close of the transaction—which is scheduled by yearend 2020 pending customary regulatory approvals as well as approval by Sasol shareholders—the integrated polyethylene JV will operate under the name Louisiana Integrated PolyEthylene JV LLC.
Under terms of the transaction agreements, each JV partner will provide pro-rata shares of ethane feedstocks and will offtake pro-rata shares of cracker and PE products at cost. Some Sasol US employees also will become employees of LyondellBasell.
Sasol, however, will retain full ownership and operational control of its Lake Charles Research and Development complex, the 460,000-tpy Lake Charles East Plant ethane cracker and US performance chemicals business assets in Lake Charles—which produce Ziegler alcohols and alumina, ethoxylates, Guerbet alcohols, paraffins, comonomers, linear alkyl benzene, ethylene oxide, and ethylene glycol—as well as access to competitively priced on-site ethylene to ensure value-chain integration, the company said.
Sasol said the proposed selloff of half its interest in the Lake Charles assets comes as a major step achieving its financial and strategic objectives by reducing net debt and rapidly shifting its portfolio towards specialty chemicals.
For LyondellBasell, the planned partnership enables the company to expand in a core area of its existing business without customary construction risks associated with new project execution, the operator said.
The planned partnership for Sasol’s Lake Charles assets follows recent startup of remaining LCCP installation earlier this year, as well as ongoing commissioning activities at the LDPE plant, which is the last of LCCP units to come online (OGJ Online, June 24, 2020).