Business Maverick: Down on the bayou, Sasol’s mega-project sings the blues

I’m goin’ down in Louisiana, Baby, behind the sun…Well, you know I just found out, my trouble just begun.” So sang US bluesman Muddy Waters in a song that could be an anthem for Sasol’s fumbling foray into the southern US state.

It is now estimated that Sasol’s Louisiana Lake Charles Chemicals Project will cost between $12.6-billion and $12.9-billion, 45% more than originally envisioned in 2014. The final product will be an ethane cracker and chemical plant that will triple the company’s chemical production capacity in the United States. The latest in a series of cost overrun announcements was made in May and last week the company delayed its annual results while it completes a review of the project’s problems.

Labour costs in the bayou were buoyant because Sasol was not the only show in town. Japanese contractor Chiyoda lost more than $950-million in the six months to 30 September 2018 because of surging labour costs on a shale-gas plant it was building in Louisiana. The dearth of skilled labour in the North American Gulf region was partly due to a scramble to bring shale projects online.

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