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Sasol CEOs step down in wake of Louisiana project cost overruns

Shake-up is the result of mismanagement of Louisiana project

by Alexander H. Tullo
October 31, 2019 | A version of this story appeared in Volume 97, Issue 43


A photo of Sasol's new complex in Louisiana.
Credit: Fluor
Sasol's new complex in Louisiana suffered billions of dollars in cost overruns.

Sasol’s two joint CEOs, Bongani Nqwababa and Stephen Cornell, have stepped down in the wake of a board review of billions of dollars in cost overruns at the South African company’s massive Lake Charles Chemical Project (LCCP) in Louisiana.

“It is a matter of profound regret for the board that shortcomings in the execution of LCCP have negatively impacted our overall reputation, led to a serious erosion of confidence in the leadership of the company, and weakened the company financially,” the board said on Oct. 28.

Sasol’s plant is one of the most ambitious of the dozen or so chemical projects that have gone up on the US Gulf Coast to take advantage of inexpensive shale gas. It includes an ethylene cracker and downstream polyethylene, ethylene glycol, ethylene oxide, and alcohol facilities.

Sasol estimated a cost of $8.9 billion when it green-lighted the LCCP in October 2014, but major problems soon surfaced. It faced unprecedented weather delays, and expensive work was required to deal with poor subsurface conditions. Wage increases caught the company off guard. In 2016, with the project half finished, Sasol raised its estimate to $11 billion. The LCCP

then faced more hurdles, including Hurricane Harvey and the repair and replacement of defective components. In May, Sasol raised its cost estimate to between $12.6 billion and $12.9 billion and launched a review conducted by independent consultants.

Their report blames the project management team, which it says “engaged in conduct that was inappropriate, demonstrated a lack of competence, and was not transparent.” The reviewers found no evidence that the team “acted with an intent to defraud,” however.

The report also says top Sasol managers insufficiently supervised those running the project and “allowed erroneous and/or unsupported reporting by the LCCP leadership to go unchallenged.”

The CEOs, who reached “amicable mutual separation” agreements with Sasol, are being replaced by Fleetwood Grobler, its executive vice president of chemicals.

Sasol says it has already disciplined the executive in charge of the LCCP. The company didn’t name that person, but in February it announced the retirement of Stephan Schoeman, who was responsible for the project.



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