Contractor Clough faces pressure to deliver Waitsia project on time

Embattled contractor Clough is under pressure to deliver the onshore gas project after owners Mitsui and Beach Energy said they expect supplies as planned.

Clough has struck problems on the Waitsia gas project in WA.

Embattled West Australian contractor Clough faces pressure to deliver the state’s Waitsia onshore gas project after owners Mitsui and Beach Energy said it expected first supplies to be delivered from the facility on schedule in 2023.

In an announcement to the Johannesburg Stock Exchange late on Monday, Clough’s parent Murray & Roberts pointed the finger for slashing its earnings on the contractor’s Waitsia scheme and a $US650m ($1bn) petrochemicals plant under construction in Texas, Project Traveler.

The disclosure by Clough’s parent company followed The Australian revealing the contractor had put itself up for sale, inviting joint venture partners and rivals including Italy’s Webuild and Saipem to participate in a sales process. Despite the pressure on Waitsia, Mitsui said it was confident the project would be delivered as planned.

“Mitsui and our contractor Clough are working collaboratively to deliver on our commitments to the local community, the state government and our customers,” a spokeswoman said. “We look forward to the completion of the Waitsia Project as planned and the delivery of first gas to market next year.”

Clough chief executive Peter Bennett.

Beach in August laid out a string of delivery risks, including the potential for Waitsia gas project delays beyond the second half of 2023. Credit Suisse analyst Saul Kavonic said this week it was likely Mitsui and Beach could come to Clough’s rescue, given the potential loss of revenue if the project was not completed on time.

Italy’s Webuild – Clough’s joint venture partner on Snowy 2.0 – is the only company remaining in the early negotiations to buy the WA contractor, sources told The Australian.

However, fresh uncertainty over Clough has also raised concerns among unions over the potential implications for the successful delivery of the big Snowy expansion scheme.

“The (Australian Manufacturing Workers’ Union) is concerned by reports that Snowy 2.0 contractor Clough is facing contract blowouts and dealing with a shortfall in working capital, given the impact the company’s strife is likely to have on the project,” the union’s NSW secretary, Cory Wright, said. “We’ll keep up the fight to improve conditions for workers on the project, pushing Clough and its potential successor to do better.”

The decision by Clough and Murray & Roberts to pursue a deal may have been forced partly by financial difficulties. Clough has endured problems in paying subcontractors and suppliers, sparking speculation the company would be tipped into voluntary administration unless its parent company was able to inject more funds.

Originally published as Contractor Clough faces pressure to deliver Waitsia project on time