Financial problems ahead for nuclear projects in Australia – warns x-Santos CEO

scrutiny-Royal-Commission CHAIN

x-Santos CEO says megaprojects tough in Aust and nuclear needs
upfront revenue December 10, 2015, SMH,  Simon Evans
  An Australian nuclear industry would have to overcome very high construction costs and would only be built if there is certainty beforehand that it can generate secure revenue over a long period, former Santos chief executive David Knox said.

Mr Knox said that assuming the construction costs of overseas megaprojects can be directly translated to be similar in Australia is fraught with danger. That’s because the logistics, large distances, higher labour costs and finding the right skilled workers makes it more challenging.

“This can be a trap, of course,” Mr Knox told South Australia’s royal commission into the nuclear industry on Thursday.

“The whole logistics exercise of doing a megaproject in Australia does make it more challenging.”

He said the large geographic distances from specialist manufacturers of equipment offshore, the need to import certain levels of specialist expertise and skills, and the higher costs of labour are influencing factors. He gave the example of an Australian worker costing an overall $100 an hour, compared with $50 an hour for a Gulf of Mexico project in the northern hemisphere.

He emphasised that Santos had no wish to enter the nuclear industry, but he was giving evidence on the broad issue of building large infrastructure projects and the potential pitfalls……

A nuclear project would need to demonstrate at the start that it could generate revenue for a long time, similar to the LNG contracts that Santos had signed, which lasted for 20 years……..

The head of the nuclear royal commission, Kevin Scarce, is due to hand down preliminary findings in February, ahead of a final report in May 2016,  on whether South Australia should expand into nuclear waste storage, enrichment and power generation…….


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