More than Meets the Eye
Veolia is eager to highlight its lesser known expertise in smart services and the oil and gas industry
Veolia is best known for its water services, but Xavier Joseph, CEO of Gulf Countries, is eager to highlight the company’s lesser known expertise in smart services and the oil and gas industry.
How long has Veolia been active in the Middle East?
Our first project was building a thermal desalination plant in Saudi Arabia in the 1960s and we have been building desalination plants since then all over the region. Our business really took off around 2004/05 when we started signing long-term contracts, like the Sur project in Oman for which we won a 25-year contract.
So the business as it is today is around 10 years old. Our joint venture with Majid Al Futtaim for the energy business started in 2001/02. Before that we were only an EPC company for desalination plants, not as a service provider.
We are currently active in Kuwait for desalination, Bahrain for energy and district cooling, in Qatar for energy and wastewater, in the UAE for almost all our businesses, water, wastewater, waste management, energy and in Oman. We are not working anymore in Jordan but we have won a new contract in Iraq. We have a little business in Egypt but we’re hoping to do more. In Saudi we have several small contracts and are expecting more work.
What is your most recent project?
Probably the desalination component of the Az Zour North power plant in Kuwait. however in July we signed a contract for the capacity extension of the Sur desalination plant which is bigger in turnover terms.
Which of Veolia’s business is seeing the biggest opportunities here?
We have three main business segments but only the first one is really active here. The infrastructure needs of the region are still great.
These countries still need to build big infrastructure projects – desalination, waste water treatment, waste to energy, district cooling and so on – and our aim is to be involved in these. This is the first business segment.
After that you’ve got two business areas that we are trying to advance. The first is related to all things ‘smart’ which is obviously very fashionable at the moment.
We can help optimise the energy and water consumption of buildings, offices, malls, etc, which is a key issue in this region as it’s one of the driest in the world and has the highest per capita energy consumption on earth.
These are big issues and we can provide services to help public authorities to improve efficiency. Endetec and Homerider are companies we own that develop the technology to do this – sensors, smart metres, etc.
We are also big in waste to energy. We have technologies to convert every kind of waste into energy. It can be sludge from wastewater treatment plant, it can be domestic or industrial waste, plastic or organic.
There are some forecasts that predict Saudi Arabia will be buying oil in 20 years because they will burn 100% of it internally to meet their own power needs. So alternative sources of energy will become very important and we can provide solutions for that.
The other business segment that is less well known is providing services to the oil and gas industry here. There’s a lot of business out there and we want to be a service provider. We already have contracts in Saudi Arabia and the UAE.
We have a contract with BP to build and operate a water treatment plant in Kazan. They need water for the workers and for the production of the gas. Industrial cleaning in refineries and issues related to soil contamination are other areas we are looking at. There are a lot of environmental issues for the oil and gas companies to deal with and Veolia is a provider of solutions to these issues.
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Why haven’t you made progress with these other segments?
Infrastructure is the only segment that is growing right now because all issues related to ‘smart’ technology, waste to energy, network efficiency, etc is not very developed here. There is lots of talk about these things but the market is not mature, the business models are not mature. His Highness Sheikh Mohammed wants Dubai to be a smart city but the public entities here don’t really know how to go about procuring these services.
When you launch a tender for a desalination plant for example, or a road, a bridge, a metro, it’s something quite easy to procure. But ‘smart’ services is more abstract and that’s part of the reason this segment is not so active.
There are waste to energy projects in all these countries but it’s expensive. It’s far more expensive to build an incinerator to burn waste than dig a hole in the desert. Everybody agrees it’s a great idea but funding has not been set aside for this. The political will to do it is there at the top level but there’s a gap between that and the operational level.
So what will be the turning point?
The situation varies from country to country. Kuwait launched a very big incinerator but I think they will face issues to fund it.
I’m not sure exactly what will be the turning point but we’re very eager to see it and I think it will happen between two and five years and that’s why we are very active here because we don’t want to miss it.
The Dubai Expo in 2020 and the Qatar World Cup in 2022 will be drivers of this. They have taken the decision to try to be more environmentally friendly.
We are working on tenders worth $3bn in Qatar alone and there is very, very strong competition. They always choose the lowest bidder and it’s difficult for us to compete with that.
Which country presents the biggest opportunities for Veolia?
Today, no doubt the biggest opportunities are in Qatar because of the World Cup. They are building very large added desalination capacity. Qatar presents the biggest opportunities in waste water as well. The Oman market is very dynamic in desalination because they are facing very strong growth in water consumption. There is a big project in Dubai to extend the Jebel Ali wastewater treatment plant.
Are large scale projects still the future for veolia in this region?
Absolutely. Scale is important. If you build a 500,000 cubic metre per day wastewater treatment plant it will never cost you five times as much as building five 100,000 cubic metres per day plants.
With no space issues here in the desert the focus is on building big facilities. And when it comes to the piping it’s so easy to dig the trenches for the pipes, it’s not like building in the mountains of Switzerland. So for this reason we will continue to build large projects. For smaller projects we are not competitive against local or regional companies.
We are perceived as a foreign company, and of course we have our headquarters in Paris, but my aim is to convert that image into a ‘glocal’ company.
We are very proud of our worldwide expertise and it’s thanks to this that we can be a very reliable and efficient partner for public authorities in this region.
Our joint venture with Majid Al Futtaim is the best example of that. Through this venture we operate the cooling technology at Ski Dubai at the Mall of the Emirates. And we want to replicate this kind of business so we are in talks with lots of local companies to set up similar joint ventures.