Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

French Water Company Veolia In The Persian Gulf : What Are The Keys For Its Success?

By S. Mac Den, Business Strategy Consultant

A once-national water company, Veolia Water, has been recently attracting attention with multiple achievements in the Middle East. It seems to have understood what most other companies still don't see : water is the missing piece to the Middle East puzzle, and only the very best methods and technologies will pass muster.

The Water Stress Index in Qatar (2nd worldwide) is so staggeringly high that any industrial application involving water (ie. most of them), which doesn't perfectly master the hydraulic parameter is set to collapse. The situation is as simple as it is tricky. On the one hand, the Persian Gulf is low on sweet water. Extremely low. On the other hand, it needs a lot of water now, and it will need just as much later, if not more. The area's development was bogged down for centuries for precisely the lack of water. So how come it is booming now?

In order to sustain its development, the Persian Gulf has to carefully select its industrial partners and settle for nothing but the very best. In recent years, Veolia Water has been implementing cutting-edge technology in the area, with industrial water applications, wastewater management systems, and desalination units. But would technical expertise be enough to explain the success of the French water company on its own?

State-of-the-art technology

Increasing worldwide pressure to enhance environmental protection has brought Veolia Water to adapt its strategy along two main axis: reduction of carbon footprint and reduction of water footprint. The grounds for this strategy shift are double. On the one hand, Veolia Water is aware that environmental care is the way of the future. On the other hand, simple business goes that way : a large part of European countries (its original and main market) and some North-American states have voted carbon taxes. Customers around the world therefore demand environmentally efficient solutions. This carbon footprint reduction program, composed of reviewed processes, enhanced machinery and new performance indicators, pushes the company towards constant innovation. The trend is global, and Veolia knows that, to maintain its leading position on the global market, it needs stay ahead of the green performance race. It had the opportunity to reveal its crown jewel in 2011, after having created the Zero Liquid Discharge (ie. pollution-free) hydraulic system of Pearl GTL, Qatar's brand new (and largest in the world) Liquid Natural Gas plant.

An adventurous attitude

The French company, created in 1853 by Napoleon the third, was initially in charge of supplying the cities of France with sweet water. Back then, the industrial assignment was easily within reach of modern technology, as the process of wastewater management was relatively simple : filter once with a gross sieve, filter again with a finer one, let it rest, inject bacteria that will "eat" what is left in the water, and finally leave the water rest in the sunlight, to kill the bacteria. All of that is child's play in a region where there is plenty of water, and plenty of sunshine. But since, Veolia Water has developed its industrial wastewater capacities to reach a new target : bringing clean water in extreme environments. The latest Petrobas offshore platform in Brazil gave Veolia Water an opportunity to do so : design a system that will provide a small city with clean safe water, when there is nothing but seawater around, and master the industrial hydraulic applications as well. As a result, Veolia feels at home when it is called upon to manage water systems in the Persian Gulf. Several projects have already been carried out by the French giant : wastewater network management in the city of Doha, capital of Qatar; and design the hydraulic system for the most advanced gas-production plant in the world in Ras Laffan. In Bahrain and Oman, Veolia has addressed the problem of frequent water cut-offs with elaborate thermal desalination seawater plants.

Ecological and social dimension

By bringing water to the desert, Veolia is fully aware that it is taking part in a groundbreaking transformation. Qatar, for instance, was a poor country for centuries until the 1950s. Then oil spurted out, showering money onto the region. But without proper water management, oil drilling is doomed to low-level exploitation. That would hugely limit the economic activity in the region, and keep living conditions way below what they are today. Gigantic gas fields are just starting to be tapped, and need industrial water critically. On top of that, these activities are notorious for their pollution potential. It is therefore paramount that these refineries not contaminate the little water there is in the region. The high-level technology is dedicated to allowing business to flourish in the region, but with a long-lasting vision, as Veolia Water is aware that tapping resources while destroying the environment would defeat the purpose. As an example of its environmental dedication, the company is developing its desalination activity away from the thermal process (heating water to evaporation to separate it from the salt - a polluting solution) towards the clean 3-pass reverse osmosis method : pressuring the water through a membrane, a process similar to an expresso-machine.

Choosing partners

Veolia has adopted a strategy of carefully chosen joint ventures. These business partnerships rely on technical added value : binding the top engineering firms to the top water-management company. In the case of Pearl GTL, all the parties at play (contractors or clients) were high-profile companies leading their market : Shell, the world-known Dutch oil company and Qatar Petroleum, the national oil- and gas-producing company of Qatar (one of the world's greatest oil and gas producers) were the clients. And on the contractor side, Veolia Water worked alongside the Chiyoda Corporation, the leading Japanese engineering company.

With many achievements behind it, several projects on the way, and much more work to be done in the area, Veolia Water is set to continue its fast-growing development in the Persian Gulf. By working only with the best, applying massive R&D to its desalination activity and wastewater management systems, and vowing to protect the fragile ecosystem, the French water-management company has achieved strong operational capacity in the area, where it now feels at home.

Stocks: OEY