A common refrain among Arab contracting companies these days is the need to look beyond the confines of their home markets. Having developed their capacity and skills, local business alone is no longer enough to fill the order books. The phenomenon is far from new but more Middle East bidders are appearing on bid lists in unexpected places.

Anyone looking for lessons on how to become a truly regional company would do well to look at the example of Consolidated Contractors International Company (CCC). Founded in Aden nearly 50 years ago by a trio of Palestinian engineers, CCC is active in more than a dozen Arab countries, several African states, Central Asia and the Caribbean. It has acquired companies in the US, the UK and Italy and is heading for revenues of around $1,300 million this year. Expansion has been at the heart of the company's ambitions from the outset and is very much in mind today. Not only is CCC continuing to expand geographically, it is also moving into new areas of expertise.

'We have pretty much mastered the value chain in construction,' says Samer Khoury, executive vice president for operations. 'We need to move towards engineering and development. This is the only way to move along the value chain.' In the most striking expression of this new approach to business development, CCC has committed to two independent power projects (IPPs) as an investor and developer, one of which is already well underway. The core business of the company remains its heavy engineering and construction for the oil, gas and petrochemical industries, centred on the Gulf states, but CCC has long pursued a policy of horizontal expansion through diversification, investment and acquisition.

An early example is National Petroleum Construction Company, the Abu Dhabi-based joint venture in which CCC has a 30 per cent interest. Founded in 1973 with Abu Dhabi National Oil Company (ADNOC) to fabricate steel structures for the onshore and offshore oil and gas industry, NPCC contributed close to a third of CCC's total sales in 1999.

More recent examples include the 1988 acquisition of The Morganti Group, which is made up of three subsidiaries with $300 million of annual construction business in the US, and ACWa Services, a UK-based environmental engineering company, which was bought and integrated into CCC in 1991. Milan-based Sicon, which does engineering for oil and gas pipelines, was a more recent purchase. A structural steel firm in Egypt, set up as a 50:50 partnership with the local Orascom, is another such venture and is now producing about 30,000 tonnes a year for the local market.

Geographical diversification has been another distinct trend that Khoury expects to extend progressively. 'We are becoming more active in Africa,' he says. 'Ten years ago we had nothing. Now we have Egypt, Libya, Nigeria, Kenya, Mauritania, Ethiopia, Botswana and Malawi.' Outside Egypt, where it works extensively with private sector clients, CCC is careful to limit its exposure to contracts in sub-Saharan Africa to those that are supported by international agencies. The African projects, which are mostly road building and water supply schemes, are financed by aid agencies such as the World Bank, The European Investment Bank, the Kuwait Fund for Arab Economic Development and the Arab Fund for Economic & Social Development.

A similar appetite for new business has driven expansion into the Caspian region, so long as the risk is managed carefully. This has meant targeting oil and gas projects that involve top quality international partners. Khoury says that CCC has about $70 million worth of work in hand in the region with Bechtel and Snamprogetti for BG, Agip and Lukoil. 'You have to make sure the oil companies are calling the shots,' he says.

While the geographical and technical expansion will continue, CCC's main business is generated in the Gulf. Even in 1999, when activity in the Gulf was subdued, five GCC states accounted for 42 per cent of all the projects awarded to CCC. Khoury cautions that the sizzling oil prices of recent months are unlikely to trigger a dramatic increase in new business this year. 'We feel it will be a slow year,' he says. 'We envisage there will be less investment in the downstream. At current prices the returns are enough from just selling oil.'

New activity in the region is being driven by the need to develop gas resources rapidly. This is to meet the growing demand from electricity generators and industry, and to release more oil for export. Another driver is the power sector itself, which is being ignited by the increase in private power developments. CCC has become a direct player in this process through its investments in IPPs in Gaza and Yemen. Khoury expects the next 12 months to create power project opportunities at Shuweihat in Abu Dhabi, Ras Abu Fontas in Qatar, Sharqiyah and Barqa in Oman and in Egypt.

Saudi Aramco, ADNOC and Qatar General Petroleum Company all have active gas development programmes but the biggest prospective scheme, the Abu Dhabi-sponsored Dolphin project, could generate huge contracts if the developers can pull it off. Despite a string of memorandums of understanding (MOUs) with both suppliers and buyers, many details of the project remain to be hammered out. Khoury notes that the project has the strong support of the GCC and has been orchestrated at the highest level. 'The walk away point is going to be the price of gas. It's a question of whether Qatar is going to give on the price to make the economics of the project work,' he says.

The most active market continues to be Saudi Arabia, where CCC works almost exclusively on projects for Saudi Aramco and Saudi Basic Industries Corporation. The only exception at the moment is the civils contract on the 2,400-MW Ghazlan power station for Sceco-East, where CCC stepped in to replace a Korean contractor that was unable to deliver.

Last year, the company secured its largest single contract in the $135 million award from Saudi Aramco for the Hawiyya gas processing plant. It is also active on two large expansion schemes at Sabic companies - Saudi-Yanbu Petrochemical Company (Yanpet) and Eastern Petrochemical Company (Sharq).

Elsewhere in the Gulf, the company has projects underway in most markets. This year it has already won a sizeable contract in Oman as part of the group building the Fahud-Sohar gas pipeline. It has also finally signed the contract for water injection facilities in the Minagish oil field in Kuwait and secured the civils package for the Maqta-Taweelah pipeline in the UAE.

In the Levant, Jordan provides a steady diet of contracts, particularly in the water sector, where the international arm of Morganti has won projects funded by the US Agency for International Development. Last year CCC won a $22.6 million contract on the Aqaba railway concession as part of the international consortium that will operate and manage the Aqaba Railways Corporation. The scheme secured $55 million in funds from the Overseas Private Investment Corporation (OPIC) of the US. CCC hopes it can team up with the agency on other projects in the region - notably in Gaza and on the IPP at Marib in Yemen, which it is promoting with US-based Delma Power.

In CCC's former stamping ground of Lebanon, where the company was based until the start of the civil war in the mid-1970s forced the move to Athens, business has slowed after the burst of post-war reconstruction. The second phase of Beirut international airport scheme, which was the largest project executed by the company as part of the reconstruction effort, is expected to open in May. Prospects for follow-on work are limited. 'The market has been quite dead because of the government's budget concerns,' Khoury says. 'I don't see much coming forward.'

Looking to the future, Khoury has no doubt that the pursuit of new business opportunities will oblige CCC not only to develop new skills but also to venture into new markets. 'The next areas where I see there will be a lot of work are Iran, Iraq and the CIS,' he says. Daunting though such prospects may seem, the track record suggests that if any contractor can make a success of them, CCC can.

PK