GAS: A breath of fresh Air

24 October 2003
At the end of a sleepy residential street in a Paris suburb, overlooking the meandering River Marne, stand the gleaming, high-tech offices of Air Liquide. From here, one of the world's leading manufacturer of industrial gases plots its expansion across the globe.

Looking overseas for business opportunities is by no means a new departure for Air Liquide. Less than five years after its creation in 1902, the company had already established a presence on the other side of the world in Japan. A century later and Air Liquide has a presence in 65 countries, with more than 1 million customers worldwide and a global staff of 30,800 employees.

For Air Liquide, global expansion is not an option, but a necessity. 'Our core activity is the manufacture of industrial gases such as oxygen, nitrogen and argon,' says Jean-Luc Bretesche, vice-president for Middle East development. 'It accounts for a large percentage of total sales - however, one characteristic of our gases is that you cannot ship them. Demand cannot be met by expanding production at a central facility, so as a result we need to be present in those countries in which we sell the gases.'

Until recently, Air Liquide's presence in the Middle East and North Africa had been limited to those countries with strong historical and linguistic ties to France. Activities in the Francophone countries of the Maghreb and in Lebanon, where Air Liquide established an office in 1932, have focused on what the company terms industrial customers - small to medium-sized businesses requiring relatively small quantities of gas.

In 2002, driven by a new round of refining and petrochemicals projects, the company began to focus its sights more closely on the Middle East. 'Today, the region accounts for a very significant percentage of the world's new refining and petrochemicals plants,' says Emmanuel Schmidt, vice-president of development for the global chemicals division. 'The emphasis for Air Liquide now is not only on supplying the small customer, but also on becoming a service provider to the corporate giants, particularly in the Gulf.'

For such a technically-oriented company - almost all staff, including those in sales and marketing, have a technical background - it is not only the proliferation of projects in the region that is attractive, but also their scale. 'The plants being built in the Gulf are very large, with the result that any successful sale is instantly very significant business,' says Pietro Di Zanno, global manager of the oil and gas division. 'The company is keen to rise to the technical challenges of developing complex large projects. We can meet their need with our expertise, and there are very few other companies that can match us in that.'

With its enormous gas reserves and commitment to downstream development, Qatar was always going to be an attractive market for Air Liquide and the company lost little time in establishing its name in the state. In May, it signed a $115 million contract to build the Gulf's first helium plant. 'The Qatari deal is a real success for us,' says Di Zanno. 'On the one hand you have the equipment sales contract, involving the supply of the helium separation plant, which is itself something of a technological feat for Air Liquide. On top of that there is also a long-term sales agreement entitling us to purchase helium from RasGas [Ras Laffan Liquefied Natural Gas Company] for supply to our customers all over the world.'

Doha's embracing of the gas-to-liquids (GTL) process is also a promising development for Air Liquide. 'The GTL application requires huge quantities of oxygen,' says Schmidt. 'We have already developed substantial air separation units suitable for GTL facilities, and Qatar certainly fits our customer profile.'

The company's determination to break into the regional market has resulted in Air Liquide's name appearing in places where few would expect to see it. The company was preselected as part of the Al-Zamil consortium to bid for Saudi Aramco's independent power projects (IPPs). The move was a strategic one, with Air Liquide interested in the development of only one of the four IPPs on offer. 'Once Aramco made clear that it was all or nothing, we withdrew from the group,' says Wilfried Manet, managing director of the Riyadh office. 'We're not in the IPP business per se - our interest is purely in serving industry and facilitating the lives of our customers. We're not looking to produce electricity for a national grid.'

Project links

The kingdom is nevertheless a key market for Air Liquide, as the company's choice to establish a new office in Riyadh in December 2002 shows. 'Just look at the project links to our main markets,' says Schmidt. 'In Saudi Arabia there are not only oil and gas projects linked to Aramco, but also major petrochemical projects linked to Sabic and other private investors, and these are of particular interest to us.'

Air Liquide is drawn to the steady stream of projects in the kingdom. 'In much of the Gulf, there is often a major project that attracts everybody's attention, but once it has been implemented, then companies have to wait several years for another to come by,' says Bretesche. 'In Saudi Arabia, the flow is continuous.'

While the Middle East accounts for only a small percentage of Air Liquide's total Eur 7,900 million turnover, the company is confident that business in the region is set to grow in the coming years. 'Clearly, given the amount of activity there, opportunities are bound to grow,' says Di Zanno. 'As the economies in the region deepen there is increasingly more scope for equipment sales of our technologies. We are keeping a close eye on markets throughout the Gulf from Oman to Iran and we are ready to move in when the opportunities arise.' n

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