Despite heavy speculation on the subject, French water companies are confident that the political fallout from the war in Iraq will have little long-term impact on their commercial prospects in the region. 'Politics is one thing, business is another,' says Gerard Canton, deputy managing director of desalination expert Sidem. 'French companies have formed strong alliances with US firms over the years, and the war in Iraq has had no impact on these business relationships.'

The de-facto embargo on French-led participation in Iraq's post-war reconstruction phase is an obvious constraint for some companies, but one that many expect to get round by taking on work as subcontractors.

'Having spent so much time in the past working in Iraq we have collated vital data on the country's water resources,' says Jean Marc Usseglio, vice-president at Sogreah Consulting. 'Already several UK colleagues have contacted us for information from these documents. I'm sure they will start work there soon and they know that they will save time and money by working with us.'

Quality, not quantity

For other companies, Iraq's plentiful natural resources mitigate the amount of business that is available. 'Iraq has only a few kilometres of coastline, so that all but rules out desalination opportunities in the first place,' says Canton. 'Besides, increasing supply is not an issue. The chief concern now is the quality, not the quantity of water available.'

Elsewhere in the Gulf, French firms are hopeful that the project delays caused by the US-led strike on Iraq will not limit business opportunities in the region for long. 'The Gulf is our most important growth market and the war has certainly had an adverse impact on work there,' says Canton. 'This is particularly the case with those projects requiring private financing, as investors are naturally cautious and unwilling to commit funds when all the news coming out of the region is focusing on war.' Nevertheless, Canton is sanguine about future prospects. 'If you look back to what happened in the immediate aftermath of the first Gulf war, then you see that business was extremely slow that year, but it picked up rapidly in 1992. The same thing is happening today, so we can look forward to a major upsurge in 2004.'

The hiatus is nevertheless unwelcome, interrupting Sidem's introduction of multi-effect distillation (MED) technology into the Gulf. For years the region has dismissed MED in favour of the alternative multi-stage flash (MSF) desalination technique, but now, says Canton, opinions are changing. 'The tide is turning and more and more people are learning the benefits of MED. The two technologies cover exactly the same applications, but as soon as you are talking about power and water plants, MED is able to offer an important degree of flexibility and the economics are preferable because of the lower investment and operation costs.'

The UAE has already come down firmly in favour of MED. Abu Dhabi has commissioned from Sidem the world's largest MED complex, for the Taweelah A1 independent water and power project (IWPP). In addition, it has ordered a 10 million-gallon-a-day (g/d) expansion at the Al-Nakheel power plant in Ras al-Khaimah and a further 5 million g/d of desalination capacity for the Ajman power plant.

Now Canton is hopeful that other governments will follow suit. 'In Saudi Arabia, only Saudi Aramco has employed MED technology in its operations. However, SWCC [Saline Water Conversion Corporation] has been looking carefully at the process, with representatives from the company recently visiting Taweelah, and we are hopeful that it might open projects to MED in future.' Kuwait is another market with little experience of MED. 'We may be partly to blame for this,' concedes Canton. 'We haven't really explained the process to the authorities there on a large scale. If you want to promote change, you have to be present on a permanent basis, and we don't have any offices there. But it is not too late to rectify this, and it is clear that we have to improve our presence in Kuwait if we are to win future contracts there.'

Sogreah too understands the importance of regional offices. 'Before our management buyout from Alcatel [in 1998], we never had any permanent offices overseas,' says Usseglio. 'But in such a competitive business it is vital to establish good contacts in the countries in which we work, so since then we have set up subsidiaries in Cairo and Morocco and plan to upgrade the office in Algeria to a subsidiary by the end of the year.'

As the choice of location suggests, North Africa has always been a key overseas market, not just for Sogreah, but for all of France's major water companies, much to the dismay of their English-speaking rivals.

Haven

Throughout the Maghreb, French firms scoop the creme de la creme of water sector contracts, from dam building in Algeria to Sidem's impressive collection of MED plants in Libya. In the latter, the company has installed desalination plants with total capacity of 274,000 cubic metres a day, and is well placed for further contracts. Morocco, too, is a haven for French firms. Having secured the 25-year concession to supply utility services to the northern towns of Tangier and Tetouan in 2000, Vivendi Environment's successor Veolia Water went on to take over the management of the Rabat-Sale utilities from a consortium led by Spain's Dragados in 2002. In Casablanca, Veolia's rival Ondeo is part of the consortium managing and operating the water, wastewater and electricity services in the kingdom's business capital.

History

For Sogreah, the company's activity in North Africa has largely been limited to public-sector clients. 'It is more a case of history than strategy. We have been in the countries of the Maghreb since they gained independence and over such a long time we have come to know the traditional public-sector clients well,' says Usseglio. 'We always prequalify for work, and when faced with the choice, we prefer to assist the owner on projects rather than act as the engineer. The volume of available work is significant, and as a result we have never really tried to expand our regional activities towards the private sector.'

However, in the Gulf, where Sogreah is returning after an absence of more than a decade, the company sees strong opportunities in the private sector. 'In 1998, we embarked on a strategy to develop our business for private-sector industries,' says Usseglio. 'With our high level of technical expertise and strong emphasis on research and development, we knew we could offer clients good risk management and innovation.' Initially, Sogreah did not specifically target the Middle East market. Rather, it went direct to the European and US oil and gas giants, which were quick to see the benefits of hiring a company with such strong maritime skills to advise on optimising the operation of coastal oil and gas terminals.

Competence

'Naturally, a large number of these plants were in the Middle East, and very soon we found ourselves advising on maritime and port infrastructure across the Gulf,' says Usseglio. Sogreah's competence in addressing the region's complex hydraulic and environmental issues, combined with the detailed information it was able to provide from its previous experience in the Gulf, ensured rapid expansion of the company's Middle East activities. 'Much of the work came by word of mouth,' says Usseglio. 'We would do a job for Total, and it would mention our name to their competitors and next we would be invited to work on a project with Shell.'

In order to strengthen its position in the region, Sogreah in October opened a new office in Dubai - Sogreah Gulf. 'So far, the bulk of our private-sector activity in the region has been in maritime services for the oil and gas industries. With the new office, we hope to broaden this, winning private contracts for other core areas of the business,' says Usseglio. 'At the moment, private-sector work accounts for around 20-25 per cent of activities, but in 10 years we hope to increase it to half of our global operations.'

At the same time the company is keen to increase public-sector work in the region too. It has already produced masterplans for tourist areas and a proposed new town in Bahrain, and will soon sign a strategically significant contract to do feasibility studies for the interconnection of the GCC drinking water network. 'Sogreah's name is already well known within ministries from our earlier work in the region and we need to rekindle these contacts in order to win more public work,' says Usseglio. 'To do that we have to be close, and the Gulf office is an important step towards achieving that goal.'