Walid Sfeir – President, Sofregaz – France
In April 2014, Walid Sfeir took the helm of Sofregaz, a longstanding engineering company specialized in gas. The president emphasizes the company’s ability to deliver a comprehensive set of services, in the LNG sector notably.
Sofregaz boasts nearly 60 years of history as an engineering firm specializing in the gas market. Could you explain the rationale behind the acquisition of Sofregaz by your private equity firm?
Sofregaz belonged to an important EPC player in the industry until we acquired the company about a year ago (April 2014). We believed in Sofregaz’s potential and know-how. Many players criticize the high labor costs and rigid labor market found in France, but we have faith in high added value, productivity and talent of French engineering. The oil and gas industry survives in France because of its deeply entrenched network of research centers, universities and headquarters of important players: Total, Technip and Engie. France benefits tremendously from this cluster of know-how, and capitalizes on innovative solutions and technology to consolidate its competitive advantages. There is actually a trend in the industry to revert back to more expensive and high value added Engineering know-how.
In the last 10 years, oil and gas players have consistently sought cheaper costs and savings. Although it is still natural to reduce Capex, many players realized that what seemed like cheaper ventures did not always materialize. Regarding TCO (Total Cost of Ownership) many players have underestimated operating expenses, costs of studies and engineering, equipment life, transport and so forth. We hear from our clients that they are willing to spend 15 to 20% more on engineering in order to achieve substantial savings on the life value of their project. Sofregaz is an expensive company to run due to the cost structure, but once again we emphasize on quality engineering that generates reliability, smarter solutions and reduced Capex.
Sofregaz is now an independent engineering player, which allows us to work with all clients. Sofregaz provides services from the wellhead to the refinery including gas treatment and gas gathering, transportation on pipelines and re-gas.
Since we acquired the company, we have concentrated our efforts on Sofregaz’s core activities. We are currently focusing on LNG and receiving terminals in particular. Sofregaz has developed an expertise in the LNG process; it boasts a tradition in process engineering and receiving LNG terminals and builds on these experiences to move up in the value chain to work on solutions like mid-scale regasification terminals, LNG bunkering solutions, vaporizers and recondensers modular solutions.
As you just mentioned, Sofregaz operates on the full spectrum of the gas chain and delivers a variety of solutions including Gas gathering & Treatment, underground storage, LNG chain and pipeline transmission. What constitutes your core business and how would you describe Sofregaz’ uniqueness and edge in the famous “EPC world”?
The first distinctive feature I wish to highlight is Sofregaz’s longstanding presence in certain key markets including Algeria and Iraq. Sofregaz has fostered deep ties, demonstrated its competencies and become a partner of choice for gas companies operating in these countries. I am also confident that our historical references in Iran will enable us to secure important market shares as the geopolitical situation unfolds.
Sofregaz’s vast credentials and the extraordinary strength of its robust portfolio comprising more than 1000 references, constitute one of our most significant assets. Sofregaz has completed over 900 projects in 85 countries. The company boasts an undisputed worldwide reputation that is the fruit of continuous technological excellence, innovation and passion, notably in the Natural Gas sector. In this respect, Sofregaz has conducted 85 projects in LNG only.
When we look at your global operations, we see a solid presence in Europe, Algeria, the Middle East, India and China. How are you planning on capitalizing on the tremendous growth potential offered by Asia and particularly China?
Sofregaz is well positioned in China where it has designed and built nine terminals. We are unfortunately absent in other Asian countries such as Japan and Southeast Asia. Our small size did not entitle to us to cover this considerable geographic area and has compelled us to make hard choices. At this stage, except China, we decided to initially implement our services in locations in close proximity to Paris: Africa, the Middle East and Europe of course. In the short run, we need to find a trusted commercial local partner or joint venture in Asia to successfully integrate our services.
Sofregaz’s philosophy consists in exporting French know how related to gas. In this regard, changes of shareholders and ownership structure have not altered these fundamentals. Sofregaz generates 95% of its revenues outside of France and has worked in 85 countries. To be successful in the Chinese market, one must position itself early, foster strong ties with local counterparts and adopt a long-term strategy. Sofregaz focuses on upstream and midstream and must therefore emphasize on countries like Algeria, which is currently revamping its production facilities. In Eastern Africa and Francophone Africa, we have positioned ourselves ahead of our Anglo-Saxon counterparts.
Australia will become the world’s largest LNG producer by 2019, and we note that Sofregaz has worked on France’s key LNG terminal in Fos-Cavaou. How can Sofregaz grasp a share of the major LNG developments about to come?
LNG is divided into two markets: liquefaction, which requires huge capacities and receiving terminals, where we can operate anywhere worldwide. In this regard, we usually operate as engineering partners of EPC contractors. We can also produce FEEDs independently. Our objective is to become a partner of choice to the EPC players, in a few specific projects and to offer modular-solutions in mid scale regasification, bunkering, vaporizers and recondensers. The oil and gas industry is going through unprecedented changes and Sofregaz must adapt to upcoming market trends.
If you had to sum up in a few words, what makes Sofregaz a partner of choice for complex engineering gas projects, what would those be?
I would like Sofregaz to be recognized as a French routed yet international, fast, reliable and flexible engineering firm capable of delivering complex projects anywhere in the world. I strive to for Sofregaz to earn the recognition it deserves for its deep expertise and creative solutions in Gas treatment and LNG.