Standing at the Lootah BCGas tank farm, on the trunk of Dubai’s Palm Jumeirah, there is an industrial-strength hissing noise being made by gas pumping through pipelines.
“That started when the Atlantis opened,” said Denis Lefrançois, who is general manager of Lootah BCGas. “Before then, you couldn’t hear it.”
Lefrançois is referring to the sudden increase in the volume of gas being used, once the mammoth hotel opened late last year. The graveled tank farm, surrounded by blast walls, has been getting more regular refills of SNG, since the Palm population started to bloom. SNG, or substitute natural gas, is the fuel of choice because it allows easier conversion of the network to natural gas, when it becomes available, than the LPG alternative.
The Dubai-based company, part of the SS Lootah Group, built and operates the Palm’s gas distribution network, but its project footprint spans from Tanzania, to Turkey, taking in Oman, Sharjah and Abu Dhabi along the way.
“When we started, there was just one project,” said Lefrançois. “We formed a JV to execute the Sharjah Gas Distribution project, the first city natural gas network in the GCC. From that point it was a good springboard for us to address what was going on in the region with infrastructure and natural gas.
“Since that time we’ve been involved in more than 1 200 projects and we’ve branched out into other areas, we’re developing in Qatar and have partners in India; so how’s business? It’s booming.”
And so it should be, the company has grown every year since its start-up days and is projecting that to continue this year. The company takes on a broad spectrum of work, from feasibility studies, and construction, to EPC contracts and operations, all in an industry that has literally started from the ground up over the last decade in this region. Where once bottled gas was the norm – Lefrançois is adamant he doesn’t see bottled gas as the competition – now an increasing number of developments, industrial cities and vertical subdivisions – industry speak for buildings with more than one gas bill – are connected to a network of some kind.
Lootah BCGas has made good use of being first to market with the Sharjah project, forged what Lefrançois calls good partnerships with major developers – Nakheel developments make up the top three of the company’s concession projects – and secured itself many of the most substantial network projects. Its effectiveness at achieving a good degree of market domination was recognised in the Gas Operator of the Year award the company received at the City Gas MENA awards earlier this year.
“We’ve grown with all the communities in Dubai throughout the last ten years,” said Lefrançois. “We get so much of their work because they have trust and faith in us and we were the first ones here in the industry with the skills we have.
“Bottled gas … is not a solution we’re looking to provide and not the way the industry is going. It is developing toward central gas systems. They’re safer, more convenient and reliable, and it’s definitely the trend.”
While competition has emerged in the market, in Lefrançois’ view, they have all entered the sector after Lootah BCGas.
“We secured the great share of the market and we don’t see that changing. We’re definitely the leaders,” he said.
On the subject of what could make things better for his business the answer is simple. More regulation. Although this may seem an odd response, there are several factors that make it an astute view. Lefrançois sees making the regulatory framework stronger as good for everybody; improving safety of the general public and those in the industry; giving developers peace of mind and adding to the industry’s integrity. Stricter regulations would also raise the barrier to entry for any potential newcomers to the gas market.
“There are regulations the authorities follow,” said Lefrançois. “But it’s not as specific as it could be if it was a more developed regulatory framework. You can’t just put anything in and get approval, but there is a latitude in terms of [equipment being] fit for purpose and quality.”
Public awareness is also a battle that must be fought. Without it, the efficiencies of gas as an energy source for domestic use, may be passed over by consumers more used to plugs than pipes.
Like leaders of many large organisations, Lefrançois talks about the ‘right solutions’, not price competitiveness. He is concerned that customers select options that are reliable and fit for purpose. This is not a surprising position when you consider the partnership nature of the deals and the term of the supply contracts – in the case of the Palm Jumeirah it’s 30 years.
“That’s really what we’re concentrating on in Dubai,” said Lefrançois. “It’s very important because of the pace of activity and because of the young regulatory framework. It is important that we’re going in objectively, not just trying to give the lowest price.”
Abu Dhabi is also seeing the rapid adoption of centralised gas networks for developments such as those on Yas and Saadiyat islands. Lootah BCGas is involved in the Emirate through Q Energy, a JV with Al Qudra Holdings. It has completed design work for networks on many of the major projects in the emirate and is also involved in developing a network of CNG stations for fuelling vehicles.
Lefrançois is clear about immediate goals. He is keen to see the company concentrate on maintaining the skills and capabilities its people have worked hard to develop.
“We have a very strong skill set in our company,” said Lefrançois. “We can’t lose that, it’s the first and most important thing. Second, we have to work on our project and operations capacities. We know that there is a great volume of work coming. This is the time where we have the opportunity to increase those capacities. We see a three-year window where we want to develop and expand, in order for us to meet those opportunities.”
“We’re also going to look at new innovative solutions, technology that will help us meet some of the needs of the developments and communities. This is something that people need. We can’t stop moving towards the fuel of the future, or stop being more efficient in our business.”
Despite the downturn, like a lot of utility-based businesses, Lootah BCGas has a full work book, to keep it busy for more than two and a half years and, according to Lefrançois, the company signed more new contracts for internal piping projects in December of last year than the company has ever done before.
The trend toward the centralised distribution of gas in the region remains clear. The relative ease of trenching in sand – which Lefrançois refers to as butter compared to the rocky ground the company has broken in North Africa – availability of suitable fuels and efficiency benefits mean the number of enquiries from the UAE’s regional neighbours, including Saudi Arabia and Qatar is increasing steadily.
“The benefits of the fuel, its long-term viability and friendliness compared to other fuels, mean there is more and more awareness and a greater push for it to expand,” said Lefrançois. “We see it from all of the emirates, neighbouring countries and Africa.
“We see expansion continuing in the region.”
Sharjah Gas Distribution, phases I-IV
Lootah BCGas constructed the first city natural gas network in the GCC, in Sharjah.
“Sharjah took a good pioneering step in converting from bottles to a central system 10 years ago now,” said Denis Lefrançois, general manager of Lootah Gas.
“We continue to work on the project, expanding below ground and there are a lot vertical subdivisions and internal piping works.”
The company’s involvement included network design, procurement and construction. Phase I featured the installation of more than 170 km of mains and conversion from LPG to natural gas for more than 24 000 commercial and residential customers. Phase II began expansion of the network, which continued with Phase III and the addition of a further 10 000 customers. Phase IV of the expansion is currently under way.
