A long-term partner in Egypt

Egypt

Thore Lohmann, country CEO of thyssenkrupp Industrial Solutions Egypt, talks to TOGY about recent developments in Egypt’s downstream sector and the company’s strategies for risk management and providing integrated services. thyssenkrupp Industrial Solutions provides engineering, construction and services for industrial plants and systems.

This interview is featured in The Oil & Gas Year Egypt 2019

How would you assess the current momentum in Egypt’s investment environment?
It is very interesting to see the development in the last few years. The momentum started in 2015-2016, and now we are more or less in full flow. We see a lot of projects coming in and a new perspective in the country. The Zohr field is completely set up and is producing. All of our clients have enough gas available, especially the fertiliser companies, who were suffering in 2013-2014. Now they have positive balance sheet results and profits and this is leading to investments in the old plants for revamps and upgrades. Meanwhile, investments in new plants are also coming.

What avenues does Egypt’s recently achieved gas self-sufficiency open up?
Especially now with the increase of renewable energy, gas potential is being unlocked so that it can be used for the chemical industry. Once you have the natural gas and the power available, and you are stepping into renewables, which unlocks further gas, the freed gas can then be used to produce methanol or other products for the fertiliser plants.

What is your take on the Egyptian downstream sector’s recent development and how has thyssenkrupp contributed to enhancing the local transformative industries?
thyssenkrupp has a strong and lengthy partnership with Egypt, especially the fertiliser industry. We have built 16 of the 17 existing nitrogen fertiliser plants in the country. We built the first plant in 1948 and it is still in operation.
Our latest project with NCIC [El Nasr Co. for Intermediate Chemicals] is currently in the starting phase. To sum up, one could say that thyssenkrupp has helped create Egypt’s fertiliser industry over the last 30 years.
Fertiliser plants are one part of our business, but we also are engaged in other petrochemical sectors such as the PVC and other polymer industries. One exemplary project is the EPPC [Egyptian Propylene & Polypropylene Company] polypropylene plant that utilises our propane dehydrogenation (PDH) technology, which we have applied for the first time here in Egypt.

What current projects are you carrying out?
We are currently finishing a project with Sidpec to upgrade their polyethylene plant. Besides that, there is an ongoing revamp project with our long-term customer EPPC. We are also bidding on a project for a new EPPC complex.
We hope that we can contribute our expertise to this project as well. Further fertiliser projects with our traditional clients are in the pipeline.

What should be done to realise Egypt’s full refining capacity?
There are two main things. First, the integration of the refineries needs to be increased. The Midor case is a good example, a role model for all refineries to grow in the same direction. It is also important to upgrade the quality of the final fuel product, to follow at least the Euro 4 or 5 regulations regarding sulphur content so as to improve the air quality in Cairo, which is quite important for us.

How are you dealing with risk management in your business?
Now there is more stability, and you can see this in the ratings of the big rating agencies. But, at the end of the day, our business is about risk management. The financial and country risk is one part, plus there is the technical risk and the scheduling risk. It is quite important to manage all of that proactively.
It is extremely important to understand the culture and the mentality in the country, and to have the right partners in the construction industry in order to manage the schedule and the risk there. This is where we benefit from our long-term relationships in the country; if you are just jumping in and out it is far more difficult to manage those risks.

How do you collaborate with local EPC and construction firms?
In thyssenkrupp we have a full-fledged local EPC company as well. This is one of the main things that differentiates us from our competitors. We do not need to get much engineering capacity from the local market because we are a part of this market. Here our main partners are more often construction companies. We have very good relationships with the big players like Petrojet, Orascom and Hassan Allam, as well as with mid-sized and small companies. We are always selecting the right partners with the right size for each project.

How do you take advantage of being both a full-fledged EPC company and a licensor?
The main benefit here is the speed at which we are able to develop and execute projects. In one of our current large-scale plant projects for example, it took us less than half a year from first discussions with the customer to the signing of an EPC contract. That is impossible if you are following the traditional method, first searching for a licensor and then looking for FEED and then tendering the EPC. We can do that in one shot, and that brings a lot of advantages to the whole project schedule. This means our customers get their product in the market earlier, which is simply a huge cashflow advantage.

How eager would you say Egypt is to embrace the Fourth Industrial Revolution?
Industry 4.0 is quite important for us at thyssenkrupp, and not just for our Industrial Solutions business area, but also for the automotive or the elevator business areas, for instance. It is not new to us. Especially in the engineering sector, we have had a fully integrated IT system for decades, covering areas from the heat and mass balance down to onsite progress control. Everything is fully integrated and now we are upgrading with the latest technology on the market.
Our customers here in the Egyptian market are interested in our operations and digitalisation approach. We help them to determine and execute their plant as it is designed to, and to assess what measures must be taken to improve performance and to optimise processes. Better integration between us and the clients’ IT system and enhanced information exchange simply enables us to do more in terms of plant efficiency and reliability. This enhances the operation and also provides us with the data for even better future plant designs

You not only set up third-party plants but also provide tailored support during and after setup, is that correct?
That’s correct. thyssenkrupp provides spare parts for our own technology, so that we are the producer as well as the service provider. We offer a wide array of field services, ranging from inspections to laser scanning of plants and drone systems to do surveys of certain plants.
We have our maintenance component as well, doing field maintenance and supporting our clients for shutdown planning, for example. Finally, we offer complete asset management, which is the operation and maintenance of entire plants.

How important is the Egyptian market for thyssenkrupp?
The Egyptian market is quite important for our plant engineering business; we call it our living room, which means that here lies the core of our business, from our history to our relationship to our clients. thyssenkrupp is connected to the Arabian Fertiliser Association, which just had a three-day seminar with us in Germany where we showed them our latest developments in green ammonia and in the digitisation process. We are really maintaining our relationships in the Egyptian fertiliser industry and the Arabian fertiliser industry as a whole. This is one of our core markets worldwide.

Are you also serving or planning to serve any neighbouring countries from the Egypt office?
Egypt is our biggest operation hub here in the region. We are servicing Saudi Arabia and other Gulf nations in supporting our other thyssenkrupp offices. We are hoping that in the near future we will be able to serve other neighbouring markets as well.

While you use Egyptian staff, you bring in the German expertise, so there is plenty of knowledge transfer through training, correct?
Yes, and for this you need to have a stable staff that you can train over the years. Most of our employees are starting straight out of university. Our Egyptian office has been here for 14 years and many people have spent that whole time with us. We increased our staff from 120 to 200 recently to be able to have a higher capacity in the country itself.

What is your strategy for the coming years?
We are working on the integration between our technology hub in Germany, our execution hub in India and our local execution hub here in Egypt in order to provide more tailor-made services and engineering in the country. To serve the large installed plant base that is already here, we will further enhance the service and after-sales service section as it is one of the biggest needs in Egypt.

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