TOGY talks to
Market intelligence in QatarJanuary 8, 2019
Mirza Laith, managing director of Axis Engineering & Mechanical Company, talks to TOGY about how local content is being supported in Qatar, the lack of need for financing in the market and why changing laws have required the company to be innovative and flexible. Axis offers technical engineering solutions and agency services to international engineering, contracting and equipment providers working across the Middle East and North Africa.
• On project finance: “Today there is a strong commitment from local banks to support the growth and development of industrial projects. Historically, infrastructure projects have been financed by the State of Qatar and no external financing has been required. However, some major oil and gas projects were financed internationally. The first project financing was implemented in the late ‘90s for the expansion and upgrade of Mesaieed refinery plant.”
• On Axis’ role: “Axis can provide international companies with market intelligence as well as knowledge of emerging opportunities. We evaluate companies to determine the best fit and then partner to create optimal engineering solutions. For instance, we offer international companies our local expertise in helping them to assess the most effective local partnerships and services to maximise local content and execute most effectively.”
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How can companies that partner with internationals contribute to Qatar’s development?
We help these international firms understand the business opportunities in Qatar. We promote Qatar actively by explaining its transparency, regulations, market potential and the value-add international companies can bring into Qatar. We have an active engagement model with international firms to raise awareness around potential projects as well as explain how business operates in Qatar. Qatar is looking for state-of-the-art technology in both oil and gas and alternative fuels including clean energy.
Axis can provide international companies with market intelligence as well as knowledge of emerging opportunities. We evaluate companies to determine the best fit and then partner to create optimal engineering solutions. For instance, we offer international companies our local expertise in helping them to assess the most effective local partnerships and services to maximise local content and execute most effectively.
Is it easy to access project financing in Qatar?
Today there is a strong commitment from local banks to support the growth and development of industrial projects. Historically, infrastructure projects have been financed by the State of Qatar and no external financing has been required. However, some major oil and gas projects were financed internationally. The first project financing was implemented in the late ‘90s for the expansion and upgrade of Mesaieed refinery plant.
Axis played a key role in the Mesaieed project; we successfully contracted international EPC companies as well as international financial institutions and offtakers for the products. Together, we submitted the most competitive bid on all three components and won the contract.
Is the trend of hiring cost-competitive Japanese and Chinese companies seen in Qatar?
In oil and gas, we see few Chinese companies operating in Qatar. Japanese, Korean, European and American ones are more prevalent in this sector. They offer higher quality and safety standards.
Chinese firms have not been able to penetrate the market, even as subcontractors, as traditionally they do not excel in quality and safety standards in oil and gas. This is changing as we see more Chinese companies trying to qualify for oil and gas projects. However, it is notable that Chinese firms are present in the infrastructure sector and have recently won bids in stadium, expressway and marine works projects.
To what extent can local players take on larger, complex projects?
The vision is to support local businesses and their growth, so we’ve witnessed the strong expansion of local construction companies. On certain building and infrastructure projects, the government invited local firms to bid on projects. They are encouraged to take the lead and collaborate with international companies as they require.
In the oil and gas industry, where projects are larger and more complex, international companies with the technological expertise are required. Local companies are often utilised as subcontractors. Qcon (Qatar Engineering & Construction Company) and Black Cat are great examples of local firms that are excelling in oil and gas projects.
The embargo helped to awaken the local market and strengthen local businesses. There was a realisation that we needed to become more self-sufficient and invest more in the development of local expertise. Recently, we secured an oil and gas maintenance contract, and where we lacked the equipment and expertise we subcontracted to an international company.
Is this market open to new technologies?
Absolutely! Qatar welcomes tried and tested innovative technologies in many sectors. Qatar adopts innovative solutions. We humbly recognise that research and development is not yet an area that has been developed in this region. So, for now, Qatar leverages advances made in other markets and is an early adopter of new technologies.
This is a key focal area for Axis. We invest a significant amount of time to identify new technologies and introduce them into the Qatar market. We’ve identified low-cost water treatment solutions for oil and gas operations that diffuse hazardous waste water and are introducing it to the market. It takes time and it’s been great to see companies are interested.
Will the new FDI law in any way change the agency model or landscape?
For some time now laws have existed that permit companies to have 100% ownership when they work with the government and semi-government entities. However, experience has shown that international firms with limited on-the-ground experience may struggle.
We have been innovative to ensure that we offer value-added support for international firms. We leverage our local expertise so they can focus on their core business and not be slowed down by local requirements. Axis continually adapts and expands its services based on the emerging needs of our international partners. In addition to local logistics support services, we provide in-depth analysis of local engineering solutions that result in significant cost savings for international firms.
Which sectors are interesting for investors at the moment?
Infrastructure such as expressways, commercial development and industrial projects continue to represent areas of growth for both local and international companies. These will require additional investments in technology and adjacent services such as facility management and maintenance. As Qatar approaches the 2022 World Cup, we anticipate the demands will continue to evolve in hospitality, healthcare, security and events.
How do the services that you offer differ from the typical agency model?
Because our business model continuously adapts to the emerging needs of our clients, we invest in the development of our people. It is important to keep ourselves up to date with market developments, legal and policy changes as well as advances in technologies. This gives us the competitive edge our clients value to make their projects more cost effective and successful.
With our professional in-house engineering team dedicated to civil, mechanical, electrical and IT, we offer thorough knowledge across the various sectors. For example, we identified the need for a comprehensive ERP [enterprise resource planning] solution in one of our clients and proactively sought and won an SAP solution to meet their needs. While this IT solution was beyond our initial scope, they valued the best practice know-how we provided as well as the solid relationship of trust we’d developed.
In addition to over 22 years in Qatar, we also have operations in Iraq. We provide operations and maintenance support services for the oil and gas and power sector with up to 300 onsite engineers supporting international projects there.
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