However, it has put on hold its European expansion plans, given the rationalisation of operations by customers there.

Tang Kin Fei, Sembcorp's president and CEO, disclosed this in an interview with BT in Oman, where the group broke ground last Wednesday for its latest Salalah independent water and power project (IWPP).

Sembcorp, he said, has also submitted a bid to operate water and utility services at the Sohar industrial port in Oman and is currently awaiting the tender result.

The group is also eyeing more IWPPs like Shuweihat 3 in Abu Dhabi next month, and Duqm and Al Ghubrah in Oman.

'We'll have to look at the merits of those upcoming IWPP projects . . . but we know that because of high Omani power demand growth, which was 14 per cent last year, there will be more power plants required in the region.'

With Gulf revenues, including from Fujairah, starting to flow in as Sembcorp pays down its project loan there, overseas projects now contribute 40 per cent to its profits (latest figures for the first nine months of 2009 show) - a big jump from the 28 per cent in 2004.

'We commenced commercial operations of our Fujairah expansion just last April, so we expect the plant to do even better, profit-wise, as we pay down the debt financing of the project,' he said.

As for its latest bid for Sohar - which has port and manufacturing facilities like petrochemical plants - 'Sohar will be strategic for Sembcorp, which established Fujairah IWPP as a Gulf beachhead in 2006, and then secured Salalah IWPP last November.

'It is about two hours' drive from Fujairah, so in terms of resource allocation and utilisation and management, it's efficient to manage the two IWPP sites from either Sohar or Fujairah. They can complement one another,' Mr Tang added.

'But we will make sure we take on projects we can digest,' he assured when asked if Sembcorp had enough resources - including sufficient skilled manpower - to cope with its expansion overseas.

It now has power/water projects stretching from Teeside in the UK to the Gulf, Singapore, Vietnam and China.

'Manpower is a very critical factor which is key to success of any project. Sembcorp has specific KPI (key performance indicator) targets for our managers to further develop additional manpower resources so that over the years they can help supplement our needs,' Mr Tang said.

'Besides our Singapore resources, and with Fujairah operating for three years, we now have both Fujairah and UK talent which can be deployed to the latest Oman project.'

In Salalah - where a camp for workers from the main Chinese contractor is already up - Sembcorp is on a tight schedule to provide the urgently needed power and water there.

As it is, the project was delayed for a year, due to the 2009 financial crisis.

Under the contract terms, the first phase of the IWPP to provide 61 MW of electricity is scheduled to start operating in Q3 next year, with the second phase (covering 173 MW and supply of 15 million gallons of water daily) - to start up shortly after, in Q4 2011.

The IWPP plant is expected to be fully operational in Q2 2012, when it will provide a total 445MW of electricity capacity.

Asked where Sembcorp is now on the learning curve regarding Gulf projects, Mr Tang stressed that 'learning is always continuous'.

'When we succeed in one project, the competition also learns how to counter and outplay. We stay very close to the ground to make sure we understand what they are doing so that we can come out with good strategies. So we can never be complacent,' he added.

Unlike previously, however, when the Gulf countries looked to Western contractors when they outsourced their requirements for energy, water and utilities,

Asian companies have shown in recent years that they are capable of offering alternative solutions, said Mr Tang. In this regard, Sembcorp has now succeeded in establishing its brand name - firstly with Fujairah in 2006, and then a track record since.

Asked why, on the other hand, Sembcorp has gone quiet regarding its planned European expansion after its Teeside project, Mr Tang said that 'we always go where our customers go, and we have to adjust our focus and direction according to our customers' needs'.

For instance, last year, three of its customers at its Teeside location shut down operations, while a fourth went into administration, although it has just found a buyer this month, he added. Some new players have come in, however.

'So, at the moment, we have no particular plans to pursue new petrochemical sites in Europe, especially with our customers rationalising their portfolios,' Mr Tang said.

Source: Marshall Cavendish