PARIS, Feb 6 (Reuters) - Veolia Environnement is seeking growth in dismantling oil rigs, tracking endocrine disruptors with tadpoles and recovering copper from mining waste water as its traditional water business stagnates, its chief executive said on Thursday.
With a two-year cost-cutting and debt-reduction plan largely done, the water, waste and energy group is targetting areas with high growth potential, Antoine Frerot said.
The group is investing heavily in toxic waste treatment, dismantling oil rigs and nuclear plants, waste management for the agrifood sector, water treatment for the mining industry and environmental services for the oil and gas industry, he said. Recycling and urban services are also in the frame.
“Each of these sectors have huge potential and we expect markets of several billions of euros and for some tens of billions,” Frerot told a briefing about corporate strategy.
Its traditional water business, which still represents 47 percent of its sales, is under pressure because of Europe’s economic slowdown, regulatory limits on concession length and increasing preference for municipal ownership of water networks that saw Veolia lose its landmark Paris concession in 2010.
At each contract renewal in its French domestic market, where it generates 50 percent of revenues, Veolia faces pressure on tariffs and has to accept shorter contracts, and is increasingly targetting industrial clients to counter that.
Frerot said once Veolia’s Dalkia energy services joint venture split with France’s EDF is finalised towards the end of 2014, it will incorporate Dalkia’s international activities and offer its services under the Veolia brand.
Energy services will then make up 21 percent of sales, after water at 44 percent and waste at 35 percent.
Frerot said that dismantling oil and gas rigs worldwide is a major business opportunity for the group, as in the coming decade some 2000 oil platforms need to be dismantled in the North Sea, the Gulf of Mexico and Southeast Asia.
With a cost of up to 100 million euros or more per platform and with dangerous waste including radioactive residues from oil drilling, Veolia says it is one of the few companies with the skills for these major projects.
In the past six years, Veolia has dismantled six oil platforms in the North Sea for customers including BP, Total, ConocoPhillips, Hess and Royal Dutch Shell, Veolia Northern Europe director Estelle Brachlianoff told Reuters on the sidelines of the briefing.
“We have many more projects in the pipeline, we are very confident about this business,” Brachlianoff said.
In its traditional water recycling business, Veolia needs to innovate to stay ahead, Frerot said, and Veolia’s Vilvoorde, Belgium plant was at the forefront of several new technologies.
Bacteria recuperate plastics from the plant’s waste water effluent and Veolia uses tadpoles to identify endocrine distruptors in the water, he said.
Veolia Water director Klaus Andersen told Reuters that Vilvoorde uses a biological process under which bacteria excrete polymers which are then turned into plastic.
“If you stress the bacteria in a particular way, they build up polymers in their cells,” he said.
Mining and the oil and gas sector also offer Veolia high growth opportunities, Frerot said, as both use huge quantities of water, from which Veolia recoups minerals before recycling.
Veolia recovers about three percent of the copper in the waste waters of the Codelco mine in Chile, he said.
Frerot said that the restructuring programme of the past two years was now mostly complete and said Veolia had sold about 6.3 billion euros worth of assets in 2012-2013.
“We have sold most of these assets on avearge at more than ten times core earnings, despite the crisis,” he said.
Frerot also confirmed that the company’s net financial debt level stood at between 8 to 9 billion euros at the end of 2013, in line with its objectives, from 9.6 billion in september.
“In four years, we have divided our debt in two,” he said.
Veolia releases 2013 earnings on Feb. 27.