The transformative potential of natural gas
Majid Jafar, CEO of Crescent Petroleum, talks to The Energy Year about energy’s key role in socioeconomic development, the company’s transformative work in Iraq and its avenues for further growth. UAE-headquartered Crescent Petroleum is a privately owned, independent oil and gas company operating across the Middle East.
This interview is featured in The Energy Year UAE 2023
How important is the role of energy in contributing to the socioeconomic development of communities?
Since our inception, we have been a key actor in the economic development of the regions we’ve worked in, starting in Sharjah decades ago. To speak of more recent activities, we have been producing hydrocarbons in the Kurdistan Region of Iraq without interruption since 2008 and we firmly believe that our mission is to unlock the energy resources of the region and help transform the local economy, regardless of the challenges we have faced in that area.
The gas we produce currently fuels over 80% of the Kurdistan Region’s electricity production and contributes to the energy security of about 5 million people. Throughout the years, we have seen a huge transformation: street lighting, retail, airports, hotels and overall diversification of the economy, all thanks to affordable energy. In addition, our investment in the natural gas sector there has saved the government more than USD 20 billion in diesel consumption that has been substituted by our gas supply. There is a growing domestic market for gas and a developing industrial sector emerging. Now, the Kurdistan Region is even supplying electricity to the rest of Iraq.
How did Crescent Petroleum grow to reach its current, diversified position?
Crescent Petroleum started as an offshore oil operator, developing the Mubarek field offshore Sharjah for more than 40 years. Over the years we expanded our activities across different countries such as Pakistan, Yemen, Egypt and Iraq.
Back in 2005, together with regional partners, we launched Dana Gas, as the Middle East’s leading publicly listed natural gas company, which is listed on the Abu Dhabi Securities Exchange (ADX) and has close to 200,000 shareholders from across the region. We had already pioneered the regional gas industry back in the ‘80s by developing the first cross-border gas trade between Sharjah and Dubai, but as a group we are now one of the largest and most dynamic private gas producers in the region, with a specific footprint in Egypt and the Kurdistan Region of Iraq, and natural gas now makes up over 80% of our total production.
Could you provide an overview of how you exported your learnings from the UAE to other markets, such as Iraq?
Back in 2007, international contractors were not willing to work in Iraq due to the sensitive security situation in the country at that time. With the project management experience we had built through our activities in the UAE, we were able to take on extremely complex projects at a very challenging time by working with and supporting local contractors in Iraq. There was an immense amount of work to develop the fields and infrastructure and we had time pressure as the power generation facilities were under construction.
We built processing plants, we brought in early production facilities and built a pipeline in six months across mountains and minefields, and delivered first gas in only 15 months. And now with the good relationship we had with the government, we are proud to say that our current production in Iraq has now reached 500 mcf [14.2 mcm] per day of gas as well as 15,000 boepd of condensate. We also produce more than 1,000 tonnes of LPG per day and are looking to double these figures in the next few years.
We are currently working on an expansion project with an investment of over USD 800 million to add another 250 mcf [7.08 mcm] by next year. We have proven up over 15 tcf [424.8 bcm] of gas reserves in the field, and the project is supported by the U.S. Development Finance Corporation (DFC) with finance of USD 250 million, and we have recently been awarded new fields in the Diyala and Basra provinces by the Federal Government of Iraq.
There are significant opportunities for growth and with our expertise and relationships, we are planning to achieve 1 bcf [28.3 mcm] per day of gas production in the next four to five years inshallah.
What opportunities are you looking at for further expansion?
The opportunities in the Kurdistan Region of Iraq are massive, especially with the greater stability the region has witnessed and the higher energy prices increasing revenues. However, we also see a retraction of European and American companies from the broader Middle East region, which presents regional companies such as ourselves with more potential opportunity.
We remain committed to our goal of creatively unlocking energy resources to help the communities we serve. We also see this as fully aligned with the longer-term goals of sustainable development and transition towards lower-carbon energy, as natural gas replacing liquid fuels for power generation is the fastest way to reduce emissions and will also enable intermittent renewable energy and the hydrogen economy.
Oil and gas will be necessary for industrial development and petrochemical products for decades to come and will be crucial aspects of the broader energy transition. We will continue working towards our goals and are looking for opportunities in places like Yemen as well as North Africa and will further follow the UAE through midstream and downstream developments.
What strategy will best help to achieve a sustainable energy transition?
First, we should point out that our regional gas production today, by displacing diesel for power generation, already prevents CO2 emissions of more than 5 million tonnes per year, which is more than all the Tesla cars on the planet. The role of natural gas is therefore crucial to achieving the energy trilemma, which requires affordability and availability as well as sustainability.
With the underinvestment we have witnessed in the hydrocarbons industry worldwide over the past decade and the current geopolitical turmoil, the world is scoring poorly on each of these aspects – reopening coal plants in response to high energy prices and energy supply shocks, while emissions continue to rise. Policymakers and investors have to look at the synergies that will enable all forms of energy to work together towards achieving the UN Sustainable Development Goals and provide the best energy solutions based on the different needs of the various geographies.
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