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Badr Jafar is executive director at Crescent Petroelum, and chairman of Gas Cities and Pearl Petroleum.

EXCLUSIVE: Badr Jafar, executive director of Crescent Petroleum, speaks candidly about Iraq, the need for gas liberalisation, and arbitration with Iran’s national oil company.

In 1969, two years before the Trucial States joined to form the United Arab Emirates, and predating the era when National Oil Companies shot to the fore of the regional oil and gas industry, Sharjah-based Crescent Petroleum marked itself out as a first-mover and incorporated itself as the region’s earliest indigenous, private energy company.

The company’s first major project was the Mubarak Field which is offshore Sharjah, which began production in 1972 and produced over 60 000 barrels per day at its peak in 1976. In turn, that led to operations right around the world, at one point holding petroleum concessions in Argentina, Canada, former Yugoslavia, France, Tunisia, and the UAE and in the 1990s adding Egypt, Pakistan and Yemen to its global portfolio.

“Our diverse international operations throughout the 80s and 90s brought valuable experience as an upstream petroleum company, in a wide range of operating conditions,” explains executive director of Crescent Petroleum, Badr Jafar. From that global presence, the company in the 1990s began a process of reining back its international positions, a strategic move in a turbulent time for the industry. “At least 40% of the world’s remaining gas reserves and 60% of global oil reserves are here in our region. We felt that with our well-developed core competencies, and being an indigenous Middle-Eastern upstream operator with regional business know-how, meant we had advantages over many of the IOCs (International Oil Companies) operating here,” he says.

A coveted presence in the most prolific hydrocarbon region in the world remains the ultimate aim of IOCs from across the globe, but entry into National Oil Company interests comes at a price many deem steep. Better to be known as a local company, says Jafar.

“We decided to bring back our original focus on the Middle East and North Africa. Over the years, we divested these operational assets and brought the core of our business back home.”

In the 1990s the company pioneered the development of a real Middle Eastern integrated project by recognising the region, even then, was heading towards a gas imbalance. “There was an emerging disparity between gas rich producers and energy hungry gas short markets. As a company we saw that disparity would continue and exacerbate.”

Initially the company began looking at filling that gap, starting with the major asset holders, Qatar and Iran. “As a private sector company we wanted to facilitate the supply from those countries into the gas short regions in the Gulf and beyond.” Widening its net, the company also began looking at hugely ambitious international projects, such as feeding the energy hungry India and Pakistan markets with surplus Middle East gas.

The Gulf-South Asia Gas Project (GUSA), first launched by Crescent in 1990, was the first workable scheme for producing, transmitting by pipeline and delivering natural gas from Qatar to South Asia and was initially developed by Crescent to service markets in the UAE as a result of rapidly increasing gas demand. Due to prevarication in Pakistan over the years, the project has yet to come off the drawing board and enter an execution phase. “Pakistan missed the opportunity which would have saved the country over US$50 billion at current prices,” Jafar says. When this project did not go ahead the Dolphin project emerged and implemented the Qatar-UAE pipeline. “The Mubadala-led Dolphin project did a great thing to engage with this opportunity, and the benefits and successes of this particular project are evident to all,” Jafar said.

The desire to build a truly regional, private sector, but publicly listed gas company spurred the development and launch of Dana Gas in 2005. “Dana Gas was the first and still is the only private sector and publically listed firm really concentrating on the full natural gas value chain and with a regional focus in the MENASA (Middle East, North Africa, and South Asia) region,” he says.

Crescent Petroleum essentially became the founder of private-sector monetising of the region’s natural gas, and is striving to deliver value throughout the value chain. “From upstream, through midstream distribution and transportation, even into downstream gas processing and facilitating gas based industries, we as a local regional company have sought to realise the maximum added-value of locally-produced gas, as opposed to focusing just on exports as many IOCs tend to do.”

Crescent Petroleum, as the key founder, holds around one fifth of the stock in Dana Gas. The scale of enthusiasm for the company is undeniable, judging from the IPO which attracted US$80 billion in less than two weeks, setting a world record for an IPO over-subscription.

Traditionally, gas reserve development partnerships in the Middle East with IOCs tend to be based predominantly on the concept of sourcing energy for exports. With natural gas, that usually entails export pipeline projects when markets are close, and LNG shipping for farther export markets. “Once that gas molecule reaches the border you’ve exchanged its value and that’s it. However, by using that molecule locally, whenever possible, you maximise the netback value of that gas, and that has a major economic multiplier effect,” enthuses Jafar.

This logic led to Jafar establishing Gas Cities LLC in 2007, a joint venture between Crescent Petroleum and Dana Gas, which is developing mega gas-based industrial cities in the region, based on the concept of clustering. Jafar, also chairman of Gas Cities, says “The Gas City concept is unique in that it is a private-sector initiative that provides a one-stop-shop for gas-intensive industries and communities in an integrated and energy efficient environment.” Gas Cities is now well on its way to signing up a number of these cities in the region, including in Iraq, Egypt and most recently Yemen.

The idea of a country using its gas is a relatively simple concept, but Jafar is passionate about how much such a basic change could transform regional gas, and gas-based industries. He concedes that export has many positive effects beyond the cash flow, and that better use of gas domestically, whilst a priority, should not rule out export deals where reserves are sufficient to support both.

“I’m not saying everything should be hoarded for domestic consumption. Gas is a great facilitator to build political and economic bridges between two countries. I think that gas has something that oil doesn’t and that is the fact it can act like an umbilical cord between two nations, which in-turn promotes long-term stability and good relations between them because the economic imperative is there.”

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