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Mon 3 Nov 2008 04:48 PM

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Crescent, Dana reveal plans to set up 'gas cities'

Joint venture eyes large-scale projects in Middle East, North Africa.

The UAE's Crescent Petroleum and affiliate Dana Gas are planning to set up at least four gas cities in the Middle East and North Africa region as it seeks to tap growing demand for hydrocarbons.

Crescent's executive director Majid Jafar told the Reuters Middle East Investment Summit the company was looking to invest several billion dollars on the infrastructure of those cities and attract tens of billions of dollars in investments.

"We submitted several proposals but in Kurdistan, it's the most advanced," he said, adding that the land has been allocated and they have already started gas production.

"We are also pursuing projects in two other locations in the GCC and in North Africa," adding that they will be gas cities, Jafar said.

The companies began supplying gas in Iraq's Kurdistan region after completing the first stage of a $650 million project, they said in October.

"We have already been approached by local authorities in other parts of Iraq to replicate gas city concept in Anbar in the west and Basra in the south because the same economic drivers exist," Jafar, who is also a board member at Dana Gas, said.

Jafar said the joint venture was looking to build "large-scale projects" in its gas city in the Kurdish areas of Iraq, including for fertilisers, cement, methanol and steel. Investors from the Gulf Arab region and Asia had shown interest, he said without specifying which companies.

The two companies also signed up last year to evaluate the region's gas reserves and to build a large gas-fed industrial complex called Kurdistan Gas City.

Initial investment in the basic infrastructure for the complex would be $3 billion. Dana and Crescent are leading the development and looking to attract partner companies.

"What we have in Mideast are not only higher reserves but also cheaper reserves to develop and bring on to production," Jafar said.

"So perhaps now there might be some positive consequences of oil prices steadying."

Jafar also said the company was looking at opportunities in North Africa, declining to be more specific.

"North Africa is certainly very interesting from a gas perspective," he said.

"We are in regular contact with governments in all these countries who have shown a warm welcome to Dana Gas as an Arab company."

Dana Gas, which has not yet reported its third-quarter earnings, closed down 1.89 percent and has lost 53.17 percent this year, underperforming the main index, which has lost 26.38 percent. (Reuters)

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