UAE’s Crescent can help Iraq meet its energy needs, says CEO

World Economic Forum/Boris Baldinger

• Crescent invested $4bn in Iraq
• Country suffers electricity shortages
• ‘Political obstacles’ remain

Iraq’s energy needs offer great potential for growth for Crescent Petroleum, the oldest private oil and gas company in the UAE, its group chief executive Majid Jafar has told AGBI. 

The Sharjah-headquartered company has built an important presence in Iraq, where it has invested nearly $4 billion, mainly in the Kurdistan region. “We operate the two largest non-associated gas fields,” said Jafar.

Gas, needed for power generation, has become a priority for Iraq’s government, as it is seen as a transition fuel, emitting less CO2 than other hydrocarbons. 

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Crescent has gradually increased its natural gas production in Iraq from 80 million cubic feet per day (MMcf/d) in 2008 to 500 MMcf/d today. 

“We will increase that further with an expansion plant, which will come on stream later this year,” said Jafar.

In 2023, the company signed three new agreements with the federal government in Baghdad to develop gas and oil fields in Diyala, the country’s centre, and Basra, on the border with Kuwait. It will add 400 MMcf/d of new gas in the first production phase.

“We now operate more than eight fields across the country; this is more than any other operator,” noted Jafar. 

“We will invest another $1 billion in the early phase with our new fields,” he said, adding the development plans will be in partnership with the government.

According to the Iraqi parliament’s electricity and energy committee, the country’s electricity demand exceeds generation capacity.

Many of Iraq’s facilities were damaged during the war, and the country suffers from gas shortages.

It produced nearly 26,000 megawatts (MW) of electricity last summer. Its output is expected to grow to about 28,000-30,000 MW next summer.

“Iraq needs to produce 35,000-40,000 MW continuously to ensure uninterrupted power supplies,” according to Hassan Al Assadi,  the parliament’s electricity and energy committee deputy chairman.

“An affiliate company (within Crescent Group) has also built new power stations, rebuilt and renovated the old ones in the country’s centre,” Jafar said.

Iraq has the second-highest proven oil reserves in the region after Saudi Arabia and Jafar added that the country is the most under-explored Opec member “as it was isolated from the global industry for decades because of war and sanctions”.

“There are challenges, and we have faced many of them. There have been terrorism and incidents, but overall, Iraq has a high potential with great needs for energy, so it is important to take a long-term perspective.”

Crescent

Given the growing role of gas for regional economies, Crescent Petroleum is looking to develop its international presence in the wider Middle East and North Africa region, Jafar added.

It has been operating in Yemen and Egypt and now is exploring opportunities in North African countries.

Jafar is concerned about a global underinvestment in natural gas, which he estimated to be between $300-$500 billion annually. 

He said this has led to price spikes, energy shortages, more coal burning in the developing world, and higher emissions.

Crescent says it achieved carbon neutrality across its operations in 2021. The company reduced its methane emissions and leaks to 0.12 percent of output. 

Methane – the primary component of natural gas, is more than 28 times as potent as carbon dioxide at trapping heat in the atmosphere. 

“We offset the remainder using UN-certified carbon credits” said Jafar

Despite the company’s drive to be more climate conscious, Jafar believes fossil fuels still have a place in the energy mix.

“It is a misconception that to address climate, we should starve investments in oil and gas. The fundamental needs must be tackled.”

Establishing a global carbon price is fundamental for achieving the energy transition, he said. 

“We see political obstacles in the West,” Jafar added.

“Most notably, the US Congress will never countenance that, as it was also reluctant to support the loss and damage fund for developing countries.”