STEP ON THE GAS

Sharjah 2015 | ENERGY & INDUSTRY | INTERVIEW

TBY talks to Majid H. Jafar, CEO of Crescent Petroleum, on upstream opportunities, contributing to the UAE's development, and trends in the global gas market.

Majid H. Jafar
BIOGRAPHY
Majid H. Jafar is the CEO of Crescent Petroleum and Vice-Chairman of the Crescent Group and Managing Director of the Board of Dana Gas (PJSC). He attended Eton College and graduated from Cambridge University with a BA and MA in Engineering, and also an MA in International Studies and Diplomacy from the University of London’s School of Oriental and African Studies, and an MBA from the Harvard Business School. He currently serves as Chairman of the Middle East-North Africa Business Council and Chairman of the Oil and Gas Independents Community at the World Economic Forum, Founder Chairman of the Centre for Economic Growth (CEG), Co-Chairman of the Business Backs Education campaign, and Vice-Chairman of the Global Energy Initiative (GEI).

How has Crescent Petroleum developed into a regional leader in the upstream sector?

Crescent is proud to have been operating regionally and internationally for over forty years. Our roots, headquarters, and heart are here in Sharjah. We initiated our operations here with the offshore Mubarek field. We grew from that and pioneered various activities in the region including cross border trade natural gas. We have offices in the UK, as well as throughout the region. We have big operations in Iraq and in Egypt through our affiliate. Crescent was also instrumental in the creation of Dana Gas.

How important is socio-economic development for the region, and how is Crescent Petroleum trying to achieve that?

We are blessed in the UAE with stability and a positive trajectory. Clearly, the source of stability is in socio-economic development, and above all creating sustainable jobs for the future. There is a lot of unmet need here domestically and regionally for energy solutions, and we feel ready to address those needs as a regional player with an understanding of the local dynamics and relationships.

What is your assessment of the current volatility of oil prices in terms of the opportunities and challenges that it creates for the oil and gas sector?

What was unusual and impacted us the most over the past year was the speed of the fall in oil prices, a 60% drop within months. That means that higher costs of oil elsewhere in the world may come off the market, and it means that all companies and governments that are exposed to that price risk need to be more conscious of costs. The key for the Middle East is to take advantage of this opportunity to be more cost conscious and instigate fundamental energy reforms, particularly pertaining to energy subsidies. Half of the world's energy subsidies last year—$220 billion—were consumed in the MENA region. That is a real destruction of value and that money could be invested in more productive ventures. Subsidy reform is not an easy thing, but it is easier when oil prices are lower because the difference is less. Also, there is room for long term planning on the energy mix and ensuring that the right incentives are provided for the private sector to maximize investment upstream and develop more of the huge resources that this region has. This region has half of the world's oil and gas, yet actual production is a fraction of that. There is a lot of scope for growth.

What is your outlook for the global oil and gas sector?

One of the key trends is the rise of the independent oil and gas companies. The sector used to be dominated by the national companies and the large multinationals. Smaller companies are driving the shale revolution in the US for example, and independent local companies are starting to become bigger players in their regions. A second important trend is the rise of gas. If coal was the fuel of the 19th century and oil was the fuel of the 20th century, then gas surely is the fuel of the 21st century. Though adding renewables to the mix and long-term sustainability beyond the fossil fuel world is important, natural gas is the cleanest and cheapest sustainable fuel for industry. This is why the demand for gas is growing phenomenally across the world and in the region. In the US they have switched more to natural gas, and as a result their emissions rates are the lowest in 20 years. Europe has actually failed to meet their targets, and they are actually importing coal from America to burn for power. The third key trend is going to be the role of the sector in contributing to the challenge of climate change and sustainable growth.

What are your company's expectations for the coming year?

Despite the challenges and sometimes negative headlines, I am an optimist about the future of the region, and a firm believer that our absolute priority must be to deliver better economic opportunities for future generations.