Sharjah-based Crescent Petroleum plans to expand further into Iraq and North Africa as it eyes rising demand for natural gas to generate electricity.
The region has a great deal of undiscovered natural gas resources, said Majid Jafar, Crescent Petroleum's chief executive. "What we see in the region is the potential is much higher than what we've achieved so far," he said.
The company aims to increase its upstream holdings, which produce 82,000 barrels of oil equivalent per day, covering three countries: the UAE, Egypt and Iraq.
In Iraq, the company is looking at upstream opportunities in the south, including in oil. And while already present in Egypt, Crescent Petroleum said that there were opportunities coming up in other North African areas.
“We’re looking at some interesting opportunities that are opening in North Africa, especially with the departure of many western international oil companies that don’t have the same risk appetite for the region as they previously did,” he said.
Natural gas exploration is more capital-intensive than searching for oil. Smaller firms are taking advantage of the increase in demand for natural gas as industry majors struggle to replace reserves as a result of high cost structures. "The discoveries and value-added additions [of today] are not coming from the majors," said Mr Jafar.
“There isn’t the incentive to do the exploration that you need as natural gas tends to be more capital-intensive. Sometimes there’s a rush to export to earn the hard currency, but later the government may regret that they didn’t allocate more for domestic needs.”
The major use for natural gas is in power generation, especially in the UAE where more than 90 per cent of electricity is generated from natural gas.
Gas is attracting more interest as countries work to diversify their energy mix.
However, it faces competition from coal, which averages about 5 to 6 US cents per kilowatt hours and helps to generate 40 per cent of the world’s electricity, said Anne-Sophie Corbeau, research fellow at King Abdullah Petroleum Studies and Research Centre.
“If you want gas to succeed, shut down coal because natural gas isn’t as cheap,” she said at the Atlantic Council meeting held in the capital last week.
lgraves@thenational.ae
Follow The National's Business section on Twitter
