Crescent Petroleum: Ahead of the Curve

Celebrating its 40th anniversary in March 2011, Crescent Petroleum has much to be proud of, as the largest and oldest private oil and gas exploration and production company in the Middle East. With current projects in northern Iraq and the UAE, Crescent Petroleum’s Director of Upstream Activities, Mr Abdulla Al-Qadi, reveals the secrets of how this dynamic company has always managed to remain ahead of the curve.

The word ‘crescent’ is derived etymologically from the present participle of the Latin verb crescere – ‘to grow’. Fittingly then, Crescent Petroleum (part of the UAE’s mighty Crescent Group) has consistently grown in strength and stature since it was established in the emirate of Sharjah in 1971, to become a well-respected name in the international oil and gas industry.

The pioneering firm was the first regional, independent, privately owned Middle Eastern petroleum firm to engage in the acquisition, exploration and development of petroleum concessions, and the production and marketing of crude oil, petroleum products and natural gas. Around 15 years ago, Crescent Petroleum established operations in Iraq – and it has been the only permanent, operational presence in the country from that period up to the present day. The venture has clearly proven to be a very wise move, with Iraq’s oil reserves now estimated to be the largest in the world, according to recent and existing geological surveys and seismic data.

Shaping up

Mr. Al-Qadi takes us back to the beginning of the Crescent Petroleum story: “We started operations at what would turn out to be one of the region’s most prolific oil and gas discoveries – Mubarek Field in Sharjah,” he reports, going on to inform that Crescent Petroleum’s activities at the said field have spanned the entire 40-year history of the company. To date, over 100 million barrels of oil and condensate, along with approximately 300 Bscf (billion standard cubic feet) of natural gas have been produced from the Mubarek Field. This has been achieved at­ a very efficient finding and development cost, despite the challenging reservoir depth and complex stratigraphy. At the peak of production, the Mubarek Field was producing an estimated 60,000 barrels of oil per day. Individual well cumulative production ranged up to 22 million barrels with none of the wells reporting less than one million barrels of cumulative production.

Crescent Petroleum’s continuous search for, and identification of, opportunities in the oil and gas sector, have resulted in the dynamic firm securing numerous international oil concessions worldwide over the decades. At the end of the 1980s, it held concessions in Argentina, Canada, Yugoslavia, France, Tunisia and the UAE. In the 1990s, the company added concessions in Egypt, Pakistan and Yemen. “Moreover, we’ve been involved in a diverse range of activities: shallow and deep gas, as well as oil exploration and production; we’ve really done the full spectrum of upstream activities in these areas over the past 40 years,” Mr Al-Qadi points out. “At the same time, we’ve always ensured that we have met our social responsibilities of sustainable development, by supporting and adding value to the communities in which we operate, through health and welfare programmes, and we are quite proud of that effort.”

Having started out in Sharjah (which remains the company’s headquarters today), Crescent Petroleum now boasts offices in London, Tehran, Baghdad and Basra, with operational offices in Erbil. Crescent Petroleum is the only international oil company to have maintained an operational office in Baghdad over the past 15 years.

One of Crescent Petroleum’s largest affiliated companies is Dana Gas – the largest private gas producer in the Middle East. “Crescent Petroleum is the major shareholder in Dana Gas – our co-operator in the Iraq project,” advises Mr Al-Qadi, of a company that also operates assets in the UAE and Egypt.

Rosneft partnership (Sharjah)

Aside from its main affiliate, partnerships play an important part in Crescent’s strategy: “We’ve had numerous partnerships in the past – for projects both within the country and abroad,” informs Mr Al-Qadi. “Just one year ago, we started a project partnership with the oil and gas producing giant, Rosneft,” he reports, of the agreement signed by both parties for the development of a 1,243 sq. km concession in Sharjah onshore, adjacent to the Saja'a gas field. The project represented the first international investment in the Middle East for Rosneft – Russia's largest oil producer, with more than US$50 billion in revenues. “We are now looking to expand the potential of that project,” adds Mr Al-Qadi.

“In addition, we have recently commenced exploration activities in one of our offshore blocks in what is known as the SAN (Sir Abu Na’yr) offshore area – we have started acquiring gravity, magnetic and seismic surveys, which is to be followed by the drilling of exploratory wells.”

In Sharjah, Crescent Petroleum’s facilities can manage 60,000 barrels of oil per day, and the company boasts an extensive network of oil and gas pipelines, both onshore and offshore.

Major projects in northern Iraq

Back in 2009, OMV (Austria’s largest oil-producing, refining, and gas station operating outfit) and MOL (the major Hungarian oil and gas company), partnered with Crescent/Dana Gas in the Kurdistan project in northern Iraq. Mr Al-Qadi provides the background: “The Kurdistan project is a complete fully-fledged project at the two largest gas fields in northern Iraq – Kor Mor and Chemchemal. Back in 2007, we signed a service contract with the government of the Kurdistan Region of Iraq (KRG), to develop and produce gas from these fields – for both local consumption and for export. We managed to complete the first phase of this project within 15 months – an achievement that we are very proud of.”

Given the extremely challenging conditions of the project, this pride is clearly well placed. “In those 15 months, we managed to build 180 km of pipeline through an extremely difficult, rugged terrain that was littered with minefields,” describes Mr Al-Qadi. “We also started our operations back in 2007, when conditions in the area were arguably at its worst. Logistically, too, it was a very difficult area to operate in, as import channels were limited and risky. Despite those difficulties, however, we managed not only to build the extensive pipeline, but also built from scratch two LPG plants that can process 350 million scf of gas per day, and we rehabilitated abandoned wells in the field, in addition to drilling new wells. Right now, we are producing about 320 million cubic feet of gas per day from Kor Mor field, while our pipeline can handle nearly 1.1 billion scf per day. We have also started advanced exploration on Chemchemal field. After completing the appraisal and development of Kor Mor and Chemchemal, more gas will be pumped through those pipelines. So far, we have spent about US$900 million on these fields, and we continue to invest.” adds Mr Al-Qadi.

“Almost 90 per cent of Iraq’s wealth comes from oil, and there aren’t many free gas fields (most is associated gas, which is burned away), so we’re proud of our achievement here,” remarks Mr Al-Qadi. “The gas is now being used to run the power stations in the country, which means that the people of Kurdistan now enjoy 22-23 hours of electricity per day, as opposed to 1-2 hours per day in the rest of Iraq. So, we believe that our project did not only benefit the government and project investors, but also the people of lraq; providing them with what they need the most at this time – electricity.”

Crescent family

The extensive experience accumulated by the personnel of Crescent Petroleum in international oil exploration ventures, and in the project management of oil operations, has been crucial to the company’s continuous success and expansion over the years.

“We have a full team at our headquarters in Sharjah, managing all the company’s activities in UAE and the Kurdistan region of Iraq, as well as staff in the other branch offices. The expertise of our workforce is really one of the assets that we are most proud of. We believe that this is really what makes the difference between us and other companies,” enthuses Mr Al-Qadi. “We are a multinational company with over 20 nationalities represented in our workforce, with people of all ages working for us – some have been employed by the company since it was established 40 years ago. At Crescent Petroleum’s 40-year anniversary celebration in March 2011, our chairman handed out some gifts to the ‘old timers’, as we call them,” he reports. “Many of the personnel have been with Crescent for more than 20 years. I personally have been with the company for just over five years, but I can see myself growing old with the company – it’s the kind of place that you don’t really want to leave. It feels like home, and that’s why we have such dedication within our workforce.”

Prior to Crescent, Mr Al-Qadi worked at a large, state-owned company – the name of which he is reluctant to disclose, although he does remark that the environment there is completely different. “We have, in Crescent, a greater level of expertise and skills amongst our smaller workforce than what these state-owned enterprises enjoy – in comparison, the talent pool that we have here is quite astonishing. Moreover, we are very selective when choosing members to join the company, which we consider to be a ‘family’.”

The Director of Upstream Operations also puts the success of the company down to its ‘style and philosophy’ of doing business. “In Crescent, we have the full team focused on success. We don’t have that feeling of being accountable to a boss, and this is down to our teamwork philosophy. Our projects are extremely efficient in achieving success,” he enthuses. “Without exception, we have not failed in any single project” he continues proudly.

Galvanising community support

The relationships that Crescent Petroleum has developed with communities around and near to its international operations have been vital to the company’s success over the years. “These relationships have resulted in full support for our operations, by the local communities – they know that we are there to contribute and add value for them,” remarks Mr Al-Qadi, going on to highlight some of the contributions that Crescent has helped bring about to communities in Kurdistan, northern Iraq. “In Iraq, we are training and developing the nationals, so that we have a very strong and experienced team there,” says Mr Al-Qadi, whose company has been engaged in the training of personnel from the Iraqi Ministry of Oil and its affiliate companies, for the strengthening of ties and the sharing of knowledge with the Ministry. “Moreover, we have a succession plan in place, so that more people from the region can work there, and feel part of something that they own,” he tells us. “It’s all about mutual respect and working with the locals to help them utilise the wealth of resources present in their region.”

Aside from the vocational training, since setting up its operations in Kurdistan, Crescent Petroleum has been involved in a number of community projects, including helping to establish schools, hospitals and sports facilities in the region, building roads and bridges, and sponsoring education for talented individuals. “This all forms part of the overall equation: Investor + local people and authorities = success,” explains Mr Al-Qadi.

A robust market

Although experiencing some volatility, Mr Al-Qadi believes that the oil and gas market is not as fragile as some make out. “Around the MENASA (Middle East, North Africa, and South Asia) regions, the markets for the past three years have actually been quite stable. The global economic downturn had an impact here for perhaps the first six months of the global crisis, when the oil price came down from about US$150 to almost US$25. That devastated the business, of course, but since then, prices have recovered well – recently rising as high as US$125, and now around the US$115 mark. So, it’s a solid market, and emerging economies are driving that growth.”

Moreover, there are countries in the region that have not been fully explored yet – one of them being Iraq. “There are very few fields in Iraq that are producing and contributing to the global oil supply. Most of Iraq’s prospects remain unexplored, so there is huge potential here,” advises Mr Al-Qadi, going on to predict that there will be greater liquidity in the future market, and that, as a result, not only would many more new projects materialise, but more activities in the unconventional oil and gas (shale) arena would be implemented.

Health, Safety and Environmental (HSE) issues are always a crucial consideration for Crescent Petroleum, and the company’s HSE track record is positive proof of how serious the company treats these aspects, as Mr Al-Qadi points out. “Over the past 40 years, we have not had a single fatality. Moreover, our record, when it comes to lost time injury (LTI) and other key performance indicators in the field HSE, is very impressive. Prior to undertaking a project, we are extremely mindful to conduct an Environmental Impact Assessment – even in areas where it is not legally required. For us, it’s always mandatory.”

Maximising opportunities

Crescent Petroleum is headed by Mr Hamid Jafar as the Chairman with Mr Majid Jafar as the CEO and Mr Badr Jafar as the company President. Throughout Mr Hamid Jafer’s administration of the company, the one thing that has remained most evident is the clear vision held by Crescent Petroleum’s leadership. “The Chairman and his leadership group have been extremely astute in their ability to identify the projects in which the company would be most successful,” remarks Mr Al-Qadi.

Going forward, the Director of Crescent Petroleum’s Upstream Activities informs that the company will continue to look for new opportunities in and around the MENA region. “That’s our homeland,” he says. “We’ve identified a number of opportunities, which we are looking forward to capitalising upon, but I cannot comment more on that subject at this time. What I can say is that the Middle East and North Africa region has always been a strategic focus of ours, although that does not mean that we won’t look at opportunities in other regions in the world.”

As mentioned earlier, the company has already invested to date US$900 million in its projects in northern Iraq, and this investment will continue – likewise for the Sharjah project. “In both areas, our projects are expanding,” Mr Al Qadi tells us. “As they expand, they will require further services and facilities, which will be installed and completed on time.”

Crescent Petroleum’s commitment to Iraq has seen the company (together with Dana Gas) develop a joint gas strategy with the Kurdistan Regional Government, including gas export plans to Europe. Furthermore, Crescent and Dana are jointly leading the ‘Kurdistan Gas City’ project to use gas supplies to fuel local industry and job creation. While in Basra, Crescent has already engaged with the Basra Development Commission and the Basrah Governorate Council, as well as submitting Basra related proposals to the federal Ministries of Industry and Electricity, and the Investment Commission, with the objective of meeting local infrastructure needs, including utilising currently flared gas and launching a ‘Basra Gas City’ project on an even larger scale than the one in Kurdistan.

Having been in the market for the past 40 years, the level of integration and acceptance that Crescent Petroleum has clearly received through its 20-year tenure in Iraq is mainly attributed to the way that the company has galvanised a strong rapport with the local communities, while its vision for such international projects has always been to add value for local people, as well as to run a successful enterprise. The foresight of this impressive E&P oil firm in venturing into Iraq at such an early stage, and maintaining a continuous presence there, is clearly evident, with newly adopted assessments revealing that Iraq has more than 350 billion barrels in oil reserves (according to the Iraqi government), making them the largest reserves in the world.

With a competent, closely-knit and internationally experienced team of energy professionals, and the astute leadership that has led Crescent to international success over the decades, there is every chance that this dynamic company can look forward to another 40 years of success in the petroleum business and continue to remain ahead of the curve.