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Rudaw

Interview

Exclusive interview: The current state and future of KRG’s natural gas

By Omar Moradi 28/1/2019
 Managing Director of the Board at DANA Gas Majid Jafar. Photo: World Economic Forum
Managing Director of the Board at DANA Gas Majid Jafar. Photo: World Economic Forum
Majid Jafar, Managing Director of the Board at DANA Gas, the biggest private sector natural gas company in the Middle East, says that “natural gas is the fuel of the 21st century and plays an important part in reducing carbon footprint as a cleaner fuel and in supplying power generation and industry.”

In this exclusive interview with Rudaw, Mr. Jafar says that “The Kurdistan Region is estimated to have over 200 trillion cubic feet of gas according to the Ministry of Natural Resources,” and with that it can “address local power and industry needs in Kurdistan and elsewhere in Iraq, as well as potentially for exports also.

Mr. Jafar said that “We are currently expanding capacity and carrying out and active drilling programme in both the Chamchamal and Khormor fields.”

He added that the company has submitted development plans for Chamchamal to the KRG Ministry of Natural Resources for approval.


Rudaw: One of the important factors that OPEC always took into consideration for making decisions is the size of US reserved oil. Why is this factor so important in the oil market and so importantly affects oil prices?

Majid Jafar: 70% of the growth in the world demand for oil over the past 4 years was supplied by US shale oil and the US is now the number one producer in the world, so it is an important factor of course. What matters is the production of oil and gas from shale, and people look to the number of drilling rigs working in shale fields as an indication of future production. Oil demand continues to grow, and the industry is always seeking a degree of stability and balance between demand and production. What really impacts the price is that balance.

How do you see the future of natural gas? The natural gas producers in the Middle East are eyeing which markets? How far did the rivalry on natural gas production between Middle East producers and Russia affect the market? Can Gulf rivals compete with the Russian natural gas particularly in European markets?

We believe that natural gas is the fuel of the 21st century and plays an important part in reducing carbon footprint as a cleaner fuel and in supplying power generation and industry. We believe that by replacing coal and oil generated power with gas, you can have a significant savings and reduce carbon emissions and other pollutants. As a result we are optimistic about the future of gas, and we even believe that gas will become more important as renewables become more prominent because it can deliver power during the intermittent periods when renewables may not be producing power.

The Kurdistan Region is estimated to have over 200 trillion cubic feet of gas according to the Ministry of Natural Resources, which means it can address local power and industry needs in Kurdistan and elsewhere in Iraq, as well as potentially for exports also.

We are proud to be operating the two largest gas fields in the Kurdistan Region, and we recently commemorated 10 years of continuous successful gas production, Alhamdulilah. This began by the invitation of His Excellency Nechirvan Barzani to invest in Kurdistan back in 2007, and his vision to utilize the private sector investment working in partnership with the KRG has led to positive results in a short time. We signed the contracts with him and Dr. Ashti in 2007 and managed to achieve first gas production in 2008 only 15 months later, despite many challenges including the instability in Iraq at that time, the need to build the infrastructure without international contractors and laying a pipeline across mountains and minefields.

We recently announced another 35% increase in production, and are working closely with Dr. Ashti Hawrami and his colleagues at the Ministry of Natural Resources to further more than double the production again in the coming two to three years inshallah. This will address local needs for power and create more fuel cost savings and economic benefits for the government and the local economy.

Dana Gas is one of the largest private natural gas companies in MENA countries, where are your biggest fields?

Dana Gas has assets and operations in Egypt and the UAE as well as, Kurdistan.

As for the Kurdistan Region, how do you see Chamchamal and Khormor gas fields?

Dana Gas together with Crescent Petroleum are the operators of the Kurdistan Gas Project, and the two companies have 35% ownership of Pearl Petroleum together with European energy firms OMV, MOL and RWE which have 10 percent stake each. We are currently expanding capacity and carrying out and active drilling programme in both the Chamchamal and Khormor fields.

What is the production capacity of these fields? How many million standard cubic feet per day (mmscfd) do you produce in the Kurdistan Region? What is your plan to increase natural gas production rates?

We are currently producing 400 mmscfd from Khormor as well as condensate and LPG and the immediate plan is to increase that to 900 mmscfd within 3 years but there will be further growth beyond that inshallah, for both fields, and the other exploration areas we have signed with the KRG.

Your current production is from Khormor, when do you start pumping natural gas from Chamchamal field?

We are currently appraising and drilling the field and have submitted our development plan to the MNR for approval.

How do you market the gas you produce in the Kurdistan Region? How do you liquidate your products in Kurdistan Region’s local market and for what purpose?

The MNR is currently buying the additional gas and oversees the contract bids for purchase of the condensate and LPG by local credible buyers.

How do you evaluate the arrival of Rosneft into the Kurdistan Region and its projects in the Region in general? Can the company’s project change oil and gas industry features?

The arrival of new operators is important for the development of a strong, sustainable oil and gas industry. Rosneft has made an important commitment to invest in different sectors of the industry, including pipelines. But these discussions are with the KRG’s MNR.

What is the size of your targeted investment in Kurdistan region for this year? Will this investment create new job opportunities for citizens?

We invested as total of US$1.3 billion in KRI in our first decade of operations and we will be investing another $800m in the coming few years to implement the expansion plans as discussed.

What kind of expertise do you prefer in Kurdistan for the time being? What percentage of your employees is from the Kurdistan Region?

More than 80 per cent of our staff are local and we expect to have 90 per cent of our workers as local in the coming 5 years, and hope to increase that considerably approaching 100 per cent in the future. We have also invested in local training programmes to increase the skills of the workforce in all areas.
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