Majid Jafar, the CEO of Crescent Petroleum says that good energy policies can stabilise a turbulent political region.
Egypt has its own energy woes and defaults on payments, Israel is not a fair player on agreements and Gaza's gas is not as attractive as it might first appear, Majid Jafar, the CEO of Crescent Petroleum says.
The head of the largest private upstream oil and gas company in the Middle East and a board managing director of Dana Gas spoke about the region's energy to TRT World.
Will the Golan Heights become a focal point for gas exploration in post-war Syria?
MAAJID JAFAR: Even in Israel, that prides itself on being westernised what with good governance and pro-capitalism, when Noble Energy made the discovery of the big gas fields they got treated very badly by the Israeli government. They tried to change the terms of the deal, and when they resisted, the Netanyahu administration tried to use rules accusing them of a monopoly so that the state could unilaterally change the terms.
Anyone who finds gas can of course [create a] monopoly from the beginning, but you don't usually get such a negative reaction from a government. And its greed that drove that. It's the kind of thing that happens across the developing world and in the Middle East, Africa and Europe.
What's important is for government to realize if that being a good place to invest over the long term is important. Especially when you are competing with other nations for investment. If you start to politically interfere, it doesn't go well.
How do you see Gazans fitting into gas exploration and distribution in the future?
MJ: I know that there was a field offshore Gaza by British Gas and Consolidated Contractors Company—and unfortunately the construction was prevented by Israel. Now that Israel has its own gas, there may be space for cooperation, but the Israeli reserves are given priority.
There are many disputes in the region. We have Cyprus-Lebanon, and now a big new discovery in Egypt — so it's a competitive space.
My concern is that there is a lot of natural gas now, a lot of LNG (liquefied natural gas) and the price is no doubt low. The east Mediterranean is extremely expensive with a well costing 80-100 million dollars because of the depth.
It's not that it's unattractive. It's just we have other priorities in the region now, like places in Iraq where the cost is much lower.
Will the Egyptian government being able to work with foreign partners to make use of new oil and gas discoveries?
MJ: Our affiliate, Dana Gas, is very active in Egypt. It's the sixth biggest producer and has invested over 2 billion dollars between acquisition and new capital investment. The challenges in Egypt have been about payments and also the geology is different. Every year we don't invest in Egypt, the production goes down 15 percent.
Zohour gas field is a big deal. But when we compare it to Iraq is still isn't as easy. In the Kurdistan region, we have invested double that. In the Kurdistan Regional Government, the fields are right next to Turkey, so there is more potential there.
Another challenge in Egypt is that there is a huge domestic market. They are importing LNG now. How much can Egypt really become an exporter when they need gas for local use and they don't pay?
The problem with Dana Gas now is that we have been owed 300 million dollars. And despite repeated promises, we have not seen that been reduced significantly.
The long term perspective for Egypt is positive. [We're] not concerned about political stability, but the short term financial picture is rocky. And that's because of big local needs as well as the slow payment rate. And tourism has been affected by the series of unfortunate terrorist acts.
Do you see Arab countries such as Egypt and Jordan working more closely with Israel in the energy sector?
MJ: I think the economy can lead politics. If you have energy relations, it can help political development. What's important is that the politics doesn't block economic cooperation. For example, Turkey is buying gas from Russia and Iran, even though it has significant political disputes with both.
I think and I hope that energy can actually help mutual dependance. When one side is exporting to another side, both become dependant; the exporter and the importer — it's like a marriage.
You build a pipeline then you need to learn how to deal with one another for the next 25 years, and so you need to learn to resolve your problems.
OPEC (Organization of the Petroleum Exporting Countries) is another example where countries that consider themselves rivals can find ways to cooperate.