Crescent Petroleum Hopes to Clinch $500 Mln in Deals in 2007
DUBAI Mar 21, 2007 (Dow Jones Newswires)
Sharjah-based private oil and gas firm Crescent Petroleum hopes to sign 4 major contracts in the Middle East and North Africa valued at a total of around $500 million in 2007, as well as bring long-awaited Iranian gas into the United Arab Emirates through a project that has cost the company $1 billion.
The first of its new contracts will be signed in Yemen next week, andthe company is in negotiations with Iran, Iraq, Yemen and Sudan to sign exploration and production contracts.
"We are about to sign two major contracts next week, one with the Yemeni government and the other with another operator - they are willing to sell to us part of their interest in one of the reasonably big concessions in Yemen," Abdulla Al Qadi, director of Upstream Operations, told reporters on the sidelines of a conference.
Most of the investment in 2007 will be set aside for exploration contracts in Iraq. "We are in negotiations with the Iraq government with regard to a number of their fields," he said.
Crescent is also entering into a bid round in Iran, Al Qadi said. "We have already identified a number of blocks of interest. We are going to pursue that quite seriously," he said.
In Sudan, the company has been in communication with the southern Sudan government to establish grounds for a business relationship. Top officials from southern Sudan will visit Crescent next week for further discussions, Al Qadi said.
Crescent could work with partners in some of the opportunities it is looking at this year. "we are partnering with mid-sized companies in the region," he said.
Aside from its expansion plans, Crescent's main project, costing around $1 billion, is to secure 600 million cubic feet of gas from Iran to supply the northern emirates of the U.A.E.
Crescent is the largest shareholder in Dana Gas (DANA.AD), a Sharjah-based private gas company that will be transporting and distributing the Iranian gas. "We are investing $1 billion," Al Qadi said. "The investment on the Iranian side is mainly on the drilling and the installation of the production facilities. But the pipeline and facilities on our side are almost $600 million."
The rest has been invested in Sajgas, which manages the gas plant in Sharjah, and the gas-receiving facilities.
The U.A.E. was expecting to receive Iranian gas last year, but delays on the Iranian side have stalled gas delivery, which is now expected this summer.
"The delay is due to technical problems for installing the production platform where the gas will go to and from in Iran," Al Qadi said. "All the wells pump their gas to it, and then that gas is pumped into our pipeline to Sharjah. The platform is expected to be completed in April this year - this is the latest that we've heard from the Iranian government."
Al Qadi said that a smaller platform was installed in Abu Dhabi some years ago, and it suffered a delay of two and a half years. "That was undertaken by a major contracting firm, but they still were behind. These projects really take some time."
Al Qadi reiterated that the price of gas isn't the reason that the project has been delayed, contradicting reports in the Iranian press. The contract was initially signed some years ago when the price of gas was much lower than now, but Al Qadi and Dana Gas officials say this has been solved.
Al Qadi expects gas very soon. "All the wells have been drilled, have been tested, and a sufficient amount of gas and contingency is ready to be pumped. Its just a matter of installing the platform, commissioning it, and make sure everything is fine," he said.
"We have already just hired additional staff for our Saj Gas plant. So hopefully by this summer we will see more buildings powered by natural gas," he said.
The initial throughput with be 600 million cubic feet a day, but this could rise to 1 billion cf/d, Al Qadi said.
The gas will go mainly to the water and electricity authorities in the emirates of Sharjah and Fujairah, Al Qadi said, which are currently using fuel oil for power generation, much more expensive than gas.
"(Gas) demand in the U.A.E market is 300% more than supply from now until 2015 so there is a huge deficit. So there will always be a shortage," Al Qadi said.
Crescent's operations in Sharjah's Mubarak field, which provides revenues of $1.7 billion to the company, will include enhanced oil recovery this year. At its peak, the field was producing 150,000 barrels a day, which has now fallen to 1,600 barrels a day. Crescent hopes to double this output by the end of 2008.
Crescent's plans to transport gas from Qatar to Pakistan have been put on hold as Qatar reassesses its gas commitments, but it could still go ahead, Al Qadi said.
Copyright (c) 2007 Dow Jones & Company, Inc.
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