Towards a Brighter Tomorrow: Majid Jafar Is CEO of Sharjah-Based Crescent Petroleum. in This Interview with Pat Lancaster He Explains His Vision of a More Prosperous, Innovative Regional Future and How, He Believes, It Might Be Achieved
Lancaster, Pat, The Middle East
Q As an Emirati citizen of Iraqi heritage with an international education gained at some of the world's finest educational establishments your insight into regional affairs--political, economic and social --can have few parallels. Your grandfather was an eminent politician and your father a successful businessman. You seem to have taken elements from both. Can you tell us something about your chosen career path to date?
I have followed in the footsteps of my father in studying engineering and pursuing a career in the energy sector, though starting outside the family business in Shell International to gain valuable experience and insight in one of the world's leading companies. But in addition to that industry path, I have also studied international relations and completed my MBA. In my business there is often interplay between the elements of the technical, commercial and political considerations.
Aside from the oil and gas business, I have always had a keen interest in policy issues around economic development and in the history of the Middle East. These perhaps trace back to my grandfather serving as Iraq's Minister of Development and Secretary-General of the Iraqi Development Board during the last decade of the monarchy. In addition to responsibility for overseeing the oil and gas sector and reform of its regulatory framework, he oversaw major investments in infrastructure projects such as roads, bridges, ports and power stations which transformed the country's economic development, some of which are still in use today.
Q: You have been outspoken and sometimes controversial about regional energy matters, would you care to elaborate?
The Middle East is blessed with at least half of the world's oil and gas reserves, yet I feel we are not maximising our potential. Other parts of the world such as North America and even Africa are now leading the way when it comes to enhancing the role of private sector investment and management and in deploying the latest technology. In many countries in the Middle East we are still largely in the mindset of the 1970s where the state and national companies should manage all the operations, and this has led to insufficient investment in exploration, in the downstream, and in the natural gas sector. I think there is a greater role to be played by the private sector, both in international oil companies and in encouraging more regional private companies to be active in all aspects of our important industry, in partnership with governments and the national oil companies. We also badly need to tackle the issue of energy subsidy reform, which is bleeding $220bn plus from government coffers in the region annually, according to the IMF--half the energy subsidies of the entire world. This reduces export revenue potential in energy exporting countries like Saudi Arabia and Iran, and causes serious budget problems for energy importers like Egypt and Jordan.
Q: You have frequently spoken of the region's gas potential, is this where the future of the hydrocarbons industry lies?
If coal was the 19th century fuel and oil the 20th century fuel, then natural gas is truly the fuel of the 21st century in my view. Our region holds 40% of the world's proven gas reserves, and the real figure is probably much higher than that as most of that 40% figure was discovered by accident when looking for oil in decades past; exploration for gas has only really received attention relatively recently in the Middle East. It is cleaner burning than oil or coal and the preferred fuel for power generation and industry, both of which have a rapidly growing demand in our region, making it among the world's fastest growing markets for gas and energy. In fact the irony is that despite the high headline reserves, practically every country in our region other than Qatar actually has a gas deficit at the moment. This shows we need to encourage more investment in natural gas exploration, production and supporting infrastructure, and this will take incentives which recognise that gas investments are more capital intensive and long-term than oil, they will also require price reform. …