What was the situation like when both Dana Gas and Crescent Petroleum first entered the Region?
When we first became active in the Region, the major issue confronting the government was its inability to resolve the ongoing energy crisis. This issue was plaguing not only the KRG, but also the Federal Government in Baghdad as well. After 2003, there was a significant shortage of electricity; when Dana Gas first began contemplating entering the market, the government provided, on average, only two hours of electricity per day. So, we held discussions with the government regarding the best possible ways to help resolve this crisis. Solving the issue of available electricity remained a top priority for the government. So, it was a priority for us as well.
How critical do you think gas production will be for the Kurdistan Region?
If natural gas were not available, the KRG would need to buy approximately $2.5-3 billion of diesel fuel every year in order to replace the gas that it currently utilizes. In other words, Dana Gas and Crescent Petroleum are returning roughly $2.5-3 billion to the government’s budget every year. These figures alone demonstrate the importance of natural gas, especially in terms of ensuring the long-term energy stability of the KRG.
Then there is the fact that natural gas is friendlier in terms of its environmental impact. Today, when countries are considering signing contracts with private companies, a major consideration is the environmental friendliness of the project being proposed. Gas is a clean energy source, whereas burning diesel will have a significant negative environmental impact. Generally speaking, gas presents fewer complications.
Dana Gas has the highest private sector investment in the oil and gas sector of any company currently operating in the Kurdistan Region.?
We have exceeded $1 billion of investment in the Kurdistan Region. When we first entered the market back in 2007, there were only a few companies that were willing to take such a risk. There were even fewer who were willing to invest $1 billion into the Region. However, we felt that it was the right decision to make. As you can see, the giant companies have come and they are now operating here. However, we were one of the first companies to identify the potential of the Region, enter the market, and begin operating in the Kurdistan Region. More importantly, the wisdom and the long term strategic vision of the KRG leadership gave us confidence to invest and plan to have long term activities in the Kurdistan Region.
Can you tell us about the company’s plans for future expansion?
What is currently happening in the Region represents a major revolution in terms of the development of the economy. There are countless infrastructure and development projects throughout the Region. All of these projects will need electricity. The Kurdistan Region cannot be satisfied with the generation of 4,000 MW, because those figures do not meet the non-stop demand for electricity. Moreover, this demand is increasing on a daily basis, and is doing so at an incredibly fast rate. So, this increased demand puts greater responsibility on the shoulders of Dana Gas and Crescent Petroleum. It means that we have to double and triple our current rates of production.
Currently, we are producing roughly 330 million cubic feet of natural gas per day. However, this amount will not be sufficient to meet future demand. So, we are currently in discussions with the government to double our production. We have to have another package of investment, which means between $500 and $700 million for the Kurdistan Region alone. The power plants of the Kurdistan Region are thirsty for more gas. The new plants that are under construction or have been planned will all need more natural gas.
The KRG also has a strong desire to export gas outside the country, which will further increase the demand. This means that doubling the current numbers may still not be enough to satisfy future energy needs. So, we hope to be able to do everything in our power to help satisfy the growing market.
Regarding the LPG facility, can you give our readers some insight into its construction and current output capacity?
The LPG facility is a two-train facility: the two plants are referred to as Chrio-1 and Chrio-2. The units are brand new and were shipped here from the United States. Fortunately, we were able to get the two plants up and running in a very short time period. Today, they are producing a total of 330 million cubic feet of natural gas per day. We have multiple other operations in addition to the LPG facility, including facilities for gas condensate and dry gases.
Dana Gas’s workforce is 80% composed of local employees in Kurdistan. How were you able to achieve that number?
The KRG has established a goal of having the local workforce play a strong role in terms of the development of the private sector. When we first began our work in the Region, we were nowhere near that number. However, we established comprehensive training programs for local staff, and were able to slowly close the gap. Currently, our workforce is actually more than 80% composed of local employees, and is spread across a variety of different sectors. This growth is in large part due to our decision to allocate a sizable portion of our annual budget to sustaining and enhancing these training courses. We are actually in the process of replacing certain senior positions with local staff. We believe that if we help to open the doors for the local population, they have both the motivation and the capability to become incredibly valuable members of our team.