Rosneft Invests $630m in Crescent JV

Reuters, quoting a top Russian official, says Russia’s largest oil producer Rosneft will invest $630 million in a joint project with UAE firm Crescent Petroleum to drill for gas in the Middle East.

In May, Rosneft‘s Chairman Igor Sechin, who is also Russia’s Deputy Prime Minister, said Russia was keen for projects to drill for gas in Iraq.

Last year, Crescent Petroleum formed a consortium with Dana Gas of the UEA, Austria’s OMV, and Hungary’s MOL, that aims to pump enough gas from Iraq’s Kurdistan region to kick-start the Nabucco pipeline to Europe via Turkey. Nabucco is seen by many as the main competitor of the Gazprom-led South Stream pipeline and is aimed at lessening European dependence on Russia, which supplies a quarter of the EU’s gas needs.

Meanwhile, according to both Itar-Tass and RIA Novosti, Russian Prime Minister Vladimir Putin met with Crescent’s Chairman, Hamid Jafar, on Saturday to discuss energy cooperation in the Middle East.

“During the talks, future cooperation in the energy sector of Iraq and other Middle Eastern countries was discussed,” the Russian government press service said.

RIA Novosti also mentions that former (and possibly future) Iraqi Prime Minister Ayad Allawi is a board member of Crescent Petroleum, and that he was present at the meeting with Putin, but he is not listed as a director on Crescent’s website.

Crescent in Iraq

Crescent Petroleum has been present in Iraq for almost 20 years, with offices in Baghdad, Erbil and Basra, all staffed 100% by qualified and experienced Iraqis. The Company has been actively engaged with the Ministry of Oil since the late eighties, carried out studies and training for the Iraqi Ministry of Oil and completed a full field development plan for the Ratawi oil field in Basra province, and would be able to achieve 250,000 barrels of new oil per day in just 18 months. The agreement was fully negotiated in the mid-nineties but not signed due to respect for international sanctions.

Crescent Petroleum is in partnership with its affiliate Dana Gas, and currently implementing a major integrated natural gas project in the Kurdistan Region of Iraq, under a service agreement signed with the regional authorities, to produce, process and deliver 300 million cubic feet per day of gas supplies urgently needed for power generation. The combined project investment of $650m is the largest private-sector investment currently being undertaken in Iraq, and involves the construction of about 180km of pipelines and two LPG plants. The project will sustain two power plants to generate 1250 MW providing cost effective electricity for 4 million Iraqis, freeing the extra 300 MW of electricity to other provinces, saving Iraq $2.5bn a year in imported fuels, and creating over 2000 new jobs. The first phase of the project was accomplished within record time, highlighted by the servicing and completion of the wells, laying the pipeline across challenging mountainous and hazardous terrain, and the installation of brand new processing facilities. 50,000 tonnes of equipment were imported. The first gas production commenced on 05 October 2008, delivering the much needed fuel to the region’s electrical power generation facilities.

In addition, Crescent Petroleum and Dana Gas are developing a joint gas strategy with the Kurdistan Regional Government, including gas export plans to Europe, and are jointly leading the “Kurdistan Gas City” project to use gas supplies to fuel local industry and job creation.

Crescent has already engaged with the Basra Development Commission, as well as the federal Ministries of Industry and Investment Commission, with a view to meeting local infrastructure needs including utilising currently flared gas and launching a Basra Gas City project on an even larger scale than the one in Kurdistan.

(Sources: Reuters, Itar-Tass, RIA Novosti, Crescent Petroleum)

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