ERBIL, Kurdistan Region - Majid Jaffar, CEO of Crescent Petroleum and Managing Director of Dana Gas, emphasized the importance of private sector investment as a key factor for supplying the energy demands of the Kurdistan Region and stressed the need to diversify customers and production facilities to continue output amid rising geopolitical turbulence.
In an interview with Rudaw in Washington, D.C. on Tuesday, Jaffar discussed the future of the role of Kurdistan’s energy infrastructure in the context of Iraq's broader energy security strategy, the expansion of the Khor Mor gas field in Sulaimani’s Chamchamal district, and the establishment of the Dhia Jaffar Center.
The discussion comes amid challenges of protecting energy infrastructure in the Kurdistan Region during regional clashes, coupled with the responsibility of ensuring adequate energy supply for the public.
“It's about providing the fundamental need for the people for electricity,” Jaffar said, adding that, “in the past, even when we've had disputes with the government not being paid, we continue producing because we take that responsibility very seriously.”
Jaffar described the coordination as a critical team effort between Peshmerga, local security forces, and the Iraqi federal government.
He cited the role of public and private sector collaboration in the success of the Kurdistan Regional Government’s (KRG) Runaki project - which aims to provide uninterrupted, 24-hour electricity across the Region - and the need for increased infrastructural support in the southern Iraqi port of Basra in order to be able to establish alternate routes independent of the Strait of Hormuz.
His remarks come amid a lack of oil and gas governance in Iraq.
Jaffar highlighted the underutilization of two pipelines in the north, and expressed optimism regarding upcoming discussions with the new Iraqi prime minister, Ali al-Zaidi, to reinstate production and address infrastructural challenges, including the possibility of increasing exports through the Kurdistan-Turkey pipeline to reduce dependence on routes vulnerable to regional tensions.
Lastly, Jaffar spoke about the establishment of the Dhia Jaffar Center and Fellowship program, a private sector effort and partnership with the American University of Kurdistan in Duhok, which he excitedly anticipates will provide new opportunities in the form of scholarships in areas related to petroleum engineering, economics, and business.
“We are excited about Kurdistan's industrial development and its drive toward greater economic self-sufficiency,” Jaffar said.
Following is the full transcript of the interview with Majid Jaffar:
Rudaw: Majid Jaffar, welcome to our studio in Washington.
Majid Jaffar: Thank you. Good to be with you. First, I'd like to express my condolences on the sad passing of your colleague, Halkawt in Baghdad. Our condolences to you and all the Rudaw team, and secondly, we'd like to thank Rudaw for great coverage from here in Washington, which we follow from around the world, and which keeps Kurdistan Region and Iraqi issues at the center of the agenda, including even in the White House, Mashallah. So, we're very grateful to you.
Thank you so much. Thank you for your kind words. We will start with the recent events in the region. Following security-related disruptions in February and March, full production resumed in April. What specific measures were taken to safeguard your personnel, facilities, and operations?
so of course it was a challenging time for the whole Middle East. Every country in the Middle East, for the first time in history, was involved in this war. Iraq, in particular, experienced attacks from all sides, from the US, Israel, militias from Iran. We took steps. We were monitoring the situation several times a day. Of course, we had a history of being attacked 11 times, even before the war. We took steps as needed in terms of production levels and protocols with the staff and the protection. We are, of course, grateful to the coordination and support we received. The long-term partnership, we are now in our 19th year. Next year will be our 20th year in the Kurdistan Region. So, we're grateful to the leadership of the KRG and the authorities of Sulaimani, as well as to the Iraqi government.
So, as you spoke about the Iraqi government, Baghdad has recently pledged additional support for protecting energy infrastructure in the Kurdistan Region. How would you assess the current level of security coordination between Erbil, Baghdad, and industry operators?
So, in our case, Alhamdulillah, there's been very good coordination, it's really been a team effort and a partnership. We're grateful to the Peshmerga and local security forces, and we are grateful to the Iraqi federal government, who has been protecting Khor Mor with aerial defense since the previous government, and now continuing into this government, and this has enabled us to continue producing. I think there is a recognition from all sides that this is a critical infrastructure which is enabling affordable electricity not only for the Kurdistan Region but also for other parts of Iraq. So when we've been attacked in the past, there was condemnation from all sides in Iraq and also internationally, and there's a recognition that this is an important facility that's providing a fundamental service and need within the country.
We know these attacks have their negative impacts on the whole operations that you have over there, sothe disruptions earlier this year contributed to widespread electricity shortages. As a supplier of fuel for roughly 80 percent of the Region's power generation, how do you balance security challenges with the responsibility of ensuring energy supply for the public?
So we take this responsibility extremely seriously. It's our kind of number one focus, of course. When we stop producing or we reduce production, we are the loser. Also, it's not in our benefit, but really it's about providing the fundamental need for the people for electricity and we take it very seriously. In the past, even when we've had dispute with the government not being paid, we continue producing because we take that responsibility very seriously. So the steps that we took during this war to reduce or sometimes cease production was taken to protect facilities and of course people working there and around there, so when we maintained production Alhamdulillah on some level, almost throughout the war period, even when other operators have left the Kurdistan Region.
Unfortunately, this war saw attacks on energy infrastructure across the whole Middle East, even in the UAE in a way that had never happened before. One of the ports that we operate in the UAE, for another one of our group companies, was attacked. So, it's been an unprecedented, challenging time for the whole region, but Alhamdulillah, together in partnership with the government Kurdistan Region and in Iraq, we have managed through this difficult period, and we hope that better times will come.
So, with all these challenges, you have made some progress in the Kurdistan Region as well. I will ask a question on the KM 250 expansion, the KM250 expansion has increased Khor Mor's production capacity to 750 million cubic feet of gas per day. How is this additional volume being integrated into the region's electricity network, and what impact is it already having?
So we are very pleased and proud that the partnership, our increasing gas production, as well as the Runaki initiative, which is an excellent initiative to achieve 24/7 electricity for the Kurdistan Region this year within 2026 achieved through reform of the electricity tariffs, reduction of losses and smart meters. These are things that in the UAE were done some years ago and turned the electricity provision into a successful initiative, even in Dubai, you have the Electricity and Water Authority became a listed company in the stock market, so that partnership is very important to achieve that shared goal.
So, besides that, Pearl Petroleum has committed $160 million to the development of the Chamchamal field. How do you see its long-term production potential compared to Khor Mor?
So Chamchamal, as you mentioned, this initial project for $160 million so the KM 2015 was in the end $1.2 billion project, because it took longer due to COVID, attacks, it was more expensive, and we have financing also, and then now this new project is to drill three wells and choose seismic and do assessment of what is there in the field and how best to develop it, but it will also create some early production, 80 to 100 million cubic feet per day, and then we will be adding to that in stages to produce more from the field. We cannot say now what the final production capacity will be of the field, because we need to drill the wells and do the assessment for the seismic, but we are optimistic that it can be another great producing field for the Kurdas style region and for all of Iraq.
So, with that investment, You recently signed 10-year agreements to supply Chamchamal gas to cement and steel factories. What does this milestone mean for Kurdistan's industrial development and its drive toward greater economic self-sufficiency?
So it's a very, very good question. We're very excited about this new phase, even going back, you know, we've now invested $4 billion since we started in 2007 Next year we'll celebrate 20th anniversary, as I mentioned, and the priority has always been first to meet the electricity needs of the Kurdistan Region itself, and then to find other markets, which is industry is very important, because it creates more jobs, more investment, and other markets, such as the federal government, now industry, you have two parts.
You have existing industry, these are plants already existing on the ground, operating cement plants, steel plants, and so on, and they may have been burning fuel oil, which is polluting, which is becoming more expensive in Iraq, as the subsidy is getting removed, so the gas replacing that can have economic and environmental benefits, and this is the basis of these first contracts, and we expect to sign more soon, where some of these customers want to buy more, or some new customers, and then the next step is what are new industrial projects, new customers who don't yet have, who haven't yet built a factory in the Kurdistan Region, who can come and, because of the gas supply, they will sign a contract and make new investment and create new economic output, so we've just actually done it's just being published now, haven't yet announced it, so I'm announcing it with you, with Rudaw here, we did a study by PwC, you know, the international company to look at the $4 billion that we've invested, what is the impact of this in the socioeconomic impact, so their conclusion is that lots of, of course, jobs were enabled, created, but the fuel cost saving, because the gas is saving money for the government, the $4 billion has achieved nearly $40 billions of savings in fuel cost and enabled GDP economic output of $250 billion for the Kurdistan Region and for Iraq, so this is something we're very proud of.
This is when you see the benefit of investment, and I've seen it on a local level, where I've been visited and heard stories. How people who started as laborers in our field and operations have become business owners, and hiring 50 people, 100 people, and working in the area, so we delivered first the electricity in the local area, making sure they have 24/7 electricity, the villages around where we operate, and then the job creation and the investment from that, so industry is an important focus for us now, and we have good support from the government and from the authorities in Sulaimani to achieve this, inshallah.
So, these are very optimistic, but to my understanding, those agreements depend on a new 40-kilometer pipeline connecting Chamchamal to the Bazian industrial corridor. Is the project on track to meet its 2027 target?
So, we are not implementing this project. This project's being implemented by local companies under the oversight of the KRG, the government, but we understand the project is moving well, and we are confident that it will be built.
It meets its targets on time?
We hope so. Yes,
So let's talk about the Iraqi energy future. Erbil and Baghdad recently reached an agreement aimed at resuming northern oil exports through the Ceyhan pipeline. Do you see this as a lasting breakthrough or merely a temporary arrangement?
So, we are not directly involved in this, because we're not producing crude oil at the moment, we're producing gas and LPG and condensates, but we hope that there can be better cooperation. There was some political agreements for the previous government. Unfortunately, it wasn't all implemented as wanted by both sides. We hope with this new government there will be a smoother way forward, and there are some gaps that still, for example, even after 23 years since the fall of the previous regime, there is still no oil and gas law in for Iraq,
Has that made a problem for you?
It hasn't directly, but you know, we think that it adds to the lack of clarity between the two governments on things like budget, you know, there shouldn't have to be such a big negotiation and debate every time there is a budget, if there was a revenue sharing law makes clear how the revenues are shared based on the population as per the constitution, then everybody will want to increase the revenues, because if you know how what is your share of the cake, then you want to make the cake bigger. If you don't know what's your share, this leads to disputes and disagreements. We hope with the new government now that we have in Baghdad and Inshallah, there will be a new government formed Kurdistan Region also, that they can work together to make smoother operation on all these key areas, because it's important for investors as well.
So, with this, Iraqi officials have discussed increasing exports through the Kurdistan-Turkey pipeline to reduce dependence on routes vulnerable to regional tensions. How important has Kurdistan's energy infrastructure become to Iraq's broader energy security strategy?
So I think if we step back and look at this crisis, which the Straits of Hormuz from this war, which I said yesterday. It's, and we've heard it from the International Energy Agency, Saudi oil minister, that this is the biggest energy crisis that the world has seen. 20% of oil and gas, fertilizer, helium, so many other things being affected that the world is now looking for alternate routes, which do not depend on the Strait of Hormuz. Iraq has, Iraq has mainly relied on exports from Basra and through the Straits of Hormuz, but Iraq has geography in the north, and there are existing pipelines, two pipelines.
They are not exporting as per their potential. Part of that is because the production in the Kurdistan Region is not as per the potential, because a lot of the operators stopped producing during the war. So, there has been a meeting recently, chaired by the new Iraqi prime minister in Baghdad with the oil and gas companies active in the Kurdistan Region to reassure them on security and try to encourage them to be producing oil again, but the Iraqi government has also announced that they need more infrastructure from the south to the north. There's longstanding plans for pipeline from south to north, which has still not happened, I expect, as we will see, not only in the Gulf region, UAE has already announced more pipelines, but in Iraq there should be an acceleration of new infrastructure to enable the exports, because for Iraq it is the second biggest oil producer in the region, after Saudi Arabia, should be, and has potential resources, you know, that could significantly lead to more increase, and yet it has the least savings, and we heard from His Excellency Kak Fuad Hussein [Iraqi Foreign Minister] this week for other sin that, you know, if there is not an opening of the straits this month, Iraq will struggle to pay salaries within one month. So it's really a crisis for Iraq, and it's time to be investing now to have more options, and with Iraq's geography, that should be possible.
So, looking into those options…
And of course, sorry, the Kurdistan Region is key to that, being given the geography.
So, speaking of the Kurdistan Region's lessons and their role in this theater, While the Kurdistan Region has made significant progress in utilizing natural gas domestically, Iraq continues to face major challenges with gas flaring. What lessons from the Kurdistan experience could be applied at the national level?
So, I think an important lesson is to enable the private sector and not to try to manage everything by the government. We have achieved. We've covered the gas needs of the Kurdistan Region with private investment. We put $4 billion of our own investment. There was no, not one cent of investment from the Kurdistan Regional government. It's private sector investment. We, the needs in the Kurdistan Region for the domestic electricity is 350 to 400 million cubic feet. Currently, in the summer, maybe it reaches closer to 500 but not more than this. We have built more capacity, so we can do 750 up to 800 when the pipeline is finished, so we can meet the needs of the Kurdistan Region. Plus, we can be supplying industry and the federal government itself is already buying electricity from power, private power producers in the Kurdistan Region, based on the gas that we supply. So, electricity is already going, gas, inshallah, will be going also to the federal government,
So, speaking of those private investments, energy investors consistently emphasize the need for legal certainty and predictable payment mechanisms. Are you satisfied with the current framework governing payments and financial settlements for gas deliveries?
So we have had challenges. This is a matter of public knowledge.
Are you still having it?
We are still having Dana Gas, as a publicly listed company, has to make these information public. We have unfortunately had delays in payments now more than three years, significant delays, which makes it hard to finance any more gas expansion, you know, if with the KRG as the, as the off-taker, but we are working with the KRG to try and resolve these, and also with the help of the power companies in the Kurdistan Region, but this is also one of the reasons why it's important to, there's significant gas potential now that we've met the needs of the KRG for the electricity within the Kurdistan Region to be finding other customers also, like industry, we mentioned, because this adds to the job creation and the economic value for the Kurdistan Region, and this is in line with the leadership of the of the KRG, and this is in line with what you see in the UAE and other Gulf countries, not just, you know, to look at, not just to produce the oil and gas, but to see how it can help you enhance your economy.
So, speaking of the global energy trends, if I'm recalling correctly, in Washington, you described disruptions to Gulf shipping routes as a "whole-economy shock." Given that your gas production is consumed domestically, how exposed are your operations to regional geopolitical turbulence?
So, to take from a high level, I said yesterday, and I believe this, that we now have come to a time when it's recognized that energy security is security, and it's because energy is the lifeblood of the economy. All sectors, people were focusing on AI. Nobody realized that the helium for the semiconductors that you need for the digital revolution are coming from Qatar. So, you know, nobody realized that the farmers today, here in the United States, in the Midwest, the big farm areas are having to change the crops which they plant because they cannot get the nitrogen fertilizer they were relying from the Gulf, from the Middle East. So it's having, you know, a worldwide impact, and that's what I meant by that statement.
Our production and reserves, of course, in the Kurdistan Region are not directly dependent on the Straits of Hormuz, because we sell it to local power, we're supplying local power stations and local customers, but there is an impact for Iraq overall by having the government fiscal challenge for the Iraqi government, which is then also impacting the KRG from salary transfers and other things. So, we, we hope this is temporary, and we can soon move forward positively after this event.
So, speaking of AI, you are arguing that energy companies should prioritize resilience alongside efficiency. How is that philosophy shaping Pearl Petroleum's future investment and expansion plans?
So, by resilience, what we mean is building infrastructure that you maybe don't need for when there is challenging time, so that means diversifying your customers, diversifying your production facilities, even within the same field, of course. The protection that we have, we've had to make hundreds of millions of dollars investment into protection systems that we never imagined before, and this is now something that the whole region will have to be doing, having asset protection teams and investments to protect energy infrastructure. I said here yesterday, and I believe that you know, and we see it, that attacks on energy infrastructure are considered war crime under international law, and the reason is you hurt people, because energy is so fundamental to lives and livelihoods. We see now economies in India and Vietnam and Southeast Asia who are having an economic crisis because of the war in our region.
So we think energy facilities should be protected and you know, not be attacked in, in time of war, and especially we, our focus is on the domestic needs, our partnership with the KRG, with authorities in Sulaimani, with our suppliers, with our employees, with our, you know, customers, now you mentioned the industrial customers having solid, strong long-term partnerships is also an important part of resilience, not only the physical pipelines or plant that you build.
So, if I'm recalling this correctly, at Davos, you highlighted the growing energy demands of artificial intelligence and data centers. Can Iraq and the Kurdistan Region leverage their natural gas resources to attract digital infrastructure and technology investment?
Yes, I do. I mean, the country is blessed with energy resources; however, it still has challenges, which are the immediate priority: meeting the electricity needs supply in local industry, and when it comes to data centers, even data centers in the UAE were hit during this war. So, we definitely have to achieve peace for the region before you can consider new investments for that. However, overall, I would say the fact of this gas resource can achieve more industrial investment to create demand, also for that gas, that might be data centers one day, but immediately we're already seeing it with steel and cement and other industrial investments,
So, I'm having my last two questions. With more than $3.5 billion invested in the Kurdistan Gas Project so far..
Actually four, though it's close to 4 billion, just under $4 billion
So, with that, what is your long-term vision for the next decade of development?
Sure, so our contracts going until 2049 and we have the long-term commitment. We are already nearly 20 years, but we're in a way just starting. We had, we had some delays due to dispute arbitration, then we had challenges in Iraq, the rise of Daesh, and we had COVID, and we had security incidents at the field, which you have reported on, so, and of course, the first priority was achieve the local electricity need demand for gas in the Kurdistan Region, which now we've achieved this year. So now we can really grow from that with Chamchamal, with industry, other markets supply in federal government, and so on. We are going to be investing much more for Chamchamal. We can consider $2 billion investment in the first major phase, not the small project we talked about, is an appraisal in early production, but the first big phase to add significant new productions, 400 million cubic feet per day, this will be several billion dollars more investment, so we are very committed to keep investing, the most important thing for the investors' confidence is, of course, payment is important, and respect for contract and respect for contractual rights is fundamental for any investor in long-term projects, especially in challenging situations.
So, my last question would be the most important question to me. You recently established the Dhia Jaffar Center. What inspired its creation, and what role do you hope it will play in shaping energy research, public policy, and future leadership in the Kurdistan Region and Iraq?
So, I should say that these, the donation, the support is personal family donation, not company donation, and we are very impressed as a family by the great universities which are being built in the Kurdistan Region, such as the American University of Kurdistan in Duhok, and I was pleased to visit and attend events there, and the American University of Iraq in Sulaimani, so as a family, and also in the name of my grandfather, Dr. Dhia Jaffar was the Iraqi Minister of Development, who did with the late King Faisal the Second many important infrastructure projects in Iraq, including the Dukan and Darbandikhan dams in Kurdistan Region, and that's still producing hydropower today, and when that started in 19th, it was 1956 and 1958 before the coup and overthrew the monarchy from 1958 until we started producing power, sorry, gas for power in 2008 For 50 years there was no new power generation in the Kurdistan Region, and successive Iraqi governments kept the Kurdistan Region dependent on the federal government for electricity. Thanks to the wise policies of the KRG, and our partnership that has changed now, and instead of being dependent on the rest of Iraq, now Iraq is buying electricity and soon gas, inshallah, from the Kurdistan Region, so that we're very proud of that. Going back to the support, so we with equal donations on the American University of Kurdistan
In Sulaimani?
American University of Kurdistan in Duhok with the Dhia Jaffar Fellowships, and these are scholarships for students, many students in areas like petroleum engineering, economics, business, which can enhance not only our sector but the economy, and then in the American University of Iraq's name on year the Diyar Jaffar Center for Energy Policy, which is to look at the specific energy policies for the Kurdistan Region and for all of Iraq. So, we're very proud of these two partnerships and to growing them, inshallah, going forward.
