I Futureproofing Fuel

• TOP 100 ARAB FAMILY BUSINESSES •

FUTUREPROOFING FUEL

Majid Jafar, CEO of Crescent Petroleum and Vice-Chairman of the Crescent Group, has a center-stage view of a global energy crisis. With an eye on the bigger picture, his more than 50-year-old U.A.E.-based family business is investing heavily in oil and gas to accelerate the transition away from fossil fuels.

BY JAMILA GANDHI

Majid Jafar, CEO of Crescent Petroleum and Vice-Chairman of the Crescent Group

IMAGE FROM SOURCE FORBESMIDDLEEAST.COM

As the price

of oil continues to fluctuate in the face of global market challenges, policymakers worldwide are taking the brunt of a dual crisis born of energy security and a creeping climate catastrophe.

Majid Jafar, CEO of Crescent Petroleum and Vice-Chairman of the Crescent Group, has been with his family business for 18 years and has seen this price cycle before. He believes that at least five major oil price cycles over the past five decades have led to volatile spikes of between $20 and $100 per barrel over the last two years. In his mind, for a more stable future, energy security and energy transition should be considered in parallel. “These are challenging times for the whole world. Energy is the lifeblood of the global economy, and it must be available and affordable as well as environmentally sustainable,” says Jafar. “We need to see more rational, long-term thinking and planning, with energy and large-scale strategic and science-based investments.”

He’s not alone in his analysis. With global energy demand expected to grow 30-50% by 2050, according to UBS data, experts say that more needs to be done to decarbonize the world economy successfully. “The energy crisis presents a threat to global economic growth,” says Michael Bolliger, Chief Investment Officer at Global Emerging Markets, UBS Global Wealth Management. “But although near-term visibility is low, we’re convinced that the crisis will accelerate the energy transition, providing opportunities and risks for the Middle East.”

While the transition will ultimately lead to less reliance on fossil fuels, it still presents big prospects for companies like Crescent Petroleum. Established in 1971, recent years have witnessed significant growth for the storied business. Crescent Petroleum says it has increased its oil and gas production by 50% over the past five years, producing over 700 million barrels of oil equivalent and making investments in oil and gas worth over $10 billion since its inception. Jafar

“We don’t think in terms of months or quarters; we think in terms of years and even decades.”

Majid Jafar highlights that oil and gas are still needed to produce high-demand products, from face masks and hand sanitizers to smartphones and vaccines. “Even electric cars still rely greatly upon oil products for their manufacturing,” he explains. “The world will still be relying on both oil and gas for decades to come, but we must both produce and consume it in cleaner ways.”

Higher energy prices have boosted the outlook for further investment in the sector. Crescent Petroleum is currently implementing a $630 million expansion project to increase natural gas production by an additional 55% by 2023. Further expansion plans would raise production to a billion cubic feet per day, implying a doubling in scale within the next three to four years.

The company has been shifting focus to natural gas for many years—natural gas now makes up 85% of the firm’s total production, and gas flaring and leakages have reduced by nearly 80% to just 0.12% of production currently. Carbon intensity has also been reduced to less than one-third of the industry average, and remaining emissions have been offset by supporting renewable wind power projects in China and Mongolia, supporting cleaner electricity that would normally be generated by burning coal. Crescent Petroleum achieved carbon neutrality across its operations in October 2021.

The company claims the gas it produces avoids more CO2 emissions annually than all Tesla cars on the planet. “Though we started as an oil company, early on we appreciated the importance of natural gas for electricity and industry,” adds Jafar. “As the world pursues decarbonization, cleaner processes and carbon capture technologies will play a vital role and cast a light on the

needs of developing countries in Asia and Africa, where 800 million people still do not have electricity and three billion lack clean fuel for cooking.”

The oil and gas conglomerate has been steadily increasing its investments throughout the Middle East since Jafar joined the company in 2004. The CEO also serves as Board Managing Director of Abu Dhabilisted Dana Gas, which was established in 2005. In 2007, Crescent Petroleum and Dana Gas were awarded exclusive rights to develop natural gas and condensate from the Khor Mor and Chemchemal Gas Fields in the Kurdistan Region of Iraq (KRI) to fuel electric power generation plants in Erbil and Chemchemal. In January 2022, Crescent Petroleum and its partners in the Pearl Petroleum consortium—the U.A.E.’s Dana Gas, Germany’s RWEST, Hungary’s MOL, and Austria’s OMV—reported a 50% increase in gas production from the Khor Mor field since 2018.

The impact of this goes well beyond revenue. In 2017, PwC estimated that Crescent Petroleum’s Kurdistan gas project’s expanded operations would contribute between $28.6 billion and $41.6 billion to the KRI economy by 2027 and create 7,500 permanent jobs. The project could also save an estimated $33.2 billion by replacing diesel with gas, saving 77 million tonnes of carbon dioxide emissions.

“Our region is already a leader when it comes to energy,” says Jafar. “The role of the Middle East has become more important for energy; it’s where new technologies like hydrogen are being proven up big commitments by the likes of the U.A.E. and Saudi Arabia.” Securing its importance on a global stage, the Middle East is featuring heavily in upcoming energy discussions. Egypt is set to host COP27 in November 2022, and the U.A.E. will host COP28 in 2023. Both host countries have ambitious energy diversification strategies. Egypt is aiming for 42% of its electricity to be produced from renewable energy sources by 2035, up from a projected 20% by the end of 2022. The U.A.E. has also set a target to produce half of its total energy from renewable and nuclear sources by 2050. The 50-year-old Gulf nation is already one of the lowest-cost solar energy producers globally and is building the world’s largest solar plant in Abu Dhabi.

As one of the country’s oldest and largest privatelyowned oil and gas companies, Crescent Petroleum’s history closely mirrors that of the U.A.E. In 1969, the signing of an oil concession agreement with the Government of Sharjah, followed by the discovery of oil, led to the formation of Crescent Petroleum in 1971—the year the U.A.E. was established. Successful operations have continued for over 50 years, led by Majid’s father Hamid Jafar, Founder and Chairman of the Crescent Group of companies, who grew the oil and gas business across Iraq, Egypt, and the U.A.E. and pursued opportunities in other sectors. “Our headquarters in Sharjah in the UAE has given us the stability to prosper and grow in an often turbulent region,” says Jafar. Today, the Crescent Group has interests in logistics, power, aviation, healthcare, real estate, private equity, and venture capital.

Exposed to the world of energy from a young age, Jafar frequently visited the family’s oil and gas platforms before he was even enrolled in school. “I grew up coming to and experiencing the business at work, but also experiencing the family nature of the business,”

he recalls. “My father, the chairman, was very wise and encouraged us to pursue other careers like law and medicine. By not pushing us into a certain direction, I naturally gravitated to the energy sector in our family business.”

A Cambridge alumna, Jafar graduated with bachelor’s and master’s degrees in engineering. After working multiple summer jobs for Shell International under a grant program, he was recruited for a full-time role when he graduated. He spent the next three years with the company, traveling across Europe and Africa. He joined Crescent Petroleum in 2004 after completing his MBA at Harvard Business School.

An advocate of responsible energy and sustainable development, Jafar also serves on the Energy Business Council of the International Energy Agency, the Advisory Board of the Responsible Energy Forum, the Stewardship Board of the Global System on Energy at the World Economic Forum, and the Board of Trustees of the Arab Forum for Environment and Development. He was also named a Young Global Leader by the World Economic Forum. “It’s a combination of science,

risk capital, management, and ingenuity to address a fundamental human need that I find most attractive in this line of work,” he reveals. “It is both a pleasure and a privilege to be able to work with family members—my father and my brother Badr and also my sister Razan who serves on our Board. It leads to deeper relationships which are professional as well as personal.”

As a second-generation leader, Jafar credits his present-day successes to a family constitution, which protects a sprawling family business by defining a family’s values and ethics and codifying rules for its business entity. “We separate the family’s identity from the business and don’t add the family’s name to any of the companies’ names and also maintain a separate family office,” explains Jafar. According to Deloitte, only 14% of family businesses with a constitution are concerned with enshrining it in law. “Transparency and open conversations are key to the sustainability of a family business in the hands of the next generation family entrepreneurs,” said Walid Chiniara, Deloitte Middle East, in a statement.

“Striking a balance between these relationships is a matter of alignment. Family members need to openly share their expectations to find common ground for their vision of the family business in the future,” agrees Rania Labaki, Director at EDHEC Family Business Research Centre and Associate Professor of Finance and Family Business at the EDHEC Business School. Drawing on his own experience, Jafar advocates for early governance and succession planning discussions with clearly defined roles written into the family constitution. For him, this means treating your family as family and your business as a business. “As my business school professor used to say—family ties are defined by love and respect, whereas in business, professionalism and accountability should govern,” he explains.

As the CEO continues to be bullish on moving energy into the next era despite testing circumstances, he’s keeping one eye on his investments while keeping his family’s principles at their core. “We don’t think in terms of months or quarters; we think in terms of years and even decades,” adds Jafar. “That means seeing through the challenging times to get to the good times and making bets that may take years to pay off while preserving corporate culture and staying true to your family values.”

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World’s Energy Billionaires

Here are the world’s top five richest people in the energy sector, according to Forbes’ World’s Billionaires ranking 2022.

Billionaire

• Fan Hongwei & family

• Harold Hamm & family

• Leonid Mikhelson

• Pei Zhenhua

• Mikhail Fridman Net worth Country

$18.2 billion

$17.2 billion

China

Fan Hongwei chairs Hengli Petrochemical, a chemical fiber supplier.

U.S. Country: Fracking pioneer Harold Hamm founded and chairs Continental Resources, one of the nation's biggest independent oil companies.

$14 billion

Russia

Leonid Mikhelson is the founder and chairman of natural gas producer Novatek.

$12.5 billion

$11.8 billion

China

Russia

Pei Zhenhua's fortune arises from his holdings in Contemporary Amperex, a battery products supplier.

Mikhail Fridman, cofounder of Alfa Bank, Russia's largest non-state bank, was hit with sanctions after Russia invaded Ukraine.

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Showcasing Energy Solutions

H.E. Saeed Mohammed Al Tayer, MD & CEO of the Dubai Electricity and Water Authority (DEWA) PJSC , explains the greater purpose behind this year’s WETEX exhibition and the impact it hopes to have.

What will WETEX deliver and why is this year’s event special? Under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and the patronage of His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Supreme Council of Energy, DEWA is organising WETEX and the Dubai Solar Show (DSS) for 2022. Both events will be held from 27-29 September at the Dubai World Trade Centre.

WETEX has become one of the largest and most important specialized annual events for regional and global organizations in the energy, water, environment, oil, gas, and green development sectors. The exhibition is an opportunity to reach thousands of exhibitors from around the world to make deals, build partnerships, and view the latest technologies and innovations.

This year is the 24th edition, and it is especially important as the U.A.E. prepares to host COP28 in 2023. The exhibition plays a crucial role in increasing the private sector’s contribution to the clean and renewable energy sectors. Who partners with the exhibition and what value do they bring? The WETEX and DSS exhibition partners with major local, regional, and international companies in the energy and water sectors. It also partners with media outlets, NGOs, and startup accelerators. All these are vital stakeholders for the success of the exhibition and contribute to making it a global platform for all energy related projects, technologies, innovations, and ambitious plans from the U.A.E. to the world. How does WETEX support nationwide efforts in the transition to a green economy? The exhibition is a forum for experts and specialists from around the world to discuss solutions for countering challenges in the clean, renewable energy sectors as well as water, oil, gas, green economy, smart grids, and sustainability, among other sectors. The WETEX and DSS exhibition consolidates Dubai’s position as a role model for providing the latest technologies

for water, energy, and the environment. It also promotes the U.A.E.’s position as a global hub for clean energy and a green economy. All this supports Dubai’s efforts to achieve the Dubai Clean Energy Strategy 2050 and the Dubai Net Zero Carbon Emissions Strategy 2050 to provide 100% of Dubai’s total power capacity from clean energy sources by 2050. What topics are at the top of the agenda? This year, WETEX and DSS will H.E. Saeed Mohammed Al Tayer, focus on several issues related to MD & CEO - DEWA energy, including sustainability, disruptive technologies of the Fourth Industrial Revolution, smart cities and grids, the future of energy in the world, environment protection, waste management, green buildings, protecting natural resources, and stimulating innovation in energy. DEWA will hold seminars, panel discussions, workshops, and awareness sessions for visitors and delegates from participating schools and universities, in collaboration with experts and specialists from the biggest leading international companies.