a global investment partner for the development of india’s oil and gas resources

A Global A Global Investment Investment Partner forPartner forThe Development The Development of India’s Oil and of India’s Oil and Gas ResourcesGas Resources

International Finance Corporation

Presentation StructurePresentation Structure

Working with IFC

Working with IFC

InternationalFinance

Corporation

InternationalFinance

Corporation

IFC’sOil & GasBusiness

IFC’sOil & GasBusiness

International Finance International Finance CorporationCorporation

A member of the World Bank Group since 1956, net worth over $6 billion

Our mission is to promote sustainable private sector investment in developing countries, so as to reduce poverty and improve people’s lives

We operate on a commercial basis, and have made a profit every year since our inception

AAA rated international borrower: allows us to offer competitive financing to clients

Catalytic: mobilization of capital, minority role, investment limit

Business partnership: same risks as other investors, no government guarantees, satisfactory returns as well as benefit to host country

Additionally: private sector not displaced

Our Guiding PrinciplesOur Guiding Principles

The resources of a development The resources of a development bank and the flexibility of an bank and the flexibility of an

investment bankinvestment bank

IFC’s Products

Global industry andcountry knowledge

and contacts

Global industry andcountry knowledge

and contacts

Commercial andtechnical skills inemerging markets

Commercial andtechnical skills inemerging markets

Understanding togovernment

policies

Understanding togovernment

policies

Capital Mobilization Syndication with commercial banks (B loan program) Co-financing

Capital Mobilization Syndication with commercial banks (B loan program) Co-financing

Long-Term Financing Corporate / Project Equity / Quasi-equity

Long-Term Financing Corporate / Project Equity / Quasi-equity

Advisory Services Country, industry, financial and technical

Advisory Services Country, industry, financial and technical

Flexible Loans

Equity Participation

Fixed/floating rates, currency of choice (including Rupees) Commercial rates, repayment tailored to project needs Long maturities: 6-10 years, appropriate grace periods Range of security packages suited to project/industry

Portfolio investor Technical /commercial knowledge in many sectors Long-term partnership

Credit Enhancement Partial credit guarantees on local / foreign currency bond issues Credit enhancement mechanisms for asset securitization

Flexible set of loan and equity Flexible set of loan and equity products and structuring products and structuring

expertise add value to sponsorsexpertise add value to sponsors

Expropriation, contract repudiation, currency convertibility Governance Political stability

Country Risk Mitigation

$2.8 bn invested in India since $2.8 bn invested in India since 19581958

IFC’s own account portfolio, by sector (as of June, 2003)

IFC : $ 1.05 billion

Syndications: $72.6 Million

Infrastructure, Power, Telecom

17%

Manufacturing & Services

42%

Other12%

Financial Institutions

29%

Innovative ApproachesInnovative Approaches

Corporate GovernanceAdvise companies on oversight structures,

inter-company transactions, shareholder protections etc

Environmental SustainabilityAdvise companies on how to minimize

environmental costs and risks, and how to profit from environmentally sustainable business practices

Social SustainabilityAdvise companies on how to work with

local communities to ensure mutually beneficial outcomes which ensure lasting business success

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WorkingwithIFC

WorkingwithIFC

InternationalFinance

Corporation

InternationalFinance

Corporation

IFC’sOil & GasBusiness

IFC’sOil & GasBusiness

IFC in oil and gas – sectorsIFC in oil and gas – sectors

UpstreamEarly appraisal/limited

explorationDevelopmentPipelines

DownstreamPipelinesProcessingRefiningDistribution

Oil and Gas Opportunities in Oil and Gas Opportunities in IndiaIndia

Domestic Gas fieldsDevelopmentPipelines

Cross-border Gas TradeLNG TerminalsPipelines

Distribution and RetailingCNG auto fuels

Financing volumes – IFC Oil & GasFinancing volumes – IFC Oil & Gas

IFC Oil, Gas and Chemicals Commitments ($m)

0

200400

600

1997 1998 1999 2000 2001 2002 2003

B loans

IFC

IFC in oil and gas – Advantages IFC in oil and gas – Advantages

Capacity to accept/deal with political risksSpread of assetsRelationships with governments and

World BankStructuring experience

Team of Specialists –Finance,engineering, legal, social and environment

Broad international experience in project financing working with investors and banks

Focus on added development value – SME initiatives etc

Well recognized policies and guidelines No withholding tax on interest on IFC loans

Gasfield development in GujaratExpansion of first private sector gas development in India

and exploration/development of a greenfield gas fieldNiko’s strong operating history in India allowed for a

flexible corporate loan packageUS$30 mm A Loan, with an additional $10 mm if

additional reserves prove up

India : Niko Resources LtdIndia : Niko Resources Ltd

Venezuela – Petrobras Venezuela – Petrobras Energía Venezuela Energía Venezuela

Sponsors: Pecom Energia (Argentina)

Project Details: Expansion of Existing oil service contract at a time when bank financing for Venezuelan projects is not available

IFC’s Involvement and rationale: Financing of $105m to finance Pecom’s share of project development costs. Developmental impacts expected from:

(i) Expansion project for an operation that is generating significant benefits for local community and workers

(ii) Supporting regional company maintain an effective presence in Venezuela at a time when the private sector generally is under pressure there.

(iii)Tax revenues and exports for Venezuela

Kazakhstan – Lukoil Kazakhstan – Lukoil

Sponsors: Lukoil, British Gas, AGIP/ENI

Project Details: Karachaganak gas condensate development, Kazakhstan

IFC’s Involvement and rationale: Financing of $150m made up of $50m A loan, $25m C loan for IFC and $75m B loan for commercial banks. Support for environmental and social assessment and program. Developmental impacts expected from:

(i)Large project in a remote area that will support local community by providing employment and wide range of services

(ii)Important environmental remediation(iii)Training for local employees including

transfer of technical and management skills(iv)Tax revenues and exports for Kazakhstan.(v)Supports development of regional company

Oil sector in Nigeria – tumultuous history but new government implementing far reaching reforms

Small business development key to IFC’s investment strategy

$30 million credit facility providing competitively priced medium term loans – complemented by a TA program

Jointly funded by IFC, Shell and a local bank

Goal of facility: To build indigenous industrial capacity in the Niger Delta – a small but important first step

Nigeria: Oil Services Local Nigeria: Oil Services Local Contractor Credit FacilityContractor Credit Facility

Supporting business linkages between Supporting business linkages between small, local companies and majors…small, local companies and majors…

Chad Cameroon Pipeline Project Chad Cameroon Pipeline Project - IFC - IFC

Finance of $2bn pipeline:Providing up to $100m of financing for its own

account$100m B loan from commercial banks and working

with other financiers on due diligence Working with government,sponsor and other lenders

on:Revenue ManagementEnvironmental, social, technical due diligence

including EMPProject design, consultation, mitigation measures,

etcHelping increase local benefits in terms of

arrangements about local recruitment, training, SME development etc

Neutral broker to help parties reach agreement in relevant areas

Oil field in Chad and pipeline Oil field in Chad and pipeline (1050km) through Cameroon (1050km) through Cameroon

(total cost $3.7bn) (total cost $3.7bn)

Kazakhstan – FIOC/SazankurakKazakhstan – FIOC/SazankurakProject Location and cost : Kazakhstan - $45m

Sponsors: FIOC (USA) and AMG (Kazakhstan)Project Details: Sazankurak oil development 120km west

of Atyrau, Kazakhstan

IFC’s Involvement and rationale: Loan, quasi-equity and equity finance totaling $20m. Developmental impacts expected from:

(i) Small project in a remote area that will support local community by providing employment.

(ii) Training for local employees including transfer of technical and management skills

(iii)Tax revenues and exports for Kazakhstan.(iv)Supports government objective of effectively

developing small oil fields that large companies may not be interested in.

Albania – Patos MarinzaAlbania – Patos Marinza

Project Location and cost : Albania - $266m (subsequent plan Phase I $198m, Phase 2 $100m)

Sponsors: Anglo Albanian Petroleum Ltd (Premier (UK), Preussag (G), Albpetrol (A)

Project Details: Enhanced oil recovery for Patos Marinza field in Albania

IFC’s Involvement and rationale: Equity of $28.5m and loans total of $40m - Sponsors need for financing in Albania and strong developmental impact from:

(i) One of the first new private investments following changes in Albania.

(ii) Oil exports that generated foreign exchange and taxes.

(iii) Demonstration of best practice environmental (first EIA) and progressive rehabilitation of past damage.

(iv) Technical and Management Skills Transfer through introduction of new technology and management methods

Cote d’Ivoire – Block CI-11Cote d’Ivoire – Block CI-11Project Location and cost : Cote d’Ivoire >$200m over

time

Sponsors: Unincorporated joint venture with UMC, Petroci (State), GNR and Pluspetrol

Project Details: Development of the small offshore Block CI-11 oil and gas field, including pipeline to shore

IFC’s Involvement : Equity investment ($38m) as UJV partner and loans for IFC account ($30m) and for account of commercial banks in syndicated “B loans” ($40m).

Rationale/development Impact:

(i) First foreign investments in oil and gas sector following sector reform with assistance of World Bank – commercial banks would not invest with out IFC and investors concerned about Government gas offtake risk.

(ii) Source of low cost local gas to displace fuel oil and facilitate major new private investment in the power sector

(iii) Oil export revenue (iv) Revenue for government in the form of taxes and

profit shares.(v) Encourage further new investment

Other Recent InvestmentsOther Recent Investments Colombia – $35m medium term loans for oil

field expansion Africa - $0.25m seed capital for oil

development venture Cameroon - $20m extension of oil

development credit facility Bulgaria - $17m medium term loans for

small offshore gas field development Brazil – $40m 9 year term loans to support

gas investment program of local company Queiroz Galvao

Argentina – financing to local oilfield developers Astra, Bridas, San Jorge

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WorkingwithIFC

WorkingwithIFC

InternationalFinance

Corporation

InternationalFinance

Corporation

IFC’sOil & GasBusiness

IFC’sOil & GasBusiness

IFC Financing for private IFC Financing for private investment oil and gas - investment oil and gas -

productsproducts A loans – long term, US$, Fixed or floating B loans – syndicated funds raised from

commercial banks Guarantees Equity and quasi equity – including UJVs General Rules:

Not project managerMaximum of 30% project cost (A

loans/equity)Market ratesLook to sponsor for project completionNot pure exploration but will take

development/appraisal risk

How IFC Adds ValueHow IFC Adds Value

Access to equity and loan finance from one source

Longer tenor loans/longer grace periods

Loan syndication

State of the art financial structuring

‘Honest broker’ role with business partners, government

Global financial and technical expertise

Global leader on corporate governance and environmental and social sustainability

SummarySummary

WBG is keen to work with industry and others to ensure sustainable oil and gas development

Both private investors and countries have a strong incentive to manage the risks well to ensure this.

IFC can help with financing and other assistance

Likely areas for focus:Riskiest countriesGas developmentCross-border projectsServices sectorDevelopment value added – E&S, SME , etc

For more information, please For more information, please contact:contact:

No. 1, Panchsheel Marg,ChanakyapuriNew Delhi 110 021Telephone: (11) 2611-

1306Facsimile: (11) 2611-

1281

Email: SouthAsia@ifc.orgWebsite: www.ifc.org/

southasia

International Finance Corporation

Godrej Bhavan, 3rd Floor

Murzban RoadFort, Mumbai 200 001Telephone: (22) 5665-

2000Facsimile: (22) 5665-

2001

Dimitris Tsitsiragos Director, South Asia Department

A Global A Global Investment Investment Partner forPartner forThe Development The Development of India’s Oil and of India’s Oil and Gas ResourcesGas Resources

International Finance Corporation