A Global Investment Partner for The Development of India’s Oil and Gas Resources

1. International Finance Corporation A Global Investment Partner for The Development of India’s Oil and Gas Resources

2. Presentation Structure InternationalFinanceCorporation IFC’s Oil & Gas Business Working with IFC

3. International Finance Corporation • 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

4. Our Guiding Principles • 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

5. The resources of a development bank and the flexibility of an investment bank • Long-Term Financing • Corporate / Project • Equity / Quasi-equity Global industry and country knowledge and contacts • Capital Mobilization • Syndication with commercial banks (B loan program) • Co-financing Understanding to government policies IFC’s Products Commercial and technical skills in emerging markets • Advisory Services • Country, industry, financial and technical

6. Flexible set of loan and equity products and structuring expertise add value to sponsors Flexible Loans • 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 Equity Participation • Portfolio investor • Technical /commercial knowledge in many sectors • Long-term partnership CreditEnhancement • Partial credit guarantees on local / foreign currency bond issues • Credit enhancement mechanisms for asset securitization Country Risk Mitigation • Expropriation, contract repudiation, currency convertibility • Governance • Political stability

7. $2.8 bn invested in India since 1958 IFC’s own account portfolio, by sector (as of June, 2003) IFC : $ 1.05 billion Syndications: $72.6 Million

8. Innovative Approaches • Corporate Governance • Advise companies on oversight structures, inter-company transactions, shareholder protections etc • Environmental Sustainability • Advise companies on how to minimize environmental costs and risks, and how to profit from environmentally sustainable business practices • Social Sustainability • Advise companies on how to work with local communities to ensure mutually beneficial outcomes which ensure lasting business success

9. Next Topic… InternationalFinanceCorporation IFC’s Oil & Gas Business Working with IFC

10. IFC in oil and gas – sectors • Upstream • Early appraisal/limited exploration • Development • Pipelines • Downstream • Pipelines • Processing • Refining • Distribution

11. Oil and Gas Opportunities in India • Domestic Gas fields • Development • Pipelines • Cross-border Gas Trade • LNG Terminals • Pipelines • Distribution and Retailing • CNG auto fuels

12. Financing volumes – IFC Oil & Gas

13. IFC in oil and gas – Advantages • Capacity to accept/deal with political risks • Spread of assets • Relationships with governments and World Bank • Structuring 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

14. India : Niko Resources Ltd • Gasfield development in Gujarat • Expansion of first private sector gas development in India and exploration/development of a greenfield gas field • Niko’s strong operating history in India allowed for a flexible corporate loan package • US$30 mm A Loan, with an additional $10 mm if additional reserves prove up

15. Venezuela – Petrobras 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: • Expansion project for an operation that is generating significant benefits for local community and workers • Supporting regional company maintain an effective presence in Venezuela at a time when the private sector generally is under pressure there. • Tax revenues and exports for Venezuela

16. 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: • Large project in a remote area that will support local community by providing employment and wide range of services • Important environmental remediation • Training for local employees including transfer of technical and management skills • Tax revenues and exports for Kazakhstan. • Supports development of regional company

17. Nigeria: Oil Services Local Contractor Credit Facility Supporting business linkages between small, local companies and majors… • 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

18. Chad Cameroon Pipeline Project - IFC Oil field in Chad and pipeline (1050km) through Cameroon (total cost $3.7bn) • 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 Management • Environmental, social, technical due diligence including EMP • Project design, consultation, mitigation measures, etc • Helping increase local benefits in terms of arrangements about local recruitment, training, SME development etc • Neutral broker to help parties reach agreement in relevant areas

19. Kazakhstan – FIOC/Sazankurak Project 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: • Small project in a remote area that will support local community by providing employment. • Training for local employees including transfer of technical and management skills • Tax revenues and exports for Kazakhstan. • Supports government objective of effectively developing small oil fields that large companies may not be interested in.

20. Albania – 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: • One of the first new private investments following changes in Albania. • Oil exports that generated foreign exchange and taxes. • Demonstration of best practice environmental (first EIA) and progressive rehabilitation of past damage. • Technical and Management Skills Transfer through introduction of new technology and management methods

21. Cote d’Ivoire – Block CI-11 • Project 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: • 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. • Source of low cost local gas to displace fuel oil and facilitate major new private investment in the power sector • Oil export revenue • Revenue for government in the form of taxes and profit shares. • Encourage further new investment

22. Other 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

23. Next Topic… InternationalFinanceCorporation IFC’s Oil & Gas Business Working with IFC

24. IFC Financing for private investment oil and gas - products • 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 manager • Maximum of 30% project cost (A loans/equity) • Market rates • Look to sponsor for project completion • Not pure exploration but will take development/appraisal risk

25. How 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

26. Summary • 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 countries • Gas development • Cross-border projects • Services sector • Development value added – E&S, SME , etc

27. No. 1, Panchsheel Marg, Chanakyapuri New Delhi 110 021 Telephone: (11) 2611-1306 Facsimile: (11) 2611-1281 For more information, please contact: International Finance Corporation Dimitris Tsitsiragos Director, South Asia Department Godrej Bhavan, 3rd Floor Murzban Road Fort, Mumbai 200 001 Telephone: (22) 5665-2000 Facsimile: (22) 5665-2001 Email:SouthAsia@ifc.org Website:www.ifc.org/southasia

28. International Finance Corporation A Global Investment Partner for The Development of India’s Oil and Gas Resources