BankersPetroleum

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	27306
Company name	Bankers Petroleum Ltd.
Country	Albania
Sector	Oil, Gas and Mining
Environmental category	B
Department	Oil, Gas, Mining And Chemicals
Status	Active

Date SPI disclosed	February 25, 2009
Projected board date	March 27, 2009
Previous Events	Invested: July 10, 2009 Signed: May 8, 2009 Approved: May 5, 2009

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Bankers Petroleum Ltd. (“Bankers” or the “Company”) is a Canadian-based oil and gas exploration and production (“E&P”) company, exclusively focused on Albania. The Company’s primary asset is the Patos Marinza heavy oilfield, in which it holds a 100% interest and right to full operatorship as it gradually takes over the field from Albpetrol, the Albanian national oil company in the next few years. In 2008, Bankers has launched a strategic plan for Patos Marinza development, aiming to increase oil recovery rates and production over the next several years through application of primary and enhanced oil recovery methods. Bankers has recently acquired 100% interest in a nearby oilfield, Kucova, development plans for which will be prepared in 2009-2010 based on the evolving economic environment. The Company’s strategy is to remain focused on E&P activities in Albania.

Bankers has invited IFC and European Bank for Reconstruction and Development (“EBRD”) to provide a financing package to help finance the development of its Albanian assets, and in particular, the Patos Marinza development plan.

Anticipated development impact of the project

Fit with the World Bank Group Strategy:

The World Bank Group’s (“WBG”) FY2006-2009 Country Assistance Strategy (“CAS”) for Albania focuses on two key pillars: (i) continued economic growth through support to private sector development; and (ii) improving public service delivery, particularly in the social sectors. Within the integrated WBG strategy, IFC’s particular development objectives in Albania are to (i) facilitate privatization and promote private sector investments in infrastructure; (ii) promote export competitiveness of the economy through support of local export-oriented companies; (iii) improve investor confidence and help increase foreign investment inflows; and (iv) promote market liberalization through encouraging fair practices and effective competition. The proposed investment will be closely aligned with this strategy.

Development Impact:

The Project is expected to generate the following development impacts:

Developing domestic energy resources
Albania is not a major hydrocarbon producer but has possibly sizeable heavy oil reserves, which if developed with the help of advanced technologies can help increase domestic oil output. The proposed investment will help Bankers accelerate oil recovery from the Patos Marinza field (and possibly at a later stage, the Kucova field), and promote greater private investment and participation in Albania’s energy sector.

Attracting foreign direct investment
Albania needs increased foreign direct investment(“FDI”) to develop its hydrocarbon sector, as well as other sectors of the economy. The Company’s investment in the project would make Bankers one of the country’s largest foreign investors in this sector. IFC’s direct involvement will help stimulate the much needed FDI inflows in Albania.

Contribution to government revenues
The project will generate substantial revenue flows to the Albanian government. The capital investment program and incremental oil production as a result of the proposed investment will result in direct economic benefits in the form of increased fiscal receipts, through income taxes (50%), royalties to the Government of Albania (10%) and Albpetrol (1-5%).

Development of local skill and, technology transfer
Most of the staff working in the Company’s operations are Albanian nationals. The Company directly employed about 200 staff in Albania at the end of 2008. The Project is expected to contribute to further development of local skills, and transfer of knowledge and technology for heavy oil extraction, both of which will aid in the future development of the Albanian oil industry.

Potential contribution to environmental remediation efforts
The Company seeks to conduct its operations in line with good international practices. Its progressive development of the field, as existing Albpetrol operations are taken over, will result in an incremental decrease of pollution and considerable clean-up in working areas, as well as reduction of health and safety risks to the communities as the initial clean-up of contaminated locations will help halt leakage from poorly abandoned equipment and ongoing pre-existing Albpetrol activities. In addition, the Company will also potentially support plans that may be developed by the public sector to undertake wider environmental remediation activities of areas affected by Albpetrol’s historical operations in the field, in conjunction with Albpetrol and other Albanian government agencies.

IFC plans to monitor the following development impacts: (i) payments to the government; (ii) employment created / maintained; and (iii) provision of training to local staff.

Governance risks assessment

The Project is expected to contribute revenues to the Albanian Government and generate positive development benefits to local communities. Royalties and taxes from the hydrocarbon sector are paid directly to the central government budget. IFC has taken into consideration the value of potential benefits and related governance risks, and is satisfied that (i) the project should be supported and (ii) the sponsor has agreed to make project/ company payments to government public. In undertaking this assessment, IFC has reviewed existing governance assessments of Albania, including Transparency International’s Corruption Perceptions Index and the World Bank Institute’s (“WBI”) Governance Indicators. Albania has seen continued improvement in WBI governance indicators. The World Bank continues to have a strong presence in the country. The current Albania CAS introduced a Governance Filter for all projects, programs, policy advice and dialogue, and sectors of the economy in which the World Bank contributes to help Albania’s goal of improving governance and reducing corruption. As European integration remains the main Government priority, improving governance should remain a key objective of government policies.

IFC's expected development contribution

Environmental and Social Sustainability
IFC is helping the Company expand its capacity to manage environmental, social, health and safety issues. IFC is playing an active role in providing this support to the Company in enhancing its existing environmental and social management system in line with IFC’s Performance Standards and good international practices. As mentioned earlier, Bankers is also willing to participate in environmental remediation of the Patos Marinza field, and may seek IFC/EBRD support to help guide its efforts.

Contribution to long-term financing needs
Bankers has requested IFC and EBRD to provide long-term financing for the development of Patos Marinza to help manage and grow its exposure in Albania. IFC is well positioned to serve the Company’s need for flexible long-term financing that is suited to the project’s needs and underlying economics.

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to the applicable performance standards, guidelines or design criteria. Bankers’ project will also result in significant site specific positive impacts involving the clean up and clearance of existing contaminated well areas. Bankers operates its existing facilities in compliance with applicable and relevant environmental and social requirements of Albania. Upon implementation of specific mitigation measures identified in the company’s HSSE Management System framework, as well as some additional measures identified by IFC’s appraisal (as reflected in the ESRS), Bankers will ensure compliance with IFC Performance Standards.

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