IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental /social information submitted by the project sponsor. The following potential environment, health and safety and social impacts of the projects were analyzed. - The Operator’s Environmental Management System; - The Operator’s Corporate capacity to review and manage projects in accordance with IFC’s environmental and social safeguard policies; - Environmental conditions of existing facilities and development of Environmental Impact Assessments; - Air emissions; - Liquid and solid waste disposal; - Noise; - Emergency response plans; and - Land acquisition and compensation.

The Operator has presented plans to address these impacts to ensure that the proposed project will comply with the environmental and social regulations/requirements of the Sultanate of Oman (Oman) and the World Bank/IFC, upon implementation of the following agreed measures. Block-5 is located onshore in Oman approximately 450 km SW of Muscat and contains the Daleel, Mezoon, Shadi and Bushra fields. The largest and most explored field is the Daleel field, which extends from the north to the south of Block-5. As part of this project, associated power generation and distribution facilities for the water supply system and water injection gas/water separation and treatment facilities will be installed. The project will also involve facilities for injecting aquifer water from the Upper Fars water supply wells, located approximately 21 km from Daleel field. Currently, Block-5 has the following permanent facilities at Daleel field: (a) a production and gathering station; (b) a camp to accommodate employees; (c) a separation station; (d) a power station with three generators; (e) six in field water wells and sixteen in Masruq; (f) a sewage treatment facility; and (g) a solid waste disposal site. Environmental Impact Assessments (EIAs) have been prepared by independent consultants for the major components of the project. The Operator has followed international best practices for the preparation of the EIAs as well as guidance notes by the World Bank Group. The Operator has also obtained all necessary approvals from the respective authorities. The project is located in an area where communities or settlements are scarce (if any). The nearest settlement to Daleel field is the Masruq village, located approximately 26 km east of the gathering station. The village consist of 63 modern government-built housing units. However, they are mostly uninhabited and are gradually being overwhelmed by drifting sand. The current population of this village is estimated to be about 20 people. Given the conditions at the location of the project site, it is not envisioned that the project will involve physical resettlement or acquisition of land. All the major proposed activities are within Block-5. The Operator has an integrated Health, Safety and Environment Management System (HSEMS) in place. The HSEMS covers the company’s activities in Oman and the impacts its activities could have on the community and the environment. The HSEMS has been structured to minimize the risks of the Operator’s activities at the project site. The HSEMS has been approved by senior management and has been incorporated at all levels of the company as well as contractors, subcontractors and any other involved party to the project. By implementing the HSEMS, the Operator aims to educate all employees, including managers, and companies which provide services to the Operator with regard to health, safety and the environment. The 21 km Glass Reinforced Epoxy pipeline and gathering lines will collect water from nine water wells located near Masruq village. The system will be designed to handle 75,000 to 80,000 barrels of water per day. The pipeline will be buried and the water will be transported to the water injection pumps located in Daleel field. The pipeline is being designed according to international standards during construction and operation, and its route is completely within Block-5. This area consists mainly of low dunes and sand drifts un-dispersed wit low flow wadi channels. The alignment of the pipeline will avoid major wadi crossings, and there will be only one sealed top road crossing. The EIA for the pipeline indicates that there is no evidence of rare or protected fauna or flora in the area of the pipeline installation. Based on review of information available it was indicated that the cemetery for Musruq village is located about 500 m from the proposed alignment of the pipeline. The cemetery is partially covered with sand drifts and is not fenced in. The Operator has indicated that the contractor for the pipeline construction, will need to clearly delineate the limits of the cemetery to ensure that accidental damage does not occur. This EIA provides specific recommendations (environmental management plan) for the Operator to minimize the impact of the project. The EIA for the waterflood facilities was prepared by the Operator and approved by the appropriate Omani authority. A construction camp for a workforce of twenty is expected to be built within the premises of Daleel field. However, this will depend on the contractor assigned to the construction of the facilities. In the event that additional housing is required, the Operator will request authorization from the appropriate Omani authority. The quality of groundwater in this area is considered very saline and thus unsuitable for drinking purposes. Potable water for the area is provided by a well near Masruq. In 1998, the Operator installed a reverse osmosis plant to meet domestic requirements of its employees and also provides bottle water. Electricity to the project site (operational and domestic) is provided by three generators. Two are gas-powered and one is diesel-powered and is used only for emergency and start and shut down purposes. Currently, a portion of the associated gas is used as fuel gas and the remaining is flared. IFC has discussed options with the Operator to reduce and ultimately stop all flaring by setting up an LPG plant for processing of the gas. The Daleel field has a sewage treatment plant that was installed in 1998 to treat all domestic liquid waste and is designed to handle thirty cubic meters per day and with a pre-existing septic tank. The treated effluent is collected in tanks for further use in irrigation of the grass in the surroundings of the facility. Produced water from Daleel field will be treated through evaporation - the Operator has two lined evaporation ponds. There are two wells to monitor the quality of groundwater in the area of the evaporating ponds. Non-hazardous waste is disposed at a designated landfill in the region of Ibri approximately 110 km away from Daleel field. Hazardous wastes are first stored at Daleel field according to the procedures specified in the HSEMS and then collected by authorized contractors to be disposed at the “Hazardous PDO Waste Storage Yard”, which is managed by Petroleum Development Oman (PDO) and is located about 70 km away from Daleel field. An Environmental Management Plan is in place to mitigate the specific impacts of this portion of the project. During the period of 2003, the project had thirty-three incidents, including nine oil and chemical spills. These spills ranged between one to three barrels of oil in different areas, and the impacts in the soil were minimal. The Operator implemented corrective measures including bioremediation for the areas with soil contamination. The bioremediated soil was then landfill. During this period there were no fatal accidents. Hazard and operability studies have been prepared for Daleel field, including the new oil/gas/water processing and treatment facilities. The studies are required for all major operations under the Operator’s HSEMS. Noise at the project site will be monitored and personal protective equipment will be provided to all employees. Due to the isolated location of Daleel field, noise generated at the project site, is not expected to have a high impact on the communities or receptors. The Operator monitors groundwater quality throughout Daleel field, some of the monitoring wells belong to the Government of Oman and others to the project, emissions from gas flaring are also monitored as well as the monthly amounts flared. The Operator is obliged to transfer knowledge to the Omani population. The Operator currently employs 37 Omanis, ranging from Chief Operating Officer to junior positions. In addition, as part of the Operator’s Local Community Contractors initiative, local Omani companies will have the opportunity to bid on oilfield service and equipment procurement contracts, which have traditionally been awarded to international companies. Over the past year, six to eight local companies have provided various services to the Operator.

This ERS contains the full environmental and social documentation prepared for the project.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

IFC will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: - the status of implementation of any measures contained in the Environmental and Social Action Plan and - ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.