This project began its appraisal process prior to the approval of the Performance Standards, therefore, the project was reviewed based on the Safeguard Policies, however, since the project Sponsor has committed to comply with the Performance Standards going forward. Performance Standards applicable to this investment include: - PS1: Social and Environmental Assessment and Management System - PS2: Labor and Working Conditions - PS3: Pollution Prevention and Abatement - PS4: Community Health, Safety and Security - PS5: Land Acquisition and Involuntary Resettlement - PS8: Cultural Heritage

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 criteria. The IFC made this categorization based on: - site visits to the offshore and on-shore facilities; and - review of environmental and social documentation. The IPR activities are located in the desert and offshore. The impacts to the environment and communities will be limited. With the implementation of the Corrective Action Plan and the Integrated Management System the risks presented by the project will be handled in a sustainable manner.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the Egyptian laws and regulations and the IFC Performance Standards and the World Bank Group environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor is as follows: In the Western Desert (WD) the company operates Alamein/Yidma and North Ras Qattara, with a working interest of 65% and 100% respectively. However, the company participates as a non-operator in the development of two other fields including: North Bahariya (30%), and El Diyur (12.5%). In the Gulf of Suez, the company operates the North July and North Ramadan concessions with a working interest of 50% and 30% respectively. The company has recently acquired the working interest of Devon in South West Gebel el Zeit which provides the company with a working interest of 44.62%. IPR is in the process of developing an Integrated Environmental, Health, Safety and Social Management System which will guide their operations in Egypt as well as other countries of operation. It is expected that the complete Integrated Management System will be in place by May 2007. The Integrated Management System will provide IPR with the necessary tools to apply the same level of standards in all of its operations, which will also include the application of International Best Practices for the oil and gas industry. To date the environment and social aspects of the project have been managed by either the operations manager or by the contractors, IPR would like to build their environment and social capacity and has committed to hire an environmental and social manager to lead the implementation of the Integrated Management System and develop the company’s strategy for future operations. The selected candidate should be in place by February 2007. The Alamein concession began production in 1968, and is located about 15 km south of the Mediterranean Sea. A total of 31 wells have been drilled in the concession, of which 22 are still producing. The concession is located in the desert and there are no communities nearby, with exception of one Bedouin community located 20 km away. According to Egyptian environmental regulations, projects need to prepare, consult and disclose the Environmental Impact Assessment (EIA). In the case of IPR, this process has been carried out by others (JV partners) and therefore, the interaction with stakeholders has been limited. The Integrated Management System will develop procedures on how IPR will manage that interaction and communications with stakeholders. To date the company has not had any complaints with respect to their operations. It is not anticipated that IPR activities will have significant impacts to cultural heritage, however, if future project developments or chance finds result in such impacts IFC’s Performance Standard 8 will be applied and IPR will implement any necessary corrective action. Currently, the project follows the procedures established by the Egyptian regulations, if an artifact is discovered during construction, the operations will be stopped until a representative of the Egyptian authorities has inspected the site. Produced water at the Alamein Yidma field is re-injected for re-pressurization of the field and the remaining is treated in a wastewater treatment facility. Solid waste from the operations are collected and disposed by a third party company authorized by the environmental authorities in Egypt. Currently, the company is utilizing their partners emergency and preparedness plans, which has been determined to be minimal for the operations. As part of the Integrated Management System, the company will be reviewing the plans and preparing a new one that outlines the responsibilities within IPR and contacts with the respective authorities. Additionally, the company will be developing as part of the management system a more systematic approach to training of personnel in areas of safety, environment and social awareness which is currently lacking. IPR facilities were either leased or acquired through a bidding process; therefore, the company was not involved in any land acquisition or compensation. The North July concession covers an area of some 9,000 acres and is situated in the central offshore Gulf of Suez region some 250 km southeast of Cairo. To date, a total of six wells have been drilled in the concession, five of which have encountered hydrocarbons and have led to the discovery of the North July field. The facilities on the North July field consist of an eight-leg, three-slot platform standing in 51 meters of water. The platform is designed for un-manned operation with standard safety monitoring devices and automatic shut down. Production from the North July field is transported to a processing facility via a nine-kilometer pipeline. The North July concession has an exclusion zone which is monitored by the Government of Egypt. Fishing in the area is limited due to the rough waters. Currently, the SWGZ field is not in development but there are plans to produce from one well in 2007.

To date the company does not have a community engagement plan or stakeholder program for its existing assets. However, the company has committed to develop as part of their Integrated Management System a communication program for internal and external stakeholders consistent with IFC’s Performance Standards. It is not anticipated that IPR activities will have significant impacts on nearby communities for its existing facilities, however, the company has committed to develop a community engagement plan for future operations. The community engagement plan should focus on engaging communities for benefit sharing activities and seeking opportunities to maximize project related opportunities.