As with many extractive sector projects, while all the Performance Standards are applicable to this investment, the activities covered by the Salamander investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Social and Environmental Assessment and Management Systems; PS2: Labor and Working Conditions; PS3: Pollution Prevention and Abatement; PS4: Community Health, Safety and Security. In addition, this review also considers the remaining standards, PS5 (Land Acquisition and Involuntary Resettlement) as some compensation has been paid but no resettlement or economic displacement has occurred; PS6 ( Biodiversity Conservation and Sustainable Natural Resource Management) although no sensitive ecosystems have been identified; PS 7 (Indigenous Peoples) which is not relevant to the BBA assets and PS8 (Cultural Heritage) although no cultural resources have been identified. The nature of extractive sector exploration is such that the company will proactively consider whether these PS apply in all its future activities.

This is a refinancing of existing IFC investments in the Company which are all IFC Category B. Since the portfolio assets and footprint being refinanced has not changed and the scale of operations has not materially changed, the refinancing is also given a B Category. Category B projects according to IFC’s Environmental and Social Review Procedure are those that result in a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to industry recognized standards, guidelines and design criteria. The existing Salamander operated portfolio consists of both exploration, development and production assets. Salamander has a Corporate Social Responsibility (CSR) Policy and a Health, Safety and Environment (HSE) Policy which commit Salamander to conduct all its operations in compliance with applicable laws, recognized international standards and best practice which includes the safety and health of employees, protection of the environment and that the interests of the communities are respected in areas where Salamander operates. Under the umbrella of the HSE Policy, the environmental or social impacts arising from current and planned assets are being, and will be mitigated and managed in accordance with national regulatory requirements and IFC’s Performance Standards within Salamander’s overarching corporate Health, Safety and Environment Management System (HSEMS) framework. The existing Salamander operated assets, which are the focus of this investment (the Borrowing Base Assets) are not anticipated to result in any significant adverse environmental and social impacts. In 2008 Salamander presented plans to address the environmental and social impacts at its operated assets, and IFC has monitored progress through regular supervision. Implementation of the Environmental and Social Action Plan (ESAP) which has been updated will ensure these assets continue to remain in compliance with IFC Performance Standards and its Environmental Health Safety (EHS) guidelines. Salamander may wish to acquire additional assets and acreage in the future for inclusion in the Borrowing Base. Salamander screens all prospective assets to establish the requirements for compliance with the IFC Performance Standards. As required, IFC may undertake additional supplementary appraisal missions to further characterize the environmental and social risk of proposed asset acquisitions prior to giving approval for inclusion within the current BBA facility. Salamander will periodically review and update its CSR and HSE Policies commensurate with its operational risks and expanding portfolio. Prior to full field development and production of new assets where Salamander is the operator, Salamander will prepare and publicly disclose a full ESIA and an ESAP consistent with IFC’s Performance Standards for all future assets where Salamander is the operator. For the non-operated assets included in the BBA portfolio, the operators which include Hess and CNOOC have a good HSE Management Systems in place and conduct their operations in accordance with national laws, regulations and good international industry practice.

Since IFC’s first investment, Salamander’s development activities have expanded and its broader portfolio has matured necessitating the development and implementation of additional control and mitigation measures. Salamander will continue to strengthen its staffing and organizational capacity to ensure that the development and implementation of its management systems keep pace with its expanding portfolio and ensure that its operations continue to meet all the required standards.

The following sections provide an update of Salamander’s performance and include actions that were identified during IFC’s supervision activities. It is noteworthy to mention that Salamander is in compliance with the ESAP for the existing investments and has made evident progress in managing its environmental and social performance and maturing its systems and procedures.

PS1: Social and Environmental Assessment and Management System

Salamander periodically reviews and updates the CSR and HSE Policies described in previous disclosures commensurate with its operational risks and expanding portfolio.

Health, Safety and Environment Management System (HSEMS)
Following IFC’s investments in 2008, Salamander has made good progress in developing its operational procedures and policies and establishing systems for managing environmental and social risks. The HSEMS was approved and signed by Salamander’s board in March 2009. In accordance with IFC’s ESAPs for the previous multiple investments, Salamander has developed an extensive set of procedures in line with the Performance Standards and recognised international standards and best practice which have been adopted as part of Salamander’s Group polices. These include among others: (i) Environmental and Social Screening for New Assets; (ii) Labor and Working Condition Standards; (iii) Public Consultation and Disclosure Planning (PCDP); (iv) Land Acquisition and Compensation Planning (LACP); (v) Group Community Development Guidelines ; (vi) Cultural Property: Chance Find Procedures; (vii) Emergency Response Plans including oil spill response; and (viii) Hazardous and non-hazardous waste management planning. The HSEMS is reviewed and updated at least annually.

The development of these procedures has assisted Salamander in formalizing its internal processes resulting in more consistency across its operations and in ensuring compliance. These procedures, which are integrated into its HSEMS have also facilitated Salamander’s implementation of the Performance Standards.

Salamander is also strengthening its institutional knowledge of IFC’s Performance Standards and applicable IFC EHS Guidelines through appropriate training to regional, general and appropriate line managers, country HSE coordinators, community liaison officers and all staff responsible for managing environmental and social performance. Salamander ensures that specific requirements under the Performance Standards that are not addressed through host country requirements are included in impact assessment studies and monitoring.

Salamander has a management of change procedure. As it continues to broaden its portfolio that now includes a diverse base of producing assets and ongoing exploration activities, the management of change procedure enables revision of project documents (at the asset level) as new information becomes available. This also includes project design changes, further phases, new development and any other changes in circumstances, such as new discoveries or changes in government regulatory regimes.

Rubicon (the Bualuang FPSO operator) has in place a Health, Safety, Environmental and Quality Management System that is implemented throughout its operations on the FPSO.

Organizational Structure
Salamander has made evident progress in strengthening its organizational capacity to manage its E&S performance, notably at country level. Country HSE&S teams are responsible and accountable for managing environmental and social risks and impacts of their operations in a manner consistent with the HSEMS. Salamander is committed to ensuring that adequate human and financial resources are allocated to deliver effective environmental and social performance.

Salamander is developing an HSE staffing plan to ensure that ongoing management of its operations is consistent with its commitments. The plan will include review of job descriptions, roles and responsibilities in line with its expanding portfolio.

The rapid expansion of Salamander’s operated portfolio has seen the addition of country level HSE&S implementation capacity. Salamander will continue to strengthen this country level HSE&S capacity through the recruitment of additional full time HSE&S staff as the portfolio continues to expand, this is in line with recommendations made as a result of IFC’s supervision and will support corporate requirements.

Salamander has also established CSR Committees at each country office in an effort to formalize its commitment to CSR. The committees are headed by the country general manager and are responsible for providing strategic guidance to community development activities, overseeing implementation of the Group CSR policy. The country level committees report to the Group CSR Steering Committee headed by the Group Chief Executive.

Environmental and Social Impact Assessment (ESIA)
The Salamander-operated assets meet all national regulations with respect to managing environmental and social issues. In addition, as part of IFC’s investment, Salamander has also established a social management system to facilitate activities such as temporary land take, stakeholder engagement and community development.

At Kambuna, Salamander is undertaking a gap analysis of its Indonesian AMDAL study to ensure that requirements of the Performance Standards are addressed in the ESIA and EMP. To supplement the AMDAL study, Salamander commissioned the University of North Sumatra to undertake a social mapping exercise of the communities located in the proximity of Salamander’s activities. The draft report was received in January 2011 and will be submitted to IFC for review. The receiving facility lies adjacent to a Pertamina LPG compression unit. In the interests of worker safety, Salamander will undertake a Quantitative Risk Assessment (QRA) of Boiling Liquid Expanding Vapour Explosion risks and impacts on the Kambuna asset and its workers. The QRA will also assess the need for an exclusion area for the Low Pressure and High Pressure flare.

Salamander will undertake a QRA based approach in assessing potential risks associated with households located in proximity to the pipeline ROW and develop control and mitigation measures if necessary. As part of this process, Salamander will develop a specific engagement schedule to raise awareness on pipeline safety and emergency response.

Monitoring and Reporting
As part of its CSR commitment, Salamander has commenced reporting on its health and safety performance and emissions data in its annual report, thus initiating the process of formalizing its reporting procedures. IFC’s supervision program has noted that gaps exist with Salamander’s environmental monitoring and so the environmental monitoring program is being updated for its operated assets and will report on environmental parameters - noise, air emissions, and liquid effluents – as part of its environmental monitoring program.

PS2: Labor and Working Conditions
Salamander’s Code of Business Conduct and its practices were described in previous disclosures and meet national regulations and IFC Performance Standards.

Human Resources Policy
Salamander is in the process of developing a Global Human Resources Policy that will outline Salamander’s current practices regarding management of its employees. Salamander will finalize this Policy in line with the requirements of Performance Standard 2 “Labour and Working Conditions”. The policy will address specific elements related to workers’ organizations, non-discrimination and equal opportunity, a grievance mechanism for employees and contractor personnel, disciplinary and termination procedures and rights and terms of employment including entitlements, benefits and wages. Salamander will distribute copies of the policy to all its employees. As part of the Policy, Salamander will formalize its system for raising workplace concerns.

To ensure full compliance with IFC’s Performance Standards, and to improve contractor practices, Salamander will also develop a Contractor Code of Conduct that will outline minimum requirements with respect to terms of employment, living and working conditions for workers. Salamander has in place and has implemented a Contractor Management procedure.

There are currently 40 staff onboard the Rubicon FPSO. All staff are hired through a Thai recruitment agency on term contracts and work on rotation. Rubicon follows Thai labour law.

Occupational Health and Safety
Salamander has adopted Occupational Health and Safety (OHS) metrics in accordance with recognized good international industry practice. The Company’s performance in terms of lost time incidents and total recordable incidents is recorded and publicly reported in their annual report (published on Salamander’s website). Salamander recorded a single lost time incident in 2.52 million man hours worked during 2010.

PS3: Pollution Prevention and Abatement
As noted above Salamander will strengthen its environmental monitoring program for its operated assets including reporting on environmental parameters - noise, air emissions, and liquid effluents.

Salamander meets national monitoring and reporting regulations for its operated assets. The Thai environmental authority (DMF) audited the FPSO in 2010 and there were no major non-compliance findings.

Salamander will update its waste management plan for each operated asset in the BBA portfolio to ensure chain of custody is managed appropriately.

Salamander continues to monitor HSE&S performance of the minority stake, non-operated assets via ongoing partner reporting. As part of the refinancing, Salamander will develop an HSE&S audit program for non-operated assets.

PS4: Community Health, Safety and Security
There is a 500 m safety exclusion zone around the Bualuang platform and FPSO. The area around Bualuang is a local fishing ground utilized by a wide spectrum of fishermen – artisanal and commercial. The platform and FPSO attract fish which in turn attracts the fishermen to the area. Salamander continuously monitors and patrols the area to ensure that fishermen do not venture into the safety zones, and engages with them at sea to raise awareness of potential risks should they enter the safety zone.
During a recent consultation session, fishermen expressed concern regarding potential collision of fishing boats and operation support vessels. Salamander will educate the fishermen on adherence to safety zones to reduce the risk of potential collision including management of boat traffic to offshore facilities.

There are five settlement areas that are in close proximity to the Kambuna onshore pipeline; namely Kelurahan Alur Dua (sub-district), Kelurahan Pelawi Utara (sub-district), Kelurahan Sei Bilah Timur (sub-district), Desa Pelawi Selatan (village) and Desa Teluk Meku (village) with a total area population of approximately 41,600 people. The community that has been most affected to date by Company activities is the village of Teluk Meku, where 12 km of the pipeline was constructed and necessitated agricultural land compensation, but did not require physical resettlement (completed in 2010).

Community safety is a priority for Salamander in the Kambuna block, with a team of 15 pipeline checkers each responsible for 1km of pipeline. Checks are undertaken four times per day for each of the 1km segments, with specific focus toward ensuring that the integrity of the pipeline has not been compromised (e.g. ad hoc excavations by local farmers). The 15 pipeline checkers employed are from the communities whose land the pipeline passes through. As such there is good awareness and a general perception that community safety considerations are being addressed by the Company and local authorities. There is nevertheless continuing apprehension amongst local communities with respect to pipeline safety and associated risks.

According to the local hospital (previously a Pertamina facility) which serves the community in Pankalan Brandan, there are no health issues associated with Salamander’s activities or the wider oil and gas industry. Since mid 2010 Salamander has an Advanced Medical Technician on site who works closely with the local hospital and medical staff.

Salamander will design a community safety awareness strategy ensuring aspects such as informing local communities in close proximity to Salamander operations of the potential risks and impacts from project activities and ensuring communities emergency preparedness consistent with IFCs Performance Standards requirements. Salamander will document country and asset level emergency preparedness procedures and response activities, resources and activities and will disclose this information in a culturally appropriate manner to the affected communities.

PS5: Land Acquisition and Involuntary Resettlement
Land Acquisition Process and Compensation
As part of the 2008 IFC investment, Salamander prepared a Corporate Framework Land Acquisition and Compensation Plan (“LACP”). The LACP outlines the principles, guidelines and approaches to be followed for acquiring land for future activities, in order to meet the requirements of national regulations in countries where Salamander operates and IFC’s Performance Standard 5 (Land Acquisition and Involuntary Resettlement). Salamander will prepare detailed LACPs for site specific projects where a new project within the operated assets requires resettlement and/or compensation.

Bualuang: Compensation for Bualuang fishermen was negotiated by Salamander on a willing buyer-willing seller basis. A total number of 255 of fishing traps were compensated, of which 176 were relocated to an area identified by the fishermen. The negotiations for the compensation of the traps were undertaken directly with the fishermen who provided details of their fishing traps. Salamander compensated the fishermen for Fish Aggregating Devices (FADs) that had to be relocated, and for disruption to fishing activities resulting from restricted access to fishing grounds during the seismic survey in 2009. The compensation was paid to the local Fisherman Associations (FA) to cover FADs and also as a development fund for non FADS fishermen, this fund was subsequently used to purchase salvage equipment for the FA use.

Previously, fishermen were under the impression that seismic campaigns were conducted by the government. Compensation claims and rates have increased following the realization that multinational companies execute these seismic campaigns, adding to the complexity of the negotiation process. There are no fixed government compensation rates and different operators in the area have paid different rates. In addition, there was an ongoing dispute between the fishermen and another operator in the Gulf of Thailand, thus affecting Salamander’s negotiation process to some extent.

As part of the existing Corporate Framework LACP, Salamander will outline the Company’s approach to fishermen’s compensation and principles for valuation and calculation of compensation rates consistent with the requirements of Performance Standard 5.

As part of the Framework Fishermen’s Management Program, Salamander will prepare a specific fishermen’s compensation plan for the Bualuang asset. The plan will include: (i) an inventory of all the affected fishermen and affected assets, (ii) methods applied to value assets at full replacement cost, (iii) rates of compensation paid, (iv) outline of a schedule for compensation and (vi) a grievance procedure.

Kambuna: To date, there have been no complaints regarding the compensation process that was described in previous disclosures.

PS6: Biodiversity Conservation and Sustainable Natural Resource Management
As previously disclosed there are no sensitive ecosystems or protected areas in the region of the operated assets. Environmental monitoring was undertaken in December 2008 around the Bualuang facilities. The results showed that there are no measureable impacts on the marine environment following start-up production at the end of August 2008. However, Salamander is implementing a Marine Biological Resource Restoration Project which involves the release of hatcheries-raised juvenile fish and shrimps in the mangrove areas of the Chumphon Island National Area. The mangrove area at the landfall of the Kambuna pipeline was successfully re-planted in 2010 by a local village NGO group.

PS8: Cultural Heritage
A Cultural Heritage Chance Find Procedure is in place but to date, Salamander has not encountered any cultural heritage resources in its operated assets and none of its concessions are associated with a cultural heritage site.

Salamander has prepared a Group Public Consultation and Disclosure Plan at the corporate level that outlines its commitment to stakeholder engagement and provides an overall strategy. Salamander will develop country level community engagement plans that target affected communities at its operated assets; is gender-inclusive; is a two-way process; ongoing throughout the life of the operations; and documented. This will realize greater continuity across the Salamander portfolio, ensuring local communities are informed of project activities, and community expectations are adequately managed, thus providing a platform whereby local communities are able to communicate opinions, concerns and issues. As part of this process, Salamander will identify the key stakeholder groups and develop a program of consultation commensurate to the project activities, including a grievance mechanism that takes into account cultural processes. To date, there have been no complaints of significance from the local communities regarding Salamander’s activities and no issues have been raised with respect to migrant workers and security concerns. Kambuna During 2008, as part of the initial notification process, Salamander conducted consultation and engagement programs with local authorities, community leaders and fishermen’s groups, building positive relationships with all parties in close proximity to their activities and operations. Three villages are located within a 15 km radius of the ROW of the export pipeline. The largest village has a population of approximately 1,000 households. During the two supervision visits in 2010, IFC held meetings with the three elected village heads to gather first-hand information on Salamander’s relationship with local authorities and communities, and to understand the key issues and concerns regarding Salamander’s activities and operations. At the village level, the engagement activities are limited primarily to community development initiatives and issues related to compensation. Notwithstanding, Salamander managed to build a positive relationship with the communities through a number of quick win projects that were implemented in the area – public hall renovation and sponsoring of a number of local events amongst others. Salamander engages on a regular basis with village heads and other officials on the provincial and regency levels. It is clear that the relationship with the key village chief, through whose community land rights the greater proportion of the pipeline ROW runs, is well established. The village head is recognized by the communities as the primary source of information and decision making and the appropriate channels for communication between the people and external parties. During its supervision visits, IFC has noted that this has resulted in inconsistent flow of information to the local communities regarding Salamander’s activities and the then ongoing construction. Furthermore, it was observed that there are a number of misperceptions regarding pipeline safety and associated risks, potential employment opportunities and confusion regarding Salamander and its relationship to the Contractor and the previous operator. The unemployment rate is high in the area and as such expectations regarding potential employment opportunities with the project are extremely high and unrealistic. These unrealistic expectations stem from past employment rates with the previous operators whereby operations were at a much larger scale and necessitated a large workforce. Salamander’s current operations are significantly smaller and cannot realize the former level of employment. During the construction of the onshore facilities, 65% of the workers were sourced from local communities by the contractor for an employment period of 6 months. The on-site operations currently employee 400 permanent and contract personnel, of which 112 are from the affected communities. As such, it is necessary for Salamander to engage regularly with the community to provide information on employment opportunities and manage unrealistic expectations. Whilst the community engagement to date has been substantial, formalization of these approaches are needed. Salamander will develop a community engagement plan for Kambuna. As part of the Kambuna community engagement plan, Salamander will develop a specific engagement schedule to raise awareness on pipeline safety and emergency response. This plan will take into account recognized social institutions that represent constituents balancing between Salamander’s own outreach and dissemination to the local populations. Salamander will identify all the stakeholders and project affected communities and engage with them on a regular basis to provide information, manage expectations and solicit feedback. In line with social norms, all community complaints and issues are currently directed to the village head. This is the recognized process followed by local communities and thus are not directed to Salamander. During IFC’s supervision, it was also noted that not all grievances have been adequately addressed due to inconsistent feedback by village heads to Salamander. Salamander will formalize its process of receiving complaints from the village heads and explaining to the communities the procedures that will be followed for receiving, reviewing and closing out complaints. Salamander will actively seek to gather updates on grievances that might have been logged to ensure timely resolution of complaints and document them. Bualuang As required under Thai regulations, a consultation program was undertaken as part of the Bualuang Expansion EIA approval in 2009 and also the seismic and exploration EIAs in 2010. The three ESIA reports have been disclosed to local communities for review and soliciting feedback. Initial consultations were held during 2009 with local fishermen and various fishermen’s association outlining ongoing and future operations at Bualuang, with a specific focus on planned seismic campaigns, future operations and the scope of the ESIA. Salamander also held a number of meetings with the fishermen and their associations to agree on compensation for relocation of FAD prior to the commencement of the drilling campaign in 2011. IFC is aware that there is an ongoing dialogue with the fishing community and the wider oil & gas industry in the Gulf of Thailand in coordination with DMF. A public consultation event was organized by DMF in coordination with the oil and gas operators in the Gulf of Thailand to address fishermen’s concerns related to exploration and production activities in the Gulf of Thailand. These issues are not Salamander specific and have been further exacerbated by the Macondo well event in the Gulf of Mexico which led to a number of fishermen’s protests. Salamander recognizes that their influence on industry wide issues is limited. However, in an effort to build positive relationships, Salamander continues to engage with the fishermen and their associations on aspects related to their operations and resolve the broader issues associated with the extractive industry. In addition, there is an ongoing engagement process with the national regulators and peers within the industry. In the meantime, Salamander has ceased its drilling program and is currently focusing on strengthening its management and monitoring program. To this end (i) Salamander is currently in the process of establishing a community relations office in Chumphon Province which will be staffed by a full time a Community Liaison officer and (ii) Salamander is exploring partnerships with a local non-governmental organization (NGO) to build the scientific case with regards to the potential impacts vis-à-vis exploration and production activities in the Gulf of Thailand. Salamander will actively engage with the fishermen’s associations during this process. Salamander’s efforts have been substantial with respect to building a positive relationship with fishermen’s communities. Salamander will prepare a fishermen’s management framework that will include: (i) A summary of the identified impacts on fishermen’s activities vis-à-vis Salamander's operations and proposed mitigation measures (in consultation with the Fishermen’s Association) for the different project phases, (ii) Compensation framework benchmarked against actual impacts (developed in agreement with the fishermen’s association), (iii) A summary of compensation to date, (iv) fishermen and fishermen’s association engagement strategy, (v) establishment of grievance mechanism specific for fishermen, (vi) community development as part of Salamander’s CSR activities and (vi) monitoring framework. The framework should be shared with the fishermen and their associations to ensure that all parties understand the procedures that will be followed by Salamander. As part of the Framework Fishermen’s Management Program Plan, Salamander will develop an engagement program for the fishermen’s communities affected by the activities in Block 8/38. The engagement program will aim to update the fishermen on project activities, any changes (e.g. to fishing exclusion zones) that may affect them and address any concerns and issues raised. Community Development A number of ‘quick win’ projects, and longer term more sustainable projects, have been completed. These included the “Marine Biological Resource Restoration Project” in the Gulf of Thailand, a public hall renovation in Kambuna and sponsoring of a number of local events. Salamander, through its community development initiatives has managed to build a positive relationship with the communities in proximity to the Kambuna operations and with NGOs, local authorities and fishing associations in the Gulf of Thailand. Consistent with its existing community development strategy, Salamander will develop country level annual community development plans outlining descriptions of the proposed projects, partners for implementation, schedule and development impact indicators for monitoring and evaluation. Salamander will ensure adoption of participatory processes with the communities to identify opportunities that will contribute to development goals in their localities and takes into account community needs particularly in areas where it has producing assets (i.e. Bualuang and Kambuna). Of Salamander’s non-operated assets in the BBA the SES concession, operated by CNOOC, also has in place an integrated social development strategy that comprises of two main components – community development and stakeholder engagement.

Salamander Energy Thailand 17th Floor, Unit 1702 , Q.House Lumpini Building, No.1 South Sathorn Road , Tungmahamek Sathorn , Bangkok 10120 Thailand Salamander Energy Indonesia 15th Floor, Jakarta Stock Exchange Building, Suite 1502, Tower 2 Jln Jenderal Sudirman Kav 52-53 Jakarta 12190 Indonesia Salamander Energy Singapore 80 Raffles Place #34-02 UOB Plaza 1 Singapore 048624 Disclosure of Relevant Policy Documents under the Action Plan. Disclosure of additional Documents was made as of 12th March 2010 at the sites listed above, as follows: GEN-GUI-CSR-0001 Group Community Development Guideline V2 12-12-09 GEN-PLA-HSE-0001 Group Land Acquisition and Compensation Plan V2.0 12-12-09 GEN-PLA-HSE-0002 Group Public Consultation and Disclosure Plan V2.0 12-12-09 GEN-PRO-HSE-0011 Cultural Property – Chance Find Procedure V2.0 12-12-09 GEN-PRO-HSE-0012 Environmental and Social Screening of New Assets V2.0 12-12-09 GEN-STD-ADM-0003 Labor and Working Conditions Standards V0.2 12-12-09 ESIA for Bualuang Disclosure of additional relevant Documents will be made as of March 2011 at the sites listed above. The following documents will be disclosed on April 18, 2011: - ESAP (Environment & Social Action Plan) - SPI (Summary of Project Information)