While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a Category B project according to IFC''s Policy on Environmental and Social Sustainability because of a limited number of specific environmental and social impacts, at this early stage of limited production in Morocco and Egypt, and early exploration in Tunisia, which can be avoided or mitigated by adhering to the applicable IFC Performance Standards, relevant guidelines and design criteria.

IFC’s categorization of this project is based on the impacts of early exploration and production activities which will be financed by IFC funds which will be dedicated to Company’s projects in Morocco (operated by Circle), in Egypt (operated by Vegas Oil and Gas), and in Tunisia (operated by Exxoil Tunisie and Tethys Oil & Gas). The current activities, to be financed by IFC funds in Morocco, Egypt and Tunisia will include primarily seismic acquisition, exploration, appraisal, and production drilling and well completions, and upgrading current production capacity of various assets. No funds from the IFC will be used for Circle projects in Oman.

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the activities associated with the proposed drilling and expansion program must be managed in a manner consistent with the following Performance Standards:

PS 1: Social and Environmental Assessment and Management SystemPS 2: Labour and Working ConditionsPS 3: Pollution Prevention and AbatementPS 4: Community Health, Safety and Security

Performance Standard 5 (Land Acquisition and Involuntary Resettlement) is not triggered at this stage. The Company undertakes, where necessary, temporary leases of land plots for pipeline construction and production facilities (seismic exploration and wells) using willing buyer / willing seller lease agreements with land owners and users and, in addition, provides compensation for loss of crops using government mandated mechanisms and in close consultation with local government agencies and other stakeholders. No resettlement or economic displacement is currently planned or envisioned in any of the Company’s assets, but if the need arises in the future, it will be handled in accordance with the requirements of PS 5.

Performance Standard 6 on Biodiversity Conservation and Sustainable Management of Living Natural Resources is not triggered at this stage due to the limited impact of current exploration and production activities and lack of sensitive biodiversity receptors in the areas of operations.

Performance Standard 7 is not applicable at this stage as no indigenous people were identified in the project’s area of influence.

There are currently no known sites of archaeological or cultural significance in the areas of Circle Oil’s operations, thus Performance Standard 8 is also not applicable at this stage. However, archaeological studies are undertaken as part of all ESIAs for the Company’s development plans and a chance-find procedure is implemented by all Company’s subsidiaries and contractors.

All Performance Standards will be considered during environmental and social impact assessment (ESIA) of any new exploration and extension projects and if applicable, mitigation measures will be designed in accordance with the requirements of the relevant Performance Standards.

Key environmental and social issues relating to the project are summarized below along with specific information about how potential impacts will be addressed by the Company. The implementation of the environmental and social risk mitigation measures described below will assure the project''s compliance with IFC''s Performance Standards and applicable WBG’s EHS guidelines.

The key social and environmental risks and issues related to this investment include: (i) management of social, environmental, health and safety performance of Circle’s contractors; (ii) social and environmental assessment of new exploration and expansion projects; (iii) working conditions for employees and contractors’ staff; (iv) accident prevention and emergency response including blowout prevention and spill prevention and liquidation; (v) management of air emissions, hazardous materials, wastewater, solid and hazardous waste; (vi) community health, safety and security or the communities near operations; (vii) adverse impacts on the natural flora and fauna within the project’s area of influence; (viii) consultation with project affected communities and stakeholder engagement.

To address identified gaps with the requirements of IFC’s Performance Standards, Circle Oil has committed to an Environmental and Social Action Plan (ESAP). Upon implementation of the mitigation measures described below and in the attached ESAP, the project will comply with environmental and social requirements, and IFC’s Performance Standards on Environmental and Social Sustainability as well as good international industry practice.

As Circle Oil’s only operated assets which will receive IFC funding are in Morocco, they are the primary subjects of the review provided below. However, IFC also reviewed the Company’s early exploration operations in Oman and found them to be in line with the Company’s EHSMS and the requirements of IFC Performance Standards.

Similarly, IFC also conducted a review of available ESIAs for Circle’s non-operated assets in Egypt and Tunisia. The EHS practices of the operators of these assets were discussed with Circle Oil and found to be in line with the requirements of IFC Performance Standards. For its non-operated assets, Circle Oil will use all reasonable endeavours to ensure the application of IFC’s Performance Standards by the asset’s operators.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Circle Oil is a junior oil and gas exploration company with a limited number of employees (about 25 people) and uses service companies and contractors placing a high level of reliance at an operational level on both asset operators and service providers. The important component of the corporate HSE management system is monitoring of service companies and contractors’ performance and integration of their operational procedures with Circle Oil HSE policy and procedures.



Responsibility for adherence to corporate HSE processes lies ultimately with the CEO. Country managers are responsible for the implementation of HSE policy at the country level, operational procedures, and overseeing of performance by contractors and operating partners. Each country Circle Oil operates in has contracts in place covering asset operations and geophysical surveys. As part of the IFC investment, the Company will retain or assign to existing appropriately qualified staff, responsibility for implementation of the corporate Environmental, Health, Safety Management System (EHSMS) which includes social functions.



Circle will develop and upgrade its EHSMS (“Corporate EHSMS”) and Environmental Health and Safety Management Manual (EHSMM) to make it fully compliant with the requirements of IFC Performance Standards as part of the ESAP commitment. The upgraded EHSMS will ensure the Company’s projects are constructed and operated in a manner consistent with host country requirements, IFC’s Performance Standards, and good international industry practice as detailed in IFC’s Environmental, Health and Safety Guidelines.



The Company undertakes its projects in accordance with the requirements of the countries that it operates. The only producing assets operated by Circle are the Sebou and Oulad N’zala concessions, which are developed by the Company’s local, fully-owned subsidiary Circle Oil Maroc Limited. The Lalla Mimouna permits, Sebou and Oulad N’zala concessions are located within areas with limited population and have limited impacts on local communities.



The Company has received all necessary permits from environmental and other authorities as appropriate to the stage of activities in each block. Emergency response, oil spill prevention and liquidation plans are in place in all of the Company’s operations.



ONHYM, the Moroccan state oil company, is a co-owner of the licenses and often an operating partner. ONHYM is responsible for ensuring compliance of its operations with the Moroccan environmental and social requirements. Existing third party contracts and asset level management systems consider EHS performance and oversight of contractors and sub-contractors. Circle oversees ONHYM’s and other contractors’ EHS performance via ongoing interactions and inspections of the sites. Existing tendering process includes EHSMS requirements, and, upon start-up of the contract, an EHS inspection is undertaken by the Circle Country Manager accompanied in many instances by
a third party quality control consultant for the duration of individual surveys or individual small projects.



Circle developed environmental and social impact assessment studies for its seismic acquisition programs, exploration and production programs as well as for pipeline construction with the help of a qualified local environmental consultant. The ESIAs define the main environmental and social impacts and sensitivity of local receptors, as well as impact mitigation measures. Before approvals, ESIAs are presented to local representatives of the government agencies for discussion and minutes are included in the approval package. Community concerns and suggestions are taken into consideration for implementing the projects.



The updated corporate level EHSMS will integrate the current corporate EHSMS with the requirements of IFC’s Performance Standards. It will also include: (i) a monitoring system for contractors deployment by each project company in order to meet relevant provisions of Circle’s EHSMS and ensure implementation of the EHSMS as applicable to their respective activities; (ii) EHS training for employees and contract labour; (iii) procedures for recording, investigating, reporting and undertaking corrective action in relation to EHS incidents including those involving contractor and sub-contractor labour; (iv) periodic monitoring of EHS performance; (v) management review of EHSMS effectiveness and implementation of measures for system upgrade; and (vi) annual reporting of EHS performance.



In line with this, for all projects supported by IFC (“Applicable Project”) funds, the Corporate EHSMS will require the review of existing ESIAs or equivalent documents. Where there may be gaps between the requirements of the Performance Standards and the Applicable Project, Circle Oil will prepare a supplemental environmental and social action plan aligning the project with Performance Standards and Guideline requirements. Where Circle Oil is not the operator of an Applicable Project, it will use reasonable endeavors to direct the application of IFC’s Performance Standards to the ESIA. Similarly, for the Company’s operated assets Lalla Mimouna and Sebou, Circle Oil will undertake any required new ESIAs ahead of any future expansion activities consistent with host national requirements and IFC’s Performance Standards. The ESIAs will be undertaken by third party independent qualified consultants and will assess both the planned expansion activity and consider the field-wide cumulative impacts supported by primary and secondary baseline data. An Environmental and Social Management Plan (“ESMP”) will be developed, consistent with the previously described requirements of the corporate wide EHSMS.

The Company currently employs about 25 people across all its subsidiaries and in its corporate office in Ireland. All Circle subsidiaries follow the requirements of the applicable labour laws of the host country. Circle has a limited number of formal HR policies. As a condition of IFC’s investment, the Company will expand and develop a formal Human Resources Policy and Procedures to comply with the requirements of IFC Performance Standards.



The Company developed a human resources handbook in order to outline the Human Resources policies and procedures in the company as well as the codes of behaviour to all of its employees. A number of policies are included in the handbook relating to leave and other benefits, performance evaluation, non-discrimination, dismissal and grievances procedure as well as health and safety. Circle Oil is currently undertaking an update of the handbook and will communicate it to all employees upon completion.



The Company promotes equal opportunity and fair working conditions among its employees. It does not use child labour and respects the rights for unionization and collective bargaining for all of its employees.



In its operations in Morocco, the Company also occasionally uses seconded employees from the national oil company, ONHYM, to assist with certain operations. In the coming months the Company plans to increase its headcount and upgrade its training plans as necessary in order to prepare its own new employees for technical positions within Circle.



Occupational Health and Safety standards are implemented by each country subsidiary. An Operations Manager is usually in charge of ensuring the compliance with OHS requirements and implementing the OHS program. This includes oversight of the performance of contractors’ and subcontractors’ personnel. During seismic acquisition programs and drilling programs, an OHS Engineer oversees the implementation of OHS processes, training, and daily crew safety meetings. Employees are routinely instructed on safety procedures during daily toolbox meetings.

Wastes from drilling activities are handled by the operating contractors. Hazardous and non-hazardous wastes are separated, and appropriate handling implemented using dedicated hazardous wastes facilities. Produced water is collected, stored and disposed of in evaporation ponds.



As part of the corporate level EHSMS, the Company will more fully develop a waste management procedure requiring assets to develop clear mechanisms to track waste consignments from the originating location to the final licensed waste treatment and disposal location.



Waste management procedures will incorporate chemical handling procedures to handle all hazardous chemicals that are produced, used, or stored during all activities, ensuring consistency with IFC guidelines. Transportation of hazardous material will comply with the local regulatory requirements and applicable international requirements. Training will be provided to all personnel as necessary.

The Company’s current and potential future operations in seismic acquisition, exploration drilling and production are not envisaged to bring significant health and safety risks for the communities around its operations.



Circle Maroc has a number of emergency response procedures in place. There is a small buffer zone between each of the Company’s facilities and local agricultural lands. The Company’s operating partner in Morocco, ONHYM has its own management processes for emergency response.



The company will review and update its Corporate EHSMS in order to ensure it is consistent with IFC’s guidelines. This will also include procedures for oversight of contractors’ ER processes. As part of the corporate level EHSMS upgrade, the Company will review existing Emergency Preparedness and Response procedures and augment, where required, to ensure consistency with IFC’s Performance Standards. The procedures will include consideration of potential spill scenarios for drilling, installation and operational phases.



The company does not employ armed security guards and has not experienced, to date, any conflicts with local communities involving violent or physical confrontations.

The company undertakes its operations in close consultations with multiple stakeholders in the countries of its operations including its operations partners, contractors, local government agencies and local communities. In Morocco, the Company employs a Social and Permit Liaison Officer responsible for communication with local communities and responding to their requests. In particular, a collaborative process of community engagement is employed for temporary access during seismic acquisition, and land leases for exploration wells and pipeline construction. A number of representatives of the local government agencies as well as elected representatives of the local communities are routinely involved in the process. Similarly, during ESIA approval process, the company engages with local representatives of government agencies and local communities during discussions as part of the Moroccan ESIA process.

The Company undertakes voluntarily social investment projects responding to requests by the communities where it operates. In Morocco, such investments included to date, support to the local communities, renovation of roads used by farmers, restoration of local water supply systems, restoration of a cemetery, significant upgrading of a local school including provision of teaching materials for the students, and upgrading a City Garden in the Sebou permit area.

General information concerning the Company''s environmental, health and safety performance can be obtained for review from the following locations in London, Morocco and Egypt:

Circle Oil Services UK
The Courtyard
Finchampstead, Wokingham
Berkshire RG40 4LW
United Kingdom

Circle Oil Maroc Limited
2 Rue Ghzaoua Souissi
La Pineped 10000
Rabat
Kingdom of Morocco

Circle Oil Egypt Ltd
44 Palastine Road
New Maadi
Cairo
Egypt

Circle Oil Tunisia Limited
rue du Lac Malaren
Immeuble Iris
Les Berges du Lac
Tunis 1053
Tunisia

Broad Community Support is not applicable for this project

Task Title / Description	Anticipated Completion Date
Retain or assign to existing appropriately qualified staff responsibilities of corporate Environment, Health, Safety, and Social Affairs Manager supported by adequate financial and professional resources.	15-Oct-13
Update the existing corporate EHSMS procedures to be consistent with the IFC Performance Standards and applicable EHS guidelines. In particular, develop or upgrade for compliance with IFC Performance Standards the following corporate level policies and procedures:	15-Apr-14
1. Environmental, Health, Safety and Social policy;
2. Update and formalise Human Resources Policy and Procedures including formal Grievances Mechanisms for employees and contractors;
3. Environmental and Social screening mechanisms (or audit procedure) for future asset acquisition / farm-ins compliant with ESMS and IFC Performance Standards, identifying any potential risks;
4. Emergency Preparedness & Response Procedures;
5. Oil Spill Contingency Procedures;
6. Public Consultation and Disclosure Procedure for informing communities and other stakeholders of activities relating to projects;
7. Grievance Mechanism to be updated with improved local communication to potentially affected communities and improved internal procedurescontaining a complaints procedure defining who is responsible for receiving complaints, processes followed for recording and acting on complaints and process for following through, communicating and closing complaints;
8. Chance-Finds Procedure to address impacts to, and protection, of cultural property encountered during project activities;
9. Waste Management Procedure identifying the type and quantity of waste streams generated at operated and co-operated assets along with available disposal routes, treatment and reuse;
10. Training protocols and plans for HSE for all staff and internal process to ensure contractors undertaking activities at operated or co-operated assets comply with the Company standards. Develop updated Environmental Management Plans (ESMPs) consistent with the updated EHSMS for each asset in the portfolio financed by IFC funds. The ESMP will detail the procedures necessary to ensure that sites are managed in accordance with IFC Performance Standards and applicable guidelines. Each ESMP will contain, at a minimum: i) an emergency response plan, ii) a spill control plan, iii) a waste management plan and iv) a stakeholder engagement plan.