The dominant shareholders and original founders of the Petrotresting Group are Frank Kanayet Yepes and Manuel Gonzalez Almeida. Mr Kanayet and Mr. Gonzalez are both respected businessmen in Colombia and credited with advancing the involvement of local Colombian companies in the development of the hydrocarbon sector. Frank Kanayet spent nine years with Schlumberger in various positions such as: Personnel Training Manager for Europe, Nigeria Branch Manager, Technical Manager for Peru, Ecuador and Colombia, Colombia Branch Manager, and Field Engineer. Manuel Gonzalez spent 13 years with Flopetrol Schlumberger Argentina as Senior Engineer and Operations Manager.

Victor Rivera is CEO of the Petrotesting Group. Mr Rivera previously managed Hocol’s operations in Colombia and has also worked in a number of senior positions with Shell internationally.

IFC is planning to make a corporate investment of up to $35 million in the form of equity and debt. Current development plans by Petrotesting Colombia note capital expenditure, including both exploration and development expenses, of $85 million between 2006 and 2008.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity	15.0

* These investment figures are indicative

The Petrotesting Group is headquartered in Bogota, Colombia. The Group’s operations are located throughout Colombia. PTC’s producing assets are located in the Departments of Antioquia, Bolivar, Casanare, Meta, Norte de Santander, Putumayo and Bolivar. PTC is also the leader of a consortium operating a multiple service contract in Mexico (Pirineo Block in north east Mexico).

The 2002 Country Assistance Strategy (CAS) and Progress Report to the Board (2005) for Colombia state that the objective of the Bank’s strategy is to support the government’s efforts to achieve economic development as a necessary, but not sufficient, condition for peace. Sustainable economic development will underpin Colombia’s efforts to build national reconciliation and lasting peace. In particular the Bank is focused on:

- achieving fast and sustainable growth;
- sharing the fruits of growth; and
- building efficient, accountable and transparent governance.

The CAS carves out a specific role for IFC to support the strategic areas of corporate governance, environmental and social sustainability, and low income and micro financing. IFC is also to support firms that are engines of growth and have linkages to wider economic and social activity.

The World Bank Group (WBG) Management Response to the Extractive Industries Review (EIR) highlights that WBG’s financing support in the oil and gas sector will continue to focus on private investment, with a strong emphasis on local and small/medium sized players. IFC’s role will be to provide access to equity financing and long term debt for Petrotesting, a local Colombian company hoping to expand its operations. IFC’s investment will help Petrotesting in realizing its future growth potential. In addition IFC will support Petrotesting’s efforts to enhance its environmental and social policies and activities.

IFC plans to monitor:

- cashflows generated by Petrotesting’s operations and the revenue payments to governments in the form of taxes, royalties, and other remittances;
- levels of local employment in the fields that Petrotesting operates and the number of jobs created; and
- Petrotesting’s social development programs and contributions to local communities in the areas in which it operates.

- Indigenous Company & Private Sector Development

Petrotesting is one of the few local companies with a presence in the Colombian oil and gas industry. Multinationals such as BP, Occidental and Petrobras currently dominate non-government investment in the sector. The provision of financing to Petrotesting will further aid the development of a promising local player in the oil and gas industry. The investment is aligned with the government of Colombia wish to see more local and private companies participate as opportunities become available in the sector.

- Commitment to enhancing environment, safety and community linkages

Petrotesting has a clear and articulated commitment to environmental and social programs. The company is clear that it wishes to collaborate with IFC to attain best practice international standards. Private companies, including Petrotesting, are acutely aware of the need for strong community support for their projects given the challenging operating conditions in rural areas of Colombia. Petrotesting is cognizant that its operations will only be successful if they are supported by the local communities and therefore sees significant value addition from IFC’s environmental, social and technical assistance expertise.

- Governance and Transparency

The Government of Colombia is aware that governance, particularly regarding fiscal responsibility and transparency must be addressed. The Colombian government has engaged both the World Bank and IMF to help improve governance. As part of the government’s current plan it has launched a comprehensive plan to modernize the state, which includes changes in public sector management, particularly the introduction of international best practices for budgetary management and the adoption of a Fiscal Responsibility and Transparency Law. The Agencia Nacional de Hidrocarburos (National Hydrocarbon Agency, “ANH”) ANH discloses information publicly on its website. It is possible to obtain recent royalty information on a municipality basis, recent contract awards and contract terms. In addition Petrotesting discloses taxes paid to the government on its website.

- Benefits to local communities

Petrotesting places great importance on sustainable development and quality of life improvement for those people affected by its operations. The company’s activities promote:

- projects that generate economic sustainability and quality of life improvements for affected communities;
- collective community well being and projects developed in cooperation with both communities and government organizations;
- generation of indirect employment and local development through the purchase of local goods and services; and
- reduction in local and regional unemployment through direct employment opportunities. IFC’s partnership with Petrotesting will also enable Petrotesting to augment its current projects and develop linkage programs.

Specifically IFC plans to work with Petrotesting to publish an annual social report that will document the specific community projects and the projects’ impacts on communities.

- US/UK International Voluntary Principles

Petrotesting, along with its partners in the Consorcio Colombia Energy (“CCE”), subscribes to the Voluntary Principles on Security and Human Rights. Due to heightened security conditions in the Putumayo region, the CCE consortium’s operations are protected by government security forces. CCE has entered into a Protection Agreement containing specific clauses related to the protection of the Human Rights Code of Conduct and International Humanitarian Rights. The 2005 the Protection Agreement specifically adheres to the Voluntary Principles whereby guidelines are given for risk assessment, interactions between companies and public security, and interactions between companies and private security. Petrotesting plans to implement the International Voluntary Principles in any operations which may require the use of security forces.

This is a Category B project, according to IFC’s procedure for environmental and social review of projects. The review of this project consisted of appraising environmental and social information submitted by the project sponsor and assessing some of the company’s operations through site visit conducted by the project team. The following potential environmental, health and safety, and social issues were analyzed:

- corporate environmental and social management systems (ESMS) based on IFC''s
- environmental and social safeguard policies;
- water supply and discharge;
- solid waste management;
- contamination of the sites from current or past operations;
- occupational health and safety issues,
- emergency response,
- impacts to vulnerable groups;
- land acquisition procedures
- community development; and
- communication and consultation.

More information is included in the ERS
Location of environmental documents In locally affected community
The location of GPC offices, headquarters and operating sites, in Colombia are:
Bogota Headquarters:

Carrera 7 No. 71-52
Torre A, Piso 10
Bogota D. C., Colombia

SurOriente (Putumayo):
Carrera. 20 No. 12 – 89
Puerto Asis, Putumayo

Valdivia (Meta):
Carrera.11 No. 6ª – 20
Puerto lópez, Meta

Saldaña (Tolima):
Carrera 9 No 7-69
Edificio. Fénix, Piso 4
Chaparral, Tolima