26110 - Maple Energy

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Summary of Proposed Investment

Project Number

26110

Company Name

Maple Energy Plc

Date SPI Disclosed

Jun 1, 2007

Country

Peru

Industry

Metals and Mining

Projected Board Date

Jul 2, 2007

Status

Completed

Sector

Oil and Gas Production (Includes Development)

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Jul 19, 2007
Signed : Jul 23, 2007
Invested : Jul 26, 2007

Project Description

Maple Energy plc (Maple or the company) is an independent, privately-held integrated energy company with assets and operations focused in Peru. Maple engages in numerous aspects of the energy business, including exploration and production of crude oil and natural gas; refining and marketing of hydrocarbon products; gas-fired power generation and transmission and the development of an ethanol project.

IFC’s proposed investments will finance Maple’s capital expenditure program in the short-to-medium term (the project) which will include:

- the drilling and well work-over programs and related activities aimed to extend production of its existing hydrocarbon fields;
- exploration and related activities in Maple’s hydrocarbon concessions; and
- the development of a greenfield ethanol project.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity	10.0

Development Impact

- Increased Supply and Monetization of Natural Gas, Gas Liquids and Oil, and Consequential Reduction in Imports:

Maple’s capital expenditure plan is targeted to increase Peru’s indigenous sources of energy, particularly through extending production levels in currently producing fields and the monetization of stranded natural gas reserves (a clean fuel), gas liquids and oil, in the central east area of Peru. In addition, Maple’s proposed investments may potentially lead to new hydrocarbon discoveries.

- Creation of Markets and Production of Renewable Bio-fuels:

Maple’s entry into the production of bio-ethanol using locally harvested sugar cane grown on its own land using state-of-the-art irrigation drip systems will boost the agricultural sector in Piura, promote the use of efficient irrigation technology in the Chira river basin, and produce a renewable, less polluting indigenous fuel. Maple’s ethanol production will allow for exports to international markets and will also be available for mixing with domestic gasoline which is expected to become mandatory in Peru in 2010.

- Contribution to Peruvian Government Revenue:

The project facilitates the production and sale of hydrocarbons and ethanol which provides an important source of revenue to the country through both upstream royalties and corporate income taxes.

- Creating Local Employment and Sourcing in Peru:

Maple’s various operations currently directly employ approximately 400 people in Peru. The planned upstream activities are expected to provide additional employment opportunities and exposure to skilled employment to Peruvians. In addition, Maple’s new ethanol venture will create direct new employment opportunities in Peru associated with the cultivation and subsequent harvesting of land to be planted with cane and the construction and operation of an industrial ethanol distillery. The project will also have an impact on secondary employment through services provided by local companies and contractors.

IFC plans to monitor the following development impacts:

- employment;
- local/national purchasing; and
- payments to governments.

IFC’s participation will provide a small and growing company with access to long-term financing, which may not be available from the market.

IFC’s support of Maple also sends an important signal to the market, enhancing its prospects to raise further equity for the project and its expansion phases, and playing an important role in encouraging the participation of other financial institutions in the project. Particularly, as Maple looks to publicly list the company during this year, IFC’s proposed anchor equity investment will provide comfort to local and international institutional as well as public investors looking to invest in the company.

IFC is assisting Maple to enhance its environmental and social management system inline with IFC’s Peformance Standards on Social and Environmental Sustainability. Also, IFC has evaluated and is making proposals to enhance the effectiveness and reach of its environmental mitigation, social investment and community development plan initiatives.

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.

IFC’s environmental and social appraisal for the project consisted of document review, company interviews, visits to the proposed project sites, and meetings with communities impacted by the project. Specific information about how potential environmental and social impacts will be addressed by Maple is summarized in the Environmental and Social Review Summary (ESRS) for the project. An environmental and social action plan has also been agreed with the company to address all of the issues identified during appraisal. This action plan is attached to the ESRS.

The proposed IFC investment would be consistent with the standards adopted in the World Bank Group’s Management Response to the Extractive Industries Review. Maple is a small, local player that has developed Peru’s first stranded gas reserve project through the Aguaytia Energy gas-to-power project. Through the project, Maple aims to extend hydrocarbon production and, if successful, make additional gas and oil discoveries through its exploration activities.

Governance Context:

The benefits of this project come in a number of forms as outlined above, including revenues to the government in the form of taxes and royalties. In coming to a view of whether to support this project, IFC considered the value of the project’s benefits, and governance and other risks to these benefits. In this respect, it has reviewed a range of assessments including, but not limited to, the World Bank Institute’s Governance Indicators and Transparency International’s Corruption Perceptions Index. Also taken into account is Peru’s current engagement with the World Bank Group and the IMF. At the national level, Peru has already achieved a relatively high standard on accountability and transparency in the collection and distribution of oil, gas and mining revenues. This effort is part of a broader process of fiscal decentralization; it builds upon existing legislation regarding access to information and is consistent with Peru’s commitment to the G8 Transparency Compact. The government, through the Minister of Energy and Mines, has subscribed to the EITI and appointed an EITI coordinator. Maple has also agreed to make all payments made to the government public.

Contacts

For Inquiries About the Project, Contact

Mr. Rex Canon
Chief Executive Officer
Av. Víctor Andrés Belaúnde 147
Vía Principal 140, Oficina 201
Edificio Real Seis, San Isidro
Lima 27, Peru

Tel: +511-611 4000
Fax: +511-222 3490
Email: canon@maplecos.com

Environmental documents associated with Maple’s operations will be located at the following locations:

- Lima Office:
Attn: Senior Vice President Operations,
Av. Víctor Andrés Belaúnde 147,
Vía Principal 140, Oficina 201,
Edificio Real Seis, San Isidro,
Lima 27, Peru;

- Pucallpa Office:
Attn: Operations Manager,
Jr. Padre Aguerrizabal 300,
Pucallpa, Peru

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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