Washington, D.C., May 25, 2006—
The International Finance Corporation, the private sector arm of the World Bank Group, has signed a $25 million financing package for Rally Energy Corp. to support upstream oil and gas projects in Egypt and Pakistan. With its investment, IFC will help strengthen energy production to meet increasing domestic demand.
Somit Varma, IFC’s Associate Director for Oil and Gas, said: “Companies like Rally are important participants in the hydrocarbon sectors of developing countries as they help develop domestic resources to satisfy growing demand. Importantly, they also bring revenues to governments and create employment as well as opportunities for local suppliers of goods and services.”
Rally Energy is a Calgary-based oil and gas firm that is strongly committed to environmental and social sustainability. Working closely with IFC, the company is implementing comprehensive steps, including training, to ensure sound environmental and social management of its projects.
In Egypt, the mining and hydrocarbon sector plays a significant role in the country’s economy, generating about 15 percent of GDP, 37 percent of export earnings, and the bulk of foreign investment. However, oil exports from Egypt have been under pressure as production at mature oil fields has fallen and domestic consumption has increased.
Rally’s project in Egypt’s Ras Issaran concession area helps to address this decline. Through a wholly-owned subsidiary, Scimitar Production Egypt Ltd., Rally has 100 percent working interest in a heavy oil development petroleum services agreement related to the Ras Issaran concession area on the western shore of the Gulf of Suez. The area is estimated to have significant heavy oil reserves. Scimitar Egypt is currently implementing a three year development program there that aims to step up oil recovery rates by employing a range of established oil enhanced oil recovery techniques.
In Pakistan, Rally’s joint venture will strengthen domestic natural gas supplies in a market where increasing demand may lead to a shortfall in domestic supply and to potential gas imports. Rally has a 22.5 percent non-operating interest in the Safed Koh block in Punjab in central Pakistan, which is operated by its partner Dewan Petroleum Pvt. Ltd. The block includes the Salsabil gas and condensate field that will be developed as a part of the project. Rally and its partners will also explore prospects for additional gas reserves in the block. Natural gas from the project will strengthen fuel supplies to industrial and urban markets in the region?
Michael Essex, IFC’s Director for the Middle East and North Africa region, said: “We welcome Rally’s participation in the energy sectors of Egypt and Pakistan. It is IFC’s strategic priority to support vital economic sectors in the region and help address increasing energy demand.”
IFC’s financing consists of revolving credit facilities of $20 million in two tranches, and a $5 million term loan with attached equity share warrants. The IFC investment will support Rally’s three year capital expenditure plan and working capital needs for its projects in Egypt and Pakistan.
Abby Badwi, President and Chief Executive Officer of Rally Energy Corp., said: “The IFC credit facility has been put in place to give Rally maximum flexibility to supplement expected cash flow from its planned 2006 and 2007 work programs, and to enable us to accelerate the thermal development project in the Issaran Field in Egypt. In addition, this strategic long term investment by the IFC, as lender and potential equity partner, will provide Rally with continued access to competitive and sustainable financing arrangements to fund planned and future growth opportunities both in Egypt and Pakistan.”
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit
www.ifc.org
.
