Washington, D.C., July 27, 2006
—The International Finance Corporation, the private sector arm of the World Bank Group, is strengthening natural gas production in Pakistan to meet the country’s increasing domestic demand by supporting a local oil and gas firm.
IFC has signed a $52 million financing package for Dewan Petroleum (Pvt.) Ltd. to support its upstream oil and gas exploration, development and production project in Pakistan. IFC aims to support local oil and gas firms in developing countries and to strengthen their market position.
“It is encouraging to see Pakistani companies like Dewan Petroleum participating in the hydrocarbon sector of their country,” said Somit Varma, IFC’s Associate Director for Oil, Gas, Mining and Chemicals. “Not only do they help to develop domestic energy resources to satisfy growing demand, but they also generate revenues for governments, create jobs, and generate business opportunities for local suppliers of goods and services.”
Dewan Petroleum, associated with the well-established Dewan Mushtaq group in Pakistan, is a new Islamabad-based oil and gas firm that is 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.
Dewan Petroleum and an affiliate company, REPL, have a 60 percent combined working interest in the Safed Koh block in Punjab in central Pakistan, which includes the Salsabil gas and condensate field. Dewan Petroleum and its partners, which include Rally Energy Corp., a Canadian oil and gas company, will also explore prospects for additional gas reserves in the block.
The joint venture will strengthen domestic natural gas supplies in a market where increasing demand may lead to a shortfall in domestic supply and hence the need for gas imports. As a part of the project, Dewan Petroleum will also make initial exploration investments in additional blocks where they have recently been awarded concession rights.
Michael Essex, IFC’s Director for the Middle East and North Africa region, said: “We welcome the Dewan group’s diversification as a new domestic private sector participant in the upstream oil and gas sector in Pakistan. Such investments are in line with IFC’s strategic priority to support the development of the Country’s energy sector and to address Pakistan’s increasing energy needs.”
The financing consists of an IFC equity investment of up to $12 million in Dewan Petroleum, a $15 million loan for IFC’s own account, and an additional $25 million loan to be syndicated to commercial banks. The IFC investment will support the company’s share of costs associated with the Salsabil field development, and further appraisal and exploration activities in Safed Koh and other blocks.
Dewan Zia-ur-Rehman Farooqui, Chairman and Chief Executive Officer of Dewan Petroleum, said: “We have had an excellent experience working with IFC and this financing is a good model for domestic financial institutions to follow. We are excited about our prospects and are encouraged by the good economic management and investor friendly policies of the current government and including the Ministry of Petroleum and its affiliate departments. We hope to play a significant role in contributing to Pakistan’s growing energy requirements. The success of Dewan Petroleum will foster new enthusiasm for domestic entrepreneurs and will encourage other private companies to participate in Pakistan’s exploration and production sector.”
About IFC
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
.
