Washington, D.C./Lima, June 26, 2008
—IFC, a member of the World Bank Group, together with other international banks today signed a financing agreement for Peru LNG, a natural gas export project that will support economic growth in some of Peru’s poorest regions and will be the largest foreign direct investment in the country’s history.
IFC’s $300 million loan for this landmark project is its largest investment for its own account in Latin America to date. In addition to financing, IFC will also advise Peru LNG to help optimize its environmental approach and ensure that local communities benefit.
“IFC has been a key partner in the financing for this project,” said Steve Suellentrop, President of Peru LNG. “Today we have reached a milestone on the road toward making a project a reality that, with IFC’s help, will enable local Peruvian people to receive tangible benefits and follow best environmental and social practice.”
Totaling $3.8 billion in costs, Peru LNG will be Latin America’s first liquefied natural gas export project. It includes a liquefaction plant and a marine loading terminal on Peru's central coast, as well as a new 408-kilometer pipeline that will connect to an existing pipeline network east of the Andes. The project is expected to make Peru a net gas exporter after operations begin in 2010.
With IFC’s support, Peru LNG is enhancing opportunities for local businesses to sell goods and services to the project, raising people’s incomes and job prospects. IFC is developing programs to engage local communities in monitoring the effects the project will have on their lives. IFC is also establishing training for nearby municipalities to make best use of the significant new revenues they will receive as a result of the project. These programs build on IFC’s experience with similar initiatives in some of Peru’s poorest regions.
“IFC offers a full range of products to make the project a commercial success and to support Peru’s economic development through private sector investment,” said Somit Varma, IFC Director and Global Head for Oil, Gas, Mining, and Chemicals. “We are committed to a long-term partnership with Peru LNG and its consortium members, as well as with the government of Peru.”
The project will help generate significant tax and incremental royalty payments to the government, equivalent to over 1.5 percent of current state revenues.
The Peru LNG project consortium is headed by U.S.-based Hunt Oil Company and includes Spain’s Repsol YPF, SK Energy of the Republic of Korea, and Marubeni Corporation of Japan. IFC’s loan is part of a $2.25 billion lending package for the project, which includes loans from the Inter-American Development Bank (IADB), Export-Import Bank of the United States (US Ex-Im Bank), Export-Import Bank of Korea (K-Exim Bank), and SACE S.p.A. of Italy.
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
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IFC's strategy in Peru is to address private sector challenges by investing and fostering sustainable development. Key sectors include the financial sector, microfinance, infrastructure, agribusiness, and tourism. IFC is also developing programs to enhance social benefits of the extractive industry. In fiscal 2007, IFC invested $247.7 million in Peru in several priority sectors. As of March 2008, IFC’s committed portfolio in the country reached $487 million.
