Vostok Project Vostok Energy Limited (Vostok or the company) is a small independent oil and gas company operating in one of Russias frontier regions - Saratov oblast, close to the border with Kazakhstan.  Its strategy is to grow into a sizeable upstream operator, focusing primarily on the development of natural gas properties. Currently, Vostoks primary asset is the 3,215 km2 Bortovoe license block which is estimated to hold proved and probable reserves of approximately 370 billion cubic feet (bcf) of gas and 19 million barrels (mmbbls) of liquids, as certified by the independent international engineering firm Miller & Lents. The block is located in an industrialized region which is facing a gas supply deficit due to limited local output and insufficient deliveries by Gazprom, the dominant Russian gas producer and domestic supplier.  Vostok is currently seeking financial support for its 2007-1Q2009 capital expenditure, which includes:   - drilling of new wells;  - selective re-entry of existing wells;  - acquisition and processing of seismic information; and  - construction and commissioning of a gas processing plant and other field infrastructure.    The project is forecast to help increase Vostoks daily gas production from minimal volumes in 2006 to 46 million cubic feet in 2009. The proposed investment will support the establishment and growth of an independent private company in Russias oil and gas sector, operating in one of the countrys frontier regions. Specific development benefits from the project are expected to include:   - Enhancing Availability of Cleaner Fuel:   The investment will support the exploration for and development of natural gas reserves in Russia, in line with World Bank Group commitments following the Extractive Industries Review. The increased availability of natural gas will promote the increased use of a cleaner fuel (given that natural gas has much lower carbon emissions than coal which is frequently the alternative fuel for power generation in Russia).   - Promoting Competition and Private Sector Participation in the Gas Sector:  The Russian upstream gas industry is dominated by state-controlled Gazprom. The participation of smaller privately-owned companies is important to the industry, as they often focus on reserves deemed too small to be of interest to larger players. More importantly, these smaller private companies deliver production and recovery rates that tend to be higher than industry averages.   - Sustaining and Increasing Local Employment:   The project will have a sustaining impact on existing employment levels and will potentially contribute to new job creation in one of Russias frontier regions. The company currently employs 55 people in Russia, all locals in Saratov oblast. It is expected that the number of permanent jobs may potentially double as Vostok expands its operations, with even more employment created during the construction phase. In addition, there is expected to be a considerable benefit through employment of local contractors and subcontractors (e.g. providing oilfield services).   - Contributions to Central and Local Government Revenue:    The project will generate fiscal receipts from hydrocarbon production taxes, rent and corporate taxes. A material portion of these receipts (100% of Property Tax payments and over 70% of Corporate Income Tax payments) will be remitted to the oblast government and thus contribute to the development of one of Russias frontier regions.   - Enhanced Support for Local Communities:   With the implementation of the project, Vostok is expected to step-up its activities in the Bortovoe license block. The communities surrounding these new operations will benefit with Vostoks tailored support programs. With the rollout of structured Community Development Plans, Vostok will be able to enhance the sustainability and efficacy of its social interventions.  IFC plans to monitor the following development impacts:   - employment, - production of natural gas, and  - payments to government.