IPR EGYPT Project The IPR Group of Companies (IPR or the company) is a group of privately-held domestic and international companies that engages in exploration and production of oil primarily in Egypt, but also in Syria and Pakistan.  IPR is headquartered in Dallas, Texas, where, besides being active in exploration and production through its affiliates in Egypt, Pakistan and Syria, it also provides petroleum consulting services through out the world.  IPRs existing production is largely concentrated in its Alamein Yidma concession in the Western Desert area of Egypt, but it also has existing production in the Gulf of Suez from the North July concession.  IFC has been asked to provide financing of up to $25 million to help fund a portion of IPRs capital expenditure program for the 2006-2009 period.  The program (drilling nine new wells and undertaking 51 well interventions or workovers, plus auxiliary facilities) will focus primarily on the further appraisal and development of its Almein Yidma field, but will also target exploration and development of five other oil fields in Egypt, namely, North Bahariya, North Ras Qattara and El Diyur all located in the Western Desert, and the Southwest Gebel El Zeit and North July fields offshore in the Gulf of Suez. Fit with World Bank Group Strategy:  Current World Bank Group (WBG) priorities in Egypt, as outlined in the FY06-09 Country Assistance Strategy (CAS) are:  - facilitating private sector development;  - enhancing the provision of public services; and  - promoting social and economic equity.   More specifically, IFC''s strategy for Egypt focuses on:  - encouraging private investments in infrastructure, mining and hydrocarbon sector;  - supporting export-oriented manufacturing;  - technical assistance for SME development and the business enabling environment; and  - supporting financial sector activities.    In recent years, crude oil production in Egypt has declined from 700,000 bpd in 2001/2 to an estimated 640,000 bpd in 2005/2006 due to lower production from maturing fields, while domestic demand has been rising. This has resulted in significant ongoing efforts to raise oil and gas production to meet domestic needs as well as to step up natural gas exports. The WBG is actively supporting these efforts; IFC has four existing oil and gas investments, and the World Bank is currently engaged in providing technical assistance to the Government of Egypt (GoE), on strengthening domestic natural gas distribution in the country. The proposed project fits well within the WBGs strategy for Egypt as it promotes the participation of the private sector and foreign direct investment in Egypts important hydrocarbons sector, especially in smaller fields that would otherwise be ignored by larger oil companies. Anticipated Development Impact of the Project:  The hydrocarbon sector is important to the Egyptian economy, contributing nearly 10% of GDP and 53% of export earnings as well as drawing a significant share of foreign direct investment.  IFCs investment will continue to support foreign investment in Egypts hydrocarbon sector.  The country recently went from an oil exporter to an oil importer. Finally, IPR specializes in enhanced oil recovery and management of marginal and declining production fields.  This technology and expertise is being applied to extend the life of smaller fields that are of no interest to the larger oil companies. This technology is being shared with its partners, including the local oil company, Sahara Petroleum.    - Contributions to Government Revenue:  Direct economic benefits for GoE in the form of Egyptian General Petroleum Corporations (EGPC) production share (includes IPRs share of royalties and income taxes).    - Creating and Providing Sustainable Local Employment:    IPR is an important source of local employment in the fields it operates, particularly in its largest field, Alamein Yidma, which, through the Joint Operating Company El Hamra Oil, employs 125 people, 90% of whom are Egyptian.  Overall, IPR employs approximately 250 people in Egypt, with the majority (90%) locals.  As the company has success in its exploration and development projects, it is likely that employment will grow.   - Local Purchases of Goods and Services:   Egypt has a thriving local oil services industry that will benefit from the project and will involve expenditures on local goods and services which will be tracked on an annual basis. Currently, IPR estimates that 70% of its annual purchases are spent locally.   IFC will monitor the projects development impacts annually based on information provided by IPR in respect of:   - annual contributions to government revenue,  - local employment, and  - purchases of local goods and services from local suppliers.