Salamander UJV Salamander Energy plc (Salamander or the Company) has invited IFC to support certain of its exploration activities in South East Asia, by acquiring a project-level equity interest in:    - the Savannakhet production sharing contract (Savannakhet PSC) in Lao PDR (Laos) and the adjacent concession L26/50 in onshore Thailand, as well as,   - L15/50, another concession onshore Northeast Thailand (together known as the Project).  Currently, the company has a 70% interest in the Savannakhet PSC and a 100% interest in the Thai concessions, and is the operator of all three blocks. Fit With World Bank Group Strategy:  The most recent World Bank Group Country Assistance Strategy for Laos (FY07-11WBG CAS) has four major aims:     - private sector development and finance;    - sustainable natural resource development;    - public financial management; and    - poverty reduction.      Thailands National Development Agenda, which forms the framework for a partnership between Thailand and the World Bank, is built around four pillars, including Natural Resources and Environment.  The Bank has also been supporting Thailands emerging role as a development assistance donor and an advocate for strengthening regional cooperation. The Bank also supports the Lao-Thai Partnership in Sustainable Hydropower Development to ensure that future hydropower projects in Laos will be friendlier to the environment and the people affected by them. It also works with the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy Business Council to promote investments and strengthen private sector cooperation within the Greater Mekong Sub-region.  Within this overall framework, IFCs strategic priorities in the region are to:     - increase impact in IDA countries;    - lead efforts to address climate change; and    - reach the underserved in frontier regions.    In the oil and gas sector, IFCs focus is to pursue more early equity investments (for which capital from other sources is more limited) and to be a long-term partner for companies that seek to attain international standards in their operations, including environmental and social practices, while supporting countries in the sustainable development of their domestic sources of energy, especially natural gas (a clean source of fuel). This investment is consistent with both the World Bank and IFC strategies, since it supports a junior oil and gas company operating in an IDA country (Laos) and a frontier region (Northeast Thailand) and in a project focusing on development of natural gas resources.   Development Impact:  Should the project progress successfully to commercial production, it is expected to generate the following development impacts:   Pilot Development Of The Upstream Sector In Laos:  Salamanders activity represents the first investment in upstream oil and gas in Laos since 1998.  If the Company is successful in its exploration efforts, the Project would help demonstrate the viability of investment by small independents in the Lao upstream sector and help catalyze the development of an upstream industry in the country.    Supporting Further Regional Cooperation Between Laos And Thailand Through Potential Export Of Gas/Electricity To Thailand And Cooperation In Other Infrastructure Development In The Bordering Area: Thailand is expected to be, at least initially, the principal market for Laotian gas.  Discovery of gas may lead to development of gas-fired electricity generation in Laos, with any excess electricity exported to Thailand.  This will help further development of the infrastructure in the region which already exists for the export of hydro power from Laos to Thailand and the import of gas-fired generated electricity from Thailand to Laos during the dry season.  Increased Supply Of Domestic Sources Of Energy, Import Substitution, Promoting The Development And Use Of Natural Gas As A Cleaner Fuel:  The Project will increase the supply of domestic sources of energy in Laos and Thailand, helping reduce their need to use limited foreign currency reserves for expensive energy imports.  The investment will support the exploration for and development of natural gas reserves, a cleaner source of fuel.  Supporting Local Economic Development Through Payments To The Government:  The governments of Laos and Thailand will receive fiscal receipts from hydrocarbon production taxes, bonuses and corporate taxes generated by the investment.  Under the Savannakhet PSC, the Government takes 45% of oil or 37% of gas as its share of profit petroleum and an income tax of 30% on taxable profits in addition to various production bonuses, rentals, training and government assistance payment. Under the Thai concessions, the Government takes a royalty of 5-15% of gross revenue and an income tax of 50% on taxable profits.  Approximately 15% of royalties in Thailand are expected to ultimately accrue to the regions where the oil and gas activities are undertaken.  Creating Some Job Opportunities And Providing Training In Local Communities: The Project will generate some job opportunities in Laos and Northeast Thailand, where agriculture is the primary business and few other job opportunities are available. In addition, the Company will also contribute to training of local staff and development of a domestic labor force with knowledge of the oil and gas industry.  IFC plans to monitor the following development impacts:   - gas sales; - payments to governments; and - employment.