Tranquilo and Otway UJVs GeoPark Holdings Limited (GeoPark or the Company) has invited IFC to consider an equity investment as an unincorporated joint venture (UJV) partner for up to 15% working interest in the Tranquilo and Otway exploration blocks, located in the Austral basin of the Magallanes and Antarctica Chilena region in southern Chile. GeoPark, through its wholly owned subsidiary GeoPark Magallanes Limitada (GeoPark Magallanes), holds 30.0% and 33.6% in Tranquilo and Otway blocks, respectively. GeoPark Magallanes is the operator of both blocks. Fit with World Bank Group Strategy

The World Bank Groups (WBG) 2007-2010 Country Partnership Strategy for Chile has been developed to meet the changing needs of a globally integrated middle-income country and assist the country in its efforts to (i) accelerate sustainable growth and (ii) increase equality of opportunity.  While Chile has not been reliant on World Bank financing given its strong financial position in recent years and investment grade status, the Government of Chile (GoC) values continued World Bank engagement as a knowledge partner.  Within the integrated WBG strategy, IFC continues to focus on areas where it can support the GoC in its development objectives of encouraging growth and competitiveness, with emphasis on projects with strong demonstration effect in sectors identified as high priority by GoC, including, increasingly, energy and gas development.  In the oil and gas sector, IFC aims to provide long term strategic support to companies that seek to attain international standards in their operations, including environmental and social practices, and help the countries of their operation develop domestic natural resources in a sustainable manner. 

Development Impact

The Government of Chile has set up a priority of developing the countrys energy resources and the public tender in 2007 of ten blocks was a significant step in this process, as well as in the Governments aim to achieve greater energy security. IFCs investment in this initial exploration stage will help signal to the private sector the importance of development in this region. If the Project progresses successfully to commercial production it is expected to have the following development impacts:

Increased development of domestic sources of energy. If the joint venture is successful in its exploration efforts, the Project will help support the Governments objective to both increase and diversify its domestic energy sources and suppliers. It will help maximize the use of local natural resources, in particular through exploration and potentially development of natural gas, a cleaner source of fuel, and potentially contribute to development of local industries and downstream activities.
Employment and local community development. Outside of Punta Arenas, the capital of the Magallanes and Antártica Chilena region, employment opportunities are rather limited.  If successful, the Project is expected to help sustain and generate additional employment opportunities in the area. The UJV partners are expected to benefit from GeoParks knowledge of the regions socioeconomic condition, given that the companys Fell block is located in the same region.
Benefits to the government.  The GoC is expected to benefit from fiscal receipts, such as hydrocarbon production share in the form of royalties and corporate taxes, generated by the Project.  The Contracts state that the operator will pay 17% income tax if the funds are re-invested in the Project, and 35% income tax if there is no re-investment or if funds are repatriated abroad.

Local and regional spending.  The Project is expected to contribute to increased local and regional spending as the majority of oilfield services and operational supplies are expected to be procured locally and regionally. 

The following development outcome indicators will be monitored on an ongoing basis during the exploration phase: (i) investment and work commitments; (ii) discovery of hydrocarbons that can be commercially developed.