PAE G San Jorge Pan American Energy (PAE or the Company) is engaged mainly in exploration, development and production of oil and gas. PAE is the second largest oil and gas producer in Argentina and has blocks located in the four major hydrocarbon basins  Golfo San Jorge, Austral, Neuquina and Northwest. The most significant block in terms of both reserves and production is the Cerro Dragon block in the Golfo San Jorge basin, located in the south of Argentina.   IFC has been requested by PAE to mobilize a corporate loan facility of up to $250 million, including up to $50 million for its own account. The loan proceeds will partially fund the Companys 2009 capital expenditures for further development of PAEs most prolific oil assets, Cerro Dragon, Piedra Clavada and Koluel Kaike in the Golfo San Jorge Basin (GSJ) (the Project).   The Project will include activities covering drilling and facility expansions and improvements and part of the 2009 investment program will go towards increasing gas production.  By the end of 2009, the planned activities are expected to increase oil and gas production. Alleviation of domestic oil and gas shortage:  Gas demand growth has outpaced gas supply in Argentina in recent years.  The growing gap has been driven by under-investment in the sector on the one hand and sustained economic expansion on the other.  The latter was fuelled by a combination of growth in the industrial sectors, increased use of natural gas in vehicles and further distorted by energy pricing policies.  In this context PAE is one of the few operators in the country continuing to increase its oil and gas production.  Gas represents around 38% of the Companys proven reserves and part of the 2009 investment program will go towards increasing gas production.  In the past 7 years PAE has grown its oil production by 39% while nationwide production (including PAE) has declined by 20%. In the same period, PAE grew its gas production by 84% compared to a 28% increase in nationwide production.    The impact of the Companys investment program in the GSJ region is expected to result in an average annual increase of production of approximately 2.7% p.a. or 14% total over the next four years.    Creation/Preservation of local employment:  PAE is a key employer in the regions where it operates, especially in the GSJ basin where it employs 914 direct staff and almost 6730 contractors. The IFC investment will contribute to the Companys growth, which has lead to an average of 200 new direct jobs created per annum since 2005. In addition, the investment will help maintain the employment level on a company-wide basis in the provinces of Chubut and Santa Cruz, where the oil and gas industry offers significant employment opportunities.    Strong community development and linkages program:  PAE continues to spend increasing amounts on social development programs ranging from education and health programs to Small Medium Enterprise support programs in its areas of operation.  In 2007 and 2008, the Company spent $3.6 million and $5.5 million, respectively, on these programs.   Local/National Sourcing:  The Company procures most of its goods and services in Argentina.  In 2008, PAE spent approximately $896 million on Argentine investments, goods and services from national and regional suppliers, and a large portion of the 2009 capital expenditure is expected to be sourced locally/nationally.  Contribution to government revenues:  PAE contributes significant fiscal revenues to all levels of government. During 2008, PAE made approximately US$1.3 billion in payments to various levels of government consisting of income taxes, royalties, export tariff and other taxes. The Company submits financial statements on quarterly basis to the Argentinas National Securities Commission as part of its obligation, and such disclosures are available publicly. In addition to remaining a significant contributor of tax revenues for both the federal and regional budgets and is also expected to continue contributing to Argentinas foreign currency earning over the life of the IFC loans.   Indicators to monitor development impact include (i) gas production, (ii) payments to government, (iii) employment maintained/created, (iv) local/national purchasing; and (iv) community development programs.