Washington, D.C./Lima, February 5, 2008
— The Board of Directors of IFC, a member of the World Bank Group,
on Tuesday approved financial and advisory support for Peru LNG, a natural
gas export project that will support growth in some of Peru’s poorest
regions and will be the largest foreign direct investment in the country’s
Totaling $3.8 billion, this landmark
investment is the first liquefied natural gas export project in Latin America.
It is expected to transform Peru into a net hydrocarbon exporter after
operations begin in 2010. In addition to the $300 million loan approved
today, IFC is advising Peru LNG on optimizing the project’s environmental
approach and ensuring that local communities benefit.
“We very much value IFC’s support
in helping us develop a project that follows best practice environmental
and social standards and that extends the investment’s development benefits
to the Peruvian people,” said Steve Suellentrop, President of Peru LNG.
The project consists of an LNG plant
and a marine loading terminal 170 kilometers south of Lima on Peru's central
coast, as well as a new 400-kilometer pipeline that will connect to an
existing pipeline network east of the Andes. The gas is expected to be
sold to overseas markets.
Peru LNG will help generate significant
annual tax and incremental royalty payments to the Peruvian government,
equivalent to over 1.5 percent of current state revenues. The project will
also support the regional economy through local purchasing of goods and
services. The company and IFC are developing a community development program
in line with Peru LNG’s commitment to sustained economic development.
“In Peru LNG we have found a partner
who shares our commitment to supporting economic development through private
sector investment,” said Somit Varma, IFC Director and Global Head for
Oil, Gas, Mining, and Chemicals. “IFC plays an important role in helping
ensure that project benefits reach the people that need them most.”
IFC will help the company purchase goods
and services from local small and midsize companies. IFC will also support
local authorities in efficiently managing and allocating incremental royalties
resulting from the project. IFC seeks to extend local engagement in the
project by giving community members opportunities to evaluate the company’s
environmental and social performance.
The approval by IFC’s Board followed
extensive consultation by IFC staff with affected people and civil society
The Peru LNG project consortium is headed
by Texas-based Hunt Oil Company and includes Spain’s Repsol YPF, SK Energy
of South Korea, and Marubeni Corporation of Japan.
IFC, a member of the World Bank Group,
fosters sustainable economic growth in developing countries by financing
private sector investment, mobilizing private capital in local and international
financial markets, and providing advisory and risk mitigation services
to businesses and governments. IFC’s vision is that poor people have the
opportunity to escape poverty and improve their lives. In FY07, IFC committed
$8.2 billion and mobilized an additional $3.9 billion through syndications
and structured finance for 299 investments in 69 developing countries.
IFC also provided advisory services in 97 countries. For more information,
Since Peru joined IFC in 1956, IFC has
provided over $1.2 billion to more than 50 private enterprises in the country,
including $300 million in syndicated loans. In fiscal 2007 (July
2006 to June 2007), IFC invested $247.7 million in the country’s priority
sectors. As of June 2007, IFC’s committed portfolio in the country reached
IFC’s strategy in Peru addresses private
sector challenges, with a focus on fostering sustainable development. Key
sectors include financial, microfinance, infrastructure, agribusiness,
and tourism. Promoting access to finance for small and medium enterprises
and housing is also at the core of IFC’s strategy. IFC provides
added value to clients in extractive industries, helping raise social and
environmental standards and increase impact in local communities.