Washington, D.C./Lima, June 26, 2008—IFC,
a member of the World Bank Group, together with other international banks
today signed a financing agreement for Peru LNG, a natural gas export project
that will support economic growth in some of Peru’s poorest regions and
will be the largest foreign direct investment in the country’s history.
IFC’s $300 million loan for this landmark
project is its largest investment for its own account in Latin America
to date. In addition to financing, IFC will also advise Peru LNG to help
optimize its environmental approach and ensure that local communities benefit.
“IFC has been a key partner in the
financing for this project,” said Steve Suellentrop, President of Peru
LNG. “Today we have reached a milestone on the road toward making a project
a reality that, with IFC’s help, will enable local Peruvian people to
receive tangible benefits and follow best environmental and social practice.”
Totaling $3.8 billion in costs, Peru
LNG will be Latin America’s first liquefied natural gas export project.
It includes a liquefaction plant and a marine loading terminal on Peru's
central coast, as well as a new 408-kilometer pipeline that will connect
to an existing pipeline network east of the Andes. The project is expected
to make Peru a net gas exporter after operations begin in 2010.
With IFC’s support, Peru LNG is enhancing
opportunities for local businesses to sell goods and services to the project,
raising people’s incomes and job prospects. IFC is developing programs
to engage local communities in monitoring the effects the project will
have on their lives. IFC is also establishing training for nearby municipalities
to make best use of the significant new revenues they will receive as a
result of the project. These programs build on IFC’s experience with similar
initiatives in some of Peru’s poorest regions.
“IFC offers a full range of products
to make the project a commercial success and to support Peru’s economic
development through private sector investment,” said Somit Varma, IFC
Director and Global Head for Oil, Gas, Mining, and Chemicals. “We are
committed to a long-term partnership with Peru LNG and its consortium members,
as well as with the government of Peru.”
The project will help generate significant
tax and incremental royalty payments to the government, equivalent to over
1.5 percent of current state revenues.
The Peru LNG project consortium is headed
by U.S.-based Hunt Oil Company and includes Spain’s Repsol YPF, SK Energy
of the Republic of Korea, and Marubeni Corporation of Japan. IFC’s loan
is part of a $2.25 billion lending package for the project, which includes
loans from the Inter-American Development Bank (IADB), Export-Import Bank
of the United States (US Ex-Im Bank), Export-Import Bank of Korea (K-Exim
Bank), and SACE S.p.A. of Italy.
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,
IFC's strategy in Peru is to address
private sector challenges by investing and fostering sustainable development.
Key sectors include the financial sector, microfinance, infrastructure,
agribusiness, and tourism. IFC is also developing programs to enhance social
benefits of the extractive industry. In fiscal 2007, IFC invested $247.7
million in Peru in several priority sectors. As of March 2008, IFC’s committed
portfolio in the country reached $487 million.