The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to support natural gas development in Bulgaria and Egypt in an effort to promote consumption of gas as a cleaner and more convenient fuel.
The IFC has provided a US$50mn loan to the Bulgarian and Egyptian subsidiaries of UK-based oil and gas producer Melrose Resources. IFC is making the investment in partnership with commercial banks that have provided another US$240mn to Melrose.
IFC’s financing will support the development of domestic gas reserves in Bulgaria and Egypt, helping meet growing demand, bolster employment, and create supply opportunities for local providers of goods and services.
Melrose is an important player in the natural gas sectors of both countries and procures about 70% of its purchases locally. It also offers significant employment opportunities in both countries.
“Melrose and IFC are long-term partners. This is IFC’s third investment to support the company’s growth strategy. Through these investments we are promoting the use of cleaner fuels in Bulgaria and Egypt, encouraging private sector involvement, and creating employment and local sourcing opportunities,” said Somit Varma, associate director of IFC’s oil, gas, mining, and chemicals department.
The financing in Egypt is a revolving credit facility to support exploration and development in the El Mansoura, Southeast El Mansoura, and Qantara concessions in the onshore Nile Delta.
In Bulgaria, the financing supports exploration in Melrose’s concessions offshore in the western Black Sea. In 2002, IFC helped finance Melrose’s development of Bulgaria’s Galata gas field, and it made a corporate financing to the company in 2004.
In Egypt’s El Mansoura area, recent oil and gas discoveries are being brought into production, and further appraisal and exploration is ongoing. IFC works with private companies in critical sectors of Egypt’s economy. The hydrocarbon sector is a strong source of foreign investment for the country and an important contributor to its gross domestic product.
Michael Essex, IFC’s director for the Middle East and North Africa region, says, “Melrose is a growing player in the Egyptian energy sector. IFC has a clear mandate to support investment in developing the country’s natural resources, which is critical to meeting increasing domestic energy demand and growing the local economy.”
In Bulgaria, Melrose subsidiaries Petreco and Petreco Bulgaria EOOD are producing in the Galata gasfield and have four adjacent offshore exploration concessions. The Galata field was the first upstream oil and gas development undertaken by the private sector in Bulgaria.
Robert Adair, chairman of Melrose, adds: “We have built a strong partnership with IFC, which has been integral to our growth in the Bulgarian and Egyptian energy markets. We look forward to continuing our relationship with IFC and benefiting from its extensive regional and sector expertise.”