Irkutsk Oil II

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Translated version of this PSD: Russian The EBRD is considering providing debt financing to Irkutsk Oil Company (“INK” or the “Company”) for further development of the Yarakta field, including the second phase of a gas utilisation programme, which will enable the Company to reach 95% of APG utilisation. The loan will also be used to restructure an existing loan for the Company. The proposed transaction, which is a continuation of the Bank’s existing cooperation with the Company, is expected to have transition impact along two dimensions: (i) Continued support for a privately-owned, small and independent Russian E&P company which is still in a pre-IPO transition period and on a fast growth path; (ii) Potential demonstration effect of new replicable products and processes going beyond standard market practice with the construction of a booster compressor station in order to increase gas re-injection capacity and of a gas processing plant. Following this investment, the Company is expected to reach a utilisation rate for its associated petroleum gas of at least 95% at its main field Yarakta. Irkutsk Oil Company is a medium sized Russian company which holds licences for oil and gas in Eastern Siberia and Yakutia in the Russian Federation. Corporate loan with tranches: A Term Loan of USD 150 million to refinance the outstanding EBRD loan and to finance the capital investment programme for the second half of 2013 and a USD 50 million standby facility. The Company’s 2013 investment programme is planned to be approx. RUB 16 billion. This will include the development of a gas utilisation programme (second stage of gas cycling project) and new drilling and infield infrastructure development. Categorised B under the Environmental and Social Policy 2008. No additional Bank due diligence will be required for the proposed loan restructuring due to the fact that the implementation of the original Project and other ongoing activities have been reviewed and assessed under the environmental and social due diligence carried out for the original debt and equity transactions with the Company and through subsequent monitoring activities (although the original project was categorised under the 2003 EP, it was structured to meet all the provisions of the 2008 ESP). Also, within existing equity transaction, the Company has developed corporate procedures for conducting environmental, health and safety audits for new acquisitions and environmental and social analysis for any expansion and development activities. The Bank will request the Client to submit relevant reports and action plans for proposed activities to the Bank. The Company is implementing an Integrated Environmental, Health and Safety Management System (IMS). The Company has in place a dedicated Occupational Health and Safety manager and robust safety procedures. The Company has also developed and is implementing Contractors Management Procedures. The Company is adequately addressing pollution prevention issues and has implemented the mitigation measures as defined in the ESAP for the original transaction. The Company conducted a biodiversity survey in 2009 which did not identify any endangered or protected species at the IOC fields or in the vicinity of the operational areas. The proposed Project will not entail any resettlement or land acquisition. The Company has established good relationships with local communities and various groups and associations of Indigenous peoples inhabiting the Irkutsk region. The Company conducted a cultural heritage survey for the Yarakta field; there is also an on-going agreement in place with the archaeology, ethnology and ancient world history department at the Irkutsk State University, for provision of cultural heritage awareness training to IOC. All company projects undergo public hearings and consultations. Information on forthcoming public consultations is promptly posted on the corporate web-site and in the media. The Project will be monitored through the review of the Company’s internal due diligence reports, review of the annual environmental and social reports as well as monitoring visits. None. Yuriy Rubin, Email: rubin@irkutskoil.ru Yakov Ginzburg, E-mail: ginzburg@irkutskoil.ru