Omimex Oil

completed

Omimex, an independent energy company engaged in the exploration and production of crude oil and natural gas, has requested financing from IFC to fund the further development of its various Colombian heavy oil fields as well as the expansion of the company’s 100%-owned Colombian pipeline. Having been in the country since 1994, Omimex has gained significant experience in the Middle Magdalena Basin, an increasingly active area for oil development located 125 miles northwest of Bogota. The company currently produces from three existing fields (Velasquez, Teca, Nare) in the basin, but plans to increase production through a multi-year, staged development program.IFC''s proposed loan will help finance a project which has four key development impacts. First, the project represents a significant investment in a poor and underdeveloped region of the country. Construction and operation will create many primary and secondary local employment opportunities in the area. Second, further investment in the company’s oil fields will allow them to be exploited to their full potential and help boost the country’s declining production. Third, the project will supply oil to a local refinery which will, in turn, free up higher-quality crude for export. Fourth, the project will provide a valuable source of revenue to Colombia through royalties and taxes.IFC has several important roles to play in this project. First, the weak Colombian economy and negative perceptions of physical security have made it difficult for companies to secure long-term financing at reasonable costs from commercial sources. IFC will therefore play an essential role by providing economic funding with reasonable maturities. Second, IFC involvement will support the government’s attempts to promote and attract new private sector investment in the oil and gas sector. Third, IFC will contribute to the project’s sustainability by working closely with the company to build and enhance its institutional capacity regarding project and financial management as well as developing an Environmental and Social Management System at the corporate level that can be applied to all future projects.