Project number:


Business sector:

Natural resources

Notice type:


Environmental category:


Approval date:

29 Oct 2014



PSD disclosed:

26 Sep 2014

Translated version of this PSD: Arabic

Project Description

The EBRD is considering providing a USD28 million loan to finance the expansion of “Advanced Energy System” (ADES), an Egyptian oil field services company. The expansion includes the purchase of one offshore drilling rig, to be operated in Egypt. The project will aim to increase domestic private sector participation in the Egyptian offshore drilling industry, which is currently dominated by a handful of large multinationals and public sector companies. The project will contribute to improved health and safety standards in offshore drilling in Egypt.

Transition Impact

The key sources of transition impact for the Project are as follows:

(i) More widespread private ownership through supporting the expansion of an independent and private-sector owned market player;

(ii) Setting standards for corporate governance and business conduct by raising Health, Safety and Environment (HSE) standards through the implementation of occupational health and safety management systems and a programme to secure ISO and OHSAS certification. In addition, corporate governance action plan will also be implemented in addition to adoption of International Financial Reporting Standards (IFRS);

(iii) Policy dialogue effort with the Egyptian authorities to agree on comprehensive measures to improve the rules and regulation for HSE in the oil and gas sector and bring the Egyptian regulation for HSE to international standards.

The Client

Advanced Energy Systems (ADES), an independent oil field services company incorporated in Egypt.

EBRD Finance

USD28 million loan.

Project Cost

USD34.5 million.

Environmental Impact

Categorised B. The Project involves the purchase of one offshore mobile drilling rig, which will be used for offshore hydrocarbon exploration and production drilling services for various sponsors. These activities may result in environmental and social impacts, the assessment of which is the ‎responsibility of the sponsor. These impacts may be similar to those typical of a category A project, which would require an Environmental and Social Impact Assessment (ESIA). The responsibility for completing an ESIA for offshore exploration or field development rests not with the Company, but rather with the particular sponsor. The Company is, however, required to comply with relevant EHS regulations and standards as well as to implement the measures prescribed by the ESIA, by the sponsor and by its own procedures. The Project is therefore categorised as B.

Environmental and social due diligence (ESDD) has been conducted by an independent consultant and has included an environmental, health and safety (EHS) audit of one of the Company’s existing rigs, an analysis of the potential environmental and social impacts associated with the Company’s activities as well as a review of Company EHS management systems, procedures and capacities to understand the Company’s ability to manage these potential impacts and meet the EBRD’s PRs. This has been complemented by independent technical due diligence of the Company’s existing rigs.

Environmental and social impacts associated with this type of project typically includes disturbance to marine life including marine mammals, the treatment and disposal of drilling muds and drill cuttings, treatment and offshore disposal of produced water, disturbances to the seabed and to marine benthos, impacts to other marine users including fisherman and impacts associated with unplanned events such as well blowouts. Due diligence confirmed that the Company has in place generally appropriate procedures and measures to avoid and mitigate these impacts although some areas for improvement have been identified and will be implemented by the Company through the ESAP. Drilling activities are also associated with various health and safety risks and the due diligence has considered the use of PPE by the Company’s workers and the implementation of specific work instructions and procedures and the appropriate use and maintenance of equipment.

The Bank’s due diligence confirmed that the Company has in place an effective environmental and health and safety management system and associated procedures that are generally in line with international standards including ISO 14001 and OHSAS 18001 for which the Company will seek certification as per the Bank’s ESAP. The management system is supported with a well-defined organisational structure with the necessary capabilities. Some improvements and strengthening of existing procedures will be required to enable certification. Human resources and labour provisions are well structured and include the necessary documentation and a worker grievance mechanism. An audit of an existing rig confirmed that EHS provisions and performance, including waste management, are generally adequate although some improvements are required to bring the Company in line the EBRD PRs and international best practice. The ESDD further confirmed that the Company’s existing operations comply with all national and sponsor requirements. The Company is required to implement a 500m radius exclusion zone around all of its activities and this is typically enforced by the local coast guard. The Company discloses information, including Company contact details, through its website and undertakes some informal community liaison through its onshore base managers. The Company supports local procurement where possible.
An ESAP, which also addresses identified gaps as per above, has been developed and will be agreed with the Company before Board. Key ESAP actions include: certification of the existing Environmental, Social and Health and Safety (ESHS) Management System to ISO 14001 and OHSAS 18001 standards; OHS improvements on select rigs including potential noise issues; the need to undertake a conditions assessment for any new rigs purchased; emission monitoring and development of a GHG inventory; and the development of an annual sustainability report. A stakeholder engagement plan and non-technical summary have also been developed as part of the due diligence and will support the Company in meeting the Bank’s stakeholder engagement and information disclosure requirements. The Company will be required to submit annual environmental and social reports to the Bank.

Non-Technical Summary: English | Arabic


Technical Cooperation

Mohamed Farouk
Chief Executive Officer
Advanced Energy Systems (ADES)
66 Corniche El Nil St., Zahret El Maadi Tower, 27th floor.
Maadi, Cairo

Tel: +202 2526 9866
Fax: +202 2526 9864


Business opportunities

For business opportunities or procurement, contact the client company.

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Text of the PIP

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