Merlon Petroleum



Project number:


Business sector:

Natural resources

Notice type:


Environmental category:


Approval date:

08 Jul 2015



PSD disclosed:

22 May 2015

Original PSD

Please note: PSD updated 30 March 2017

Translated version of this PSD: Arabic

Project Description

This outlines a two-year extension to the original facility signed in 2015 with an increase in the Bank's commitment.

The project entails an EBRD loan to finance the client's operations in Egypt, including investments to reduce associated petroleum gas (APG) flaring, and capital expenditures for field development. As part of the project the Bank will assist the company in strengthening its network of local suppliers.

Project Objectives

Transition Impact

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

1. Support of private sector development and increased competition in the oil and gas sector in Egypt;

2. Demonstration of new replicable activities through investment in technologies to capture APG, where present, for in situ and clean power generation in its Egyptian operations;

3. Setting Standards for Business through the disclosure of payments to Egyptian authorities in line with the principles of the Extractive Industry  Transparency Initiative;

4. Policy dialogue effort with the Egyptian authorities to discuss comprehensive measures to reduce gas flaring in Egypt.

Client Information


Merlon Petroleum El Fayum, an independent upstream oil & gas company operating in Egypt.

EBRD Finance Summary

USD 42,733,333.00

This is a 2 year extension to project approved in 2015, including a USD 11.4m increase in the Bank's current commitment

Total Project Cost

USD 86,650,000.00

Up to USD34.4 million

Environmental and Social Summary

Categorised B (2014 ESP): Environmental and Social Due Diligence (ESDD) has shown that the impacts associated with the Project are readily identified and addressed through the implementation of appropriate mitigation measures. While the Company has in place various provisions to address these impacts, some improvements will be required to align the Company and its operations with the PRs. ESDD was undertaken by an independent consultant and included a corporate review and a site audit. The Project involves the drilling of additional wells to expand the Companyis existing activities in the El Fayum concession and increase production. The El Fayum field is predominately an agricultural area. The majority of the new wells will be drilled from existing well pads (sites) with no further significant land-take requirements. Any new wells and well pads will be subject to local environmental impact assessments (EIA). . The Company has undertaken a social impact assessment (SIA) of its activities and this will be updated to consider the Project. As part of future EIAs the Company will also undertake a biodiversity risk assessment to assess whether its activities are impacting biodiversity in the wider area and the nearby protected area, Lake Qaroun.Significant biodiversity impacts are not expected.

The Company is in the process of implementing an ISO 14001 and OHSAS 18001 certified management system (MS) which will address many of the necessary improvements identified through the ESDD. This will include the appointment of additional personnel to implement the MS and improve Company and contractor E&S performance. HR and labour provisions are in line with PR2 although the Company will need to formalise the existing internal grievance mechanism and further extend it to contractors.

Current GHG emissions are approx. 50 000 tCO2e/year and are expected to increase to approx. 72 500 tCO2e/year through the Project. An Associated Petroleum Gas (APG) utilisation programme has been agreed with the Company, which in the first instance includes the replacement of diesel generators with gas generators. This would do much to reduce the flaring of APG and reduce GHG emissions (by approx. 15 000 tCO2e/year). Some monitoring of emissions takes place but this will need to be improved to ensure compliance with national requirements. Water is supplied by the municipality. Produced water is treated and then re-injected to maintain reservoir pressure. Wastewater is treated on site before being removed for final treatment in a third party facility. Waste management services are provided by licensed contractors. The Company will need to implement some improvements with respect to its chemical and waste storage facilities. The Company has in place a variety of H&S procedures. These are generally effectively but further monitoring is
required to bring these in line with the PRs and improve contractor H&S performance. An appropriate emergency response plan is in place. Oil is transported by trucks to a receiving station. Land for operations and the Project is acquired through voluntary rental agreements, which include compensation for crops and to land users where applicable. Some landowners are also employed by the Company. The process is in line with PR 5 but will need to be formalised and disclosed to affected people together with a formalised grievance mechanism. No cultural heritage issues have been identified but the company will need to develop a chance finds procedure applicable to new activities. A Stakeholder Engagement Plan and Non-Technical Summary have been developed
as part of the ESDD to meet to meet the EBRD's consultation and disclosure requirements. An ESAP has been developed and agreed with the Company to structure the Project in line with the PRs. The Company will be required to report to the Bank annually on its E&S performance and the implementation of the ESAP. The EBRD will monitor the Project as required.

Technical Cooperation



Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Share this page: