82629 INTEGRATEDSAFEGUARDSDATASHEET CONCEPT STAGE Report No.: Date ISDS Updated: November 7, 2013 I. BASIC INFORMATION A. Basic Project Data Country: Lebanon Project ID: P146202 Additional Project ID (if any): Project Name: Floating Storage and Regasification Unit Project Task Team Leader: Simon J. Stolp Estimated Appraisal Date: April 2014 Estimated Board Date: Ju!Y_ 2014 Managing Unit: MNSEE Lending Instrument: PRG Sector: Oil and Gas (I 00%) Theme: Infrastructure Services for Private Sector Development (100%) IBRD Amount (US$m.): $60M Partial Risk Guarantee IDA Amount (US$m.): GEF Amount (US$m.): PCF Amount (US$m. ): Other financing amounts by source: Environmental Category: A Simplified Processing Simple ] R~eaterlX] Is this a transferred project Yes [] No [X] B. Project Objectives [from section 2 of PCN]: The project development objective is "to provide natural gas to the power sector as replacement fuel for more expensive and environmentally detrimental liquid fuel oils". C. Project Description [from section 3 ofPCN]: The proposed operation consists of providing a credit enhancement mechanism to address the low credit worthiness of the Lebanese power sector to support the development of a Floating Storage and Regasification Unit (FSRU) to enable the import of Liquefied Natural Gas (LNG). The proposed instrument will be a Partial Risk Guarantee (PRG) back-stopping liquidity payments under a TUA entered between the Government of Lebanon (GoL) and the FSRU project developer/owner/operator. A number of potential developers have already indicated to Ministry of Energy and Water (MoEW) that a PRG would support their decision to enter into a TUA with the GoL, MoEW or a government owned entity such as EdL. The viability of this project will be contingent upon whether the PRG option is taken by the first ranked bidder for the LNG development. The Lebanon LNG import facility is a 3.5 mtpa (4.8 BCM), floating storage and regasification facility to be located 1.7 km off-shore, 2.4 km east of the Tripoli harbor and 3.2 km west of an the existing 435 MW power station at Deir Amar. The site is to be located within an existing oil product import port operated by the Ministry of Energy and Water. Specifically, the regasification terminal will include: • 1 x Floating Storage and Regasification Unit (FSRU) • Offshore ship berthing and LNG unloading facilities • High pressure gas send-out connection and sub-sea pipeline to shore • Power and control system connections from FSRU to the unloading ship • Buried pressure gas pipeline from shore landing to connection point for the Lebanon gas transmission pipeline system • Shore transfer boat jetty for terminal operations crew transfers to/from offshore facilities The FSRU will be designed to offload and store LNG delivered in bulk by ship and re-gasify product to meet local power generation fuel requirements of the Deir Amar power plant. A FSRU design was selected as the lowest cost, quickest construction time option. The FSRU technology is relatively new, _but has been successfully demonstrated to be reliable in many offshore areas throughout the world. The preferred site was selected due to existing petroleum import operations, preferred met-ocean conditions and proximity to demand. The FSRU and associated facilities are anticipated to cost between $150M and $290M to construct, dependent on the technology adopted. The project will be privately developed under a BOO arrangement with the GoL, who will purchase LNG supply under separate agreement(s) and will contract for the long-term use of the FSRU through a terminal use agreement. The TUA will include both capacity and use charges. D. Project location and salient physical characteristics relevant to the analysis of environmental and social risks and impacts (if known): The LNG Terminal (FSRU and associated structures), will be located 1.7 km off-shore at Deir Amar, just north of Tripoli in northern Lebanon. The terminal will consist of the FSRU (a converted LNG tanker), moored to either a single point mooring or island jetty, and a sub-sea gas pipeline to the shore where it will connect directly with e?Cisting gas facilities. The civil works supported by the PRO will be 2.5 km of high pressure gas pipeline. Most part of the pipeline will be built subsea. The small section onshore will be built on the land owned by the GoL. Therefore the project supported by the PRO will not involve in any land acquisition and economic displacement. Other environmental risks will however need to be managed - including marine and coastal risks associated with the facility. E. Borrower's Institutional Capacity for Effective Social & Environmental Management Systems (SEMS): These are likely to be recognized international oil companies, LNG operators or industrial companies with strong experience in international LNG operations. The Request for Proposals sent by the GoL states that it will evaluate the bidders against technical criteria, which include environmental and social management indicators (e.g. demonstration of appropriate management systems including safety, environment and security). It also indicates that the awarded developer will be responsible to obtain all required permits, licenses, consents, and approvals required for project. The developer is therefore likely to have capacity for effective implementation of environmental and social management systems, and of developing the environmental and impact assessment (EIA) for which they will be responsible following the guidelines of the Request for Proposals. Their institutional capacity will be assessed as a part of the PRG due diligence and summarized in the Environmental and Social Review Summary (ESRS). The beneficiary companies will operate under the established Lebanese institutional, legal and regulatory framework for environmental and social management. MoEW's authority to govern the gas industry in Lebanon, through Lebanon Oil Installations (LOI), is based on Decree Law# 79/77 dated June 2, 1977 which entrusted the MoEW with the management of all the oil installations on Lebanese territory and the administration of all financial, economic and regulatory matters relating thereto. The Bank is currently closely engaged with the involved sector agencies (Ministry of Energy and Water - LOI, and Ministry of Finance) through policy dialogue, and under ongoing technical assistance projects. These agencies have experience working with Bank projects. The Bank will be able to guide MoEW and MoF through the PRG arrangements (e.g. procurement of the LIC Bank, etc). F. Environmental and Social Safeguards Specialists on the Team: Zeyad Abu-Hassanein, MNSWA Chaogang Wang, MNSSO II. PERFORMANCE STANDARDS THAT MIGHT APPLY Performance Standards (please explain why) Yes No TBD PS 1: Assessment and Management of Environmental X and Social Risks and Impacts Given the marine location of the FSRU and the associated facility and their likely impacts, this proje-ct is classified as a category "A" project. Assessing this PS will include all possible impacts of the construction and operation of the offshore facility on the marine environment and the onshore power plant associated with the project. It will also examine any potential aspects of trans-boundary Issues and the triggering of OP 7.50 will be determined (TBD). Decommissioning plans will also be included in the event that the FSRU operator terminates and relocates the facility. By appraisal, all necessary ESIAs will have been developed, reviewed by the Bank, and disclosed. The client will produce an environmental audit of the existing Deir Amar power plant and its expansion underway to assess its performance against the WB performance standards and, if needed, propose necessary measures to rectify any issues coming out of the audit. The developer will produce the ESIA of the offshore facility. Performance Standards (please-explain why) Yes No TBD PS 2: Labor and Working Conditions X PS 3: Resource Efficiency and Pollution Prevention X PS 4: Community Health, Safety, and Security X PS 5: Land Acquisition and Involuntary Resettlement X The civil works supported by the PRG will be 2.5 krn of high pressure gas pipeline. Most part of the pipeline will be built subsea. The small section onshore will be built on the land owned by the Government of Lebanon. PS 6: Biodiversity Conservation and Sustainable X Management of Living Natural Resources PS 7: Indigenous Peoples X PS 8: Cultural Heritage X III. SAFEGUARD PREPARATION PLAN The LNG FSRU is a private sector project that will be designed, constructed, owned and operated by a private entity. Since the definition of this operator is in accordance with paragraphs 3 and 4 of OP 4.03 and that the client has no objection to it, Bank Performance Standards for Private Sector Activities will apply to the project. If the option for a PRG is exercised by the first ranked bidder for the LNG development, the Bank would commence due diligence on safeguards and appraisal of the project. By project appraisal, all instruments will be prepared by the client or the private entity, and the Bank will examine the environmental and social management system (ESMS), including the ESIA for the FSRU, the audit of the existing Deir Amar Power Plant, the ESIA of the Deir Amar Power Plant expansion, and the capacity of the developer and the MoEW to implement, monitor, and enforce the ESMS. According to the current project preparation timeline, the summary of the E&S impacts ofthe project will be included in the ESRS and ISDS early 2014. IV. APPROVALS Si ned and submitted h : Task Team Leader: Date: ll/07/2013