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Borets
Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Project number 28453
Country
Russian Federation(IDA)
RegionEurope and Central Asia
SectorOilfield Services
Department
Company nameBorets International Ltd
Environmental category:B
StatusActive
Date ESRS disclosedNovember 13, 2009
Previous EventsInvested: March 18, 2010
Signed: December 22, 2009
Approved: December 21, 2009
View Summary of Proposed Investment (SPI), click here

OverviewCategory &

Applicable Standards
Key Issues

& Mitigation
Community/

Engagements
Client's

Documentation

Overview of IFC's scope of review
Environmental and social (E&S) appraisal of Borets’ operations in Russia included visits of IFC’s environmental specialists to manufacturing plants in Tomilino (“Kontekko”), Kurgan (“Kurgan Cable Plant”) and Lysva (“Lysvaneftemash”) as well as interviews of corporate environmental, health and safety (EHS) and HR experts at Borets’ Moscow HQ in October and November 2009. During the visits and phone interviews IFC’s experts have reviewed management procedures, accident records, relevant emission and discharge data, and the actual implementation of occupational health and safety standards.

IFC’s review also used the conclusions of environmental and social due diligence carried out by internationally recognized consultant Environmental Resources Management Limited (ERM), UK, during July and August 2009. ERM undertook an environmental audit of Borets facilities in 2006, when four manufacturing (Lebedyan, Lysva, Kurgan and Kineshma) and eight service sites (Centroforce, Borets Service – Nefteyugansk (6 sites), and Borets-Muravlenko) were assessed. These sites were subject to update interviews in 2009. In addition, the manufacturing site in Krasnodar and service sites in Buzuluk acquired by Borets between 2006 and 2009 were visited and assessed as part of this assignment.

IFC’s review also included BIL’s international operations acquired from Weatherford in 2008. For this purpose, an IFC environmental specialist met with the corporate Environmental Director of Weatherford International on October 29th, at Weatherford’s HQ in Houston, USA.

During the appraisal IFC’s staff reviewed the following documentation:
Weatherford’s Enterprise Excellence Program (EPP) – summary of the Company’s integrated management system.
Weatherford’s Performance Tracking System (WPTS) - summary
Weatherford’s Environment Manual
Weatherford’s Safety Manual
Project description
Borets International Limited (“BIL”, or ‘the Group”) and its subsidiaries (“Borets” or the “Company”) are the leading Russian producers of electrical submersible pumps (“ESPs”). ESPs are an important part of the oil production process and are installed in oil wells that do not have sufficient reservoir pressure and need supplemental energy in raising oil from the reservoir to the surface. In addition, Borets provides extensive services from ESP repair and maintenance contracts to logistics, inventory and field monitoring and supervision services. Borets also makes other products used in the oilfield services sector such as submersible centrifugal pumps, submersible motors, cables, and surface control equipment. The Group has 10 manufacturing locations, 6 in Russia, and one each in Western Europe, China, the U.S. and Canada. The Group also has 18 service centers, 7 in Russia. It has 8644 employees worldwide, including 8061 in Russia.

BIL approached IFC, EBRD and DEG to finance its $230 million investment needs which include: (i) refinancing its outstanding long-term debt; (ii) funding mainly the working capital and capital expenditure requirements of the Group’s international expansion (largely allocated to Mexico, Brazil, Indonesia, Africa and China but such allocation may change depending on the timing and results of the bidding processes for service and equipment sales contracts in most cases); and (iii) modernization and working capital requirements of its operations in Russia (the “Project”).

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