Avner Oil - Annual Report 2011 - Delek Energy Systems

(E)additional quantities of natural gas on a spot basis, in addition to those set in the 2005agreement, and it replaces the addendum to the 2009 agreement that was signedbetween the parties. The spot agreement is at new, significantly higher, prices thanthe prices set in the 2005 agreement and as was agreed in the trade negotiations heldbetween Delek Ashkelon and the Yam Tethys project operator. The agreement doesnot include a commitment to supply and/or a commitment to buy natural gas, ratheronly the terms that will be applicable to such supply as aforesaid (if any) and thereforethe quantities actually supplied and the total financial amounts for the transaction areunknown and independent, inter alia, from the set of factors and mainly the volume ofnatural gas that will actually be supplied to Delek Ashkelon. Consequently, thePartnership is unable to estimate the total financial value of the agreement.Agreement for the sale of natural gas to Hadera Paper(1) On July 29, 2005, an agreement was signed between the Yam Tethys project partnersand Hadera Paper Ltd. (“Hadera Paper”) for the supply of natural gas ("the originalagreement"). Gas supply under the agreement commenced in August 2007 uponcompletion of the pipeline and required facilities, and will terminate on the earlier offive years from commencement of gas flow or upon purchasing of 0.43 BCM, but nolater than July 1, 2011.(2) At the signing date of the letter of intent, the financial value of the agreement (for allYam Tethys project partners) is estimated at USD 40 million.Forward-looking information: The above estimate by the Partnership is forward-lookinginformation, based on the estimates of the general partner regarding future gasconsumption by Hadera Paper. The estimate may not materialize should actual gasconsumption by Hadera Paper be lower than the above projections.(F)(3) On May 15, 2011 the parties sign a further agreement under which the agreementperiod was extended by a further two years, i.e. until June 2013 the ("the additionalagreement"). This agreement is for the supply of a total volume of natural gas of 0.21BCM and includes the right of either party to further extend the agreement period untilthe total quantity has been consumed, if by the end of the agreement period the totalvolume has not been consumed. The formula for the gas price in the agreement isbased on the price of crude oil (Brent barrel) with a discount component and includesa minimum price but not a maximum price.(4) On January 25, 2012, the parties signed an amendment to the further agreementaccording to which, inter alia, the agreement period was extended for a further month,i.e. until July 2013. At this date the further agreement will expire, also if the totalvolume has not been consumed.(5) At the signing date of the letter of intent, the financial value of the agreement (for allYam Tethys project partners) is estimated at USD 63 million.(6) Forward-looking information: The above estimate by the Partnership is forward-lookinginformation, based on the estimates of the general partner regarding future gasconsumption by Hadera Paper. The estimate may not materialize should actual gasconsumption by Hadera Paper be lower than the above projections.Agreement with ICL Group(1) On March 25, 2008, an agreement was signed between the Yam Tethys projectpartners and a wholly-owned subsidiary of Israel Chemicals Ltd. (“ICL”), guaranteedby ICL, for the supply of natural gas to plants in the ICL Group in Israel (“ICL Group”).(2) ICL Group undertook to purchase a total gas quantity of 2 BCM from the Yam Tethysproject partners, subject to the adjustments in the agreement (“the gas contractquantity”).(3) Gas supply commenced in December 2009 and will end at the earlier of:A. September 2014 (subject to extension as specified below); orB. Purchase of the total contract quantity.(4) The period set out in subsection (3) will be automatically extended by one additionyear, if by the end date the entire contract gas quantity has not been consumed. InA-126