Avner Oil - Annual Report 2011 - Delek Energy Systems

(G)addition, Yam Tethys partners have an option to extend the period by an additionaltwo years, until the entire contract gas quantity has been consumed, as set out in theagreement.(5) The price of gas is based on the price of fuel oil, with a discount including maximumand minimum prices. ICL Group has a take or pay agreement for a minimum annualvolume of gas according to conditions set out in the agreement.(6) The total financial value of the agreement (for all Yam Tethys project partners) isestimated at USD 260-330 million. Actual revenues will be affected by a number ofconditions, primarily the price of fuel oil and rate of gas consumption.(7) Forward-looking information: The above estimate by the Partnership is forward-lookinginformation, based on the estimates of the general partner regarding future gasconsumption by ICL Group. The estimate may not materialize should actual gasconsumption by ICL Group be different from the aforementioned projections.Agreement to sell natural gas to ORL:On June 25, 2002 the Yam Tethys project partners (in this section: "the sellers") and ORLsigned an agreement for the supply of natural gas to ORL and its subsidiaries ("theagreement"), the main points being:(1) Under the agreement, ORL undertakes to purchase from the sellers a quantity of BCM1.2 natural gas (“the gas contract quantity”). The entire consideration for theagreement will be paid in installments over 27 months, starting from June 2011, orover a shorter period if ORL consumes the contractual gas quantity earlier. If ORLdoes not consume the contractual gas quantity over this period, the supply period willbe extended, according to the terms set out in the agreement.(2) The gas price in the agreement includes a fixed and variable component, based onthe formula for crude oil prices (Brent barrel), with a minimum price but not amaximum price.(3) The financial scope of the agreement is estimated at USD 350 million (according to acalculation on the date the agreement was signed). It is hereby clarified that the actualfinancial scope of the agreement may change as a result of changes in global oilprices and ORL's rate of gas consumption.(4) Forward looking information: The foregoing estimates of the agreement's totalfinancial value and gas supply period is forward-looking information as defined in theSecurities Law, and there is no certainty that the supply dates, agreement periodand/or total financial value will be as estimated above, as they depend, inter alia, on arange of factors, including the volume, rate and timing of ORL's natural gasconsumption, and oil prices.7.11.4 Agreements to sell natural gas from the Tamar project(A)Agreement to sell natural gas to IEC;On March 14, 2012, the Tamar project partners and IEC (“the sellers" and “the buyers”respectively) signed a natural gas supply agreement (“the supply agreement"), the mainpoints of which are as follows:(1) The sellers undertook to supply the IEC with natural gas for a period of 15 years fromthe end of the Tamar project running in period (in this section: "the commencementdate of commercial supply") or until IEC consumes the total volume of gas prescribedin the agreement, which is 78 BCM (in this section: “the total contract quantity”),whichever is earlier. IEC has the right to extend the agreement period by an additionaltwo years if by the end of 15 years from the commencement date of commercialsupply from the Tamar project the total contract quantity has not been consumed, asset out above, and provided that notice thereof is given no later than 13 yearsfollowing the commencement date of commercial supply.(2) Under the agreement IEC has the option to increase the total contract quantity to atotal amount of 99 BCM (in this section: “the option"). The option may be exercised byApril 2, 2013 in accordance with the terms set in the agreement. In the event that theoption is exercised, the sellers will be required to install additional installations to allowfor increasing the supply capacity of the Tamar project gas handling and pipelinesystem, subject, inter alia to receiving the authorizations required by law. The sellersA-127