Avner Oil - Annual Report 2011 - Delek Energy Systems

Minimum total annual quantity in the contracts(BCM)2012 20133.4 3.4As of December 31, 2010, the order backlog for 2010 and 2011, as set out in binding agreements for thesupply of natural gas from the Yam Tethys project were as follows:Minimum total annual quantity in thecontracts(BCM)2010 20112.8 3.14The supply of natural gas in 2011 was 4.34 BCM. The consideration received from the sale of gas in 2011amounted to USD 722.8 million (100%).7.14 Competition7.14.1 Israel7.14.2 CyprusA number of companies have been selling natural gas in Israel for many years. The sale of naturalgas is primarily intended for local markets, therefore the competition is with parties operating inthese markets.In addition to the Yam Tethys group, the EMG group also markets natural gas to the Israeli market.EMG imports gas from Egypt and has signed gas supply agreements with a number of Israeliconsumers, the largest of which are the IEC Ltd. and companies affiliated to Israel Corp. It shouldbe noted that over the past year EMG's supply of natural gas has been disrupted numerous timesas a result of the political unrest and/or security developments in Egypt. Moreover, the media haverecently published information regarding the intention of the Egyptian authorities to reexamine thesales prices of the gas leaving Egypt. These events may have implications for the competition inIsrael's natural gas economy.In addition, the British Gas Group apparently discovered natural gas reserves off the coast ofGaza, in volumes similar to the Yam Tethys discovery, but it is does not currently market naturalgas to the Israeli market.In view of the commercial discoveries at Tamar, Dalit, Dolphin, Tanin and Leviathan, the partnersto these discoveries (including the Partnership) could become significant suppliers of natural gas tothe Israeli market.In addition to these discoveries, under the terms of the licenses issued by the commissioner tonumerous parties, several exploration drillings are expected to be conducted in the forthcomingyear. If these drillings lead to discoveries of significant quantities of natural gas, the competition fornatural gas supply in the Israeli market will increase.Natural gas suppliers also compete with other fuels, including coal, and the level of gasconsumption and price are affected by the prices of these fuels. In addition, in the future, LNG maybe imported into the Israeli market (see section ‎6 above).Oil sales are less limited to local customers, and may be made on the global markets, where thereis greater competition, but also more sales options. However, oil is a commodity with a pricedictated by global fluctuations in supply and demand, therefore competition with other oil producingcompanies is not expected to have a material impact on the Partnership's oil sales, if any.As of the date of the report, Cyprus is almost completely dependent on imported oil products andelectricity production in Cyprus is mainly based (90%) on burning oil and oil products. The Cypriotagreements to sell gas from the Tamar project, due to the fact that they are contingent agreements whose conditionsfor them entering into force have not yet been met as of the reporting date.A-134