Avner Oil - Annual Report 2011 - Delek Energy Systems

its provisions, including the capacity of the pipeline to be used by the other natural gassuppliers and construction of pipelines for these suppliers, provided the licenseincludes provisions for reimbursement of the construction costs for the additionalpipelines.(6) According to the Natural Gas Sector Law, involvement in the sale and marketing ofnatural gas does not require a license, however the Minister may determine, at hisdiscretion, and in accordance with the conditions prescribed in the Natural Gas SectorLaw and with the consent of the Minister of Finance and the approval of theEconomics Committee of the Knesset, that the period to be determined andinvolvement in the sale and marketing of natural gas, shall require a license.(7) If an individual applies for more than one license, the Minister may, in consultationwith the Director, impose certain conditions on the licenses, including a conditionstipulating that the operations implemented in accordance with the license will bemanaged by a separate company with managerial and financial separation betweenthe companies, and the Minister may impose such conditions at any time, includingafter the licenses are granted.(8) Storage and LNG licenses will be granted through a tender or another publicprocedure, however the Minister may decide, with the consent of the Minister ofFinance and in consultation with the council, to grant a storage or LNG license to theholder of a transmission license without a tender or aforesaid public procedure, inaccordance with section 9 of the Natural Gas Sector Law. Notwithstanding theaforesaid, the leaseholder may, for as long as the lease is valid, store gas producedby the leaseholder in a reserve in the lease area. Notwithstanding the aforesaid, theMinister may grant the lease holder a license to store gas not produced by the leaseholder, in a reservoir within the lease area, without a tender or any other publicprocedure, for so long as the lease is valid. The Minister may instruct a lease holder,so long as the lease is valid, to provide others with storage services in the reservoir inthe lease area and may prescribe conditions for the provision of such services, aftergranting the lease holder the opportunity to make the holder's claim 167 . If the Ministerinstructs the lease holder as aforesaid, the lease holder will be considered to be aholder of a storage license and the relevant provisions of the Natural Gas Sector Lawwill apply to the lease holder.(9) The Natural Gas Sector Law determines restrictions on the licensee's other interests,however the Minister may grant the license holder permission to be involved in otherfields, if the Minister believes that this will not derogate from the license holders'operations under the license, or the supervision of the license holder's obligations inaccordance with the Natural Gas Sector Law, and the Minister may, after granting thelicense holder the opportunity to make claims, impose conditions on the permit.(10) According to the Natural Gas Sector Law, the term of the license will be no more than30 years and may not be extended. However, this provision will not prevent thelicensee from participating in any tender held for granting a new license.Notwithstanding the aforesaid, the Minister may decide not to place a time limit on adistribution license, and if the license is limited in time, the Minister may extend theterm of the license or cancel the limitation on the period and may impose conditionson the license in reference to any decision made as aforesaid.(11) The Minister, in consultation with the Director, may prescribe conditions in a license toensure the objectives of the Natural Gas Sector Law and compliance with theprovisions of the Law, including conditions that must be fulfilled prior to commencingthe activities under the license. Without derogating from the generality of theaforesaid, conditions regarding the following matters may be prescribed in the license:167In a letter dated July 12, 2011, the Director of the Natural Gas Authority notified the partners in the Yam Tethysproject that, under the forgoing powers, the Minister of Energy intends to instruct them to store, a volume of naturalgas equivalent to BCM 5 within the Mari B reserve for the IEC, less the amounts that the IEC consumes under theagreement specified in section ‎7.11.3(B) above, commencing on the date on which the instruction is given until theend of the foregoing agreement period. The Director also noted that, if the Minister so instructs, a breach of theterms of the instruction will be deemed as a breach of the storage license that will be granted under the law and as abreach of the terms of the Ashkelon lease. On August 3, 2011 the Yam Tethys project partners submitted theirresponse to the foregoing letter to the Commissioner of Petroleum Affairs and requested that the draft instructionsnoted in the letter be canceled, inter alia, since they are unreasonable and baseless.A-150