Avner Oil - Annual Report 2011 - Delek Energy Systems

(C)If the Commissioner postpones or revises the schedules as set out in this section, theCommissioner may require the leaseholder to submit an updated plan for construction of thefacilities as set out above, to allow the lease owner to fulfill its commitments according to thelease deed.Supervising company 53(A)(B)Planning and construction of the production system will be supervised by companies withexperience in supervising planning or construction of production systems, with an agreementwith the leaseholder.The leaseholder will inform the Commissioner of the identity of the proposed companies,before signing agreements with supervising companies for the construction stage of theproduction system. The Commissioner may not approve a supervising company, if theCommissioner is convinced that the proposed company has the professional abilities andexperience required for appropriate supervision.Commercial productionCommercial production from the lease area will be according to the following principles:(A)(B)(C)(D)(E)(F)Production will be carried out with proper diligence, without waste and in a manner that willnot impair the properties of the reservoir in the lease area.Production will be according to a minimum and maximum output levels approved by theCommissioner, from time to time, taking into account reservoir data and properties.The leaseholder is required to maintain the quality of gas flowing to the national gas pipeline,according to the gas specification set out in the license according to section 10 or accordingto section 7 in the Natural Gas Law.The leaseholder will execute commercial production as a prudent operator in accordancewith the regulations issued by the competent authorities and the law, and according to theprovisions of any license, permit, approval and other document required for that purpose inaccordance with the law.The leaseholder will not start commercial production or gas flow to the leaseholder's pipelinebefore applying to the Commissioner for approval to operate and before obtaining theCommissioner's approval.At the end of each year (at least 30 days before the end of the calendar year) theleaseholder will submit a detailed annual work plan to the Commissioner, with an estimate ofthe cost for the operations in the plan and a forecast of production rates for the followingyear.(G)The leaseholder will notify the Commissioner of the planned date for beginning constructionof additional facilities in order to comply with the provisions to the lease deed.Storage of natural gas(A)The Commissioner may instruct the leaseholder to act to transfer the natural gas for storagefrom the reservoir to approved reservoirs, if this does not impose any expense on theleaseholder for transmission, storage or recovery of the gas and compliance with thoseinstructions does not damage the reservoir. Royalties for the stored natural gas will be paidwhen the gas is recovered from the storage reservoir and not when it is produced from thefield. 545354The supervising company that has been chosen is GL Noble Denton (unrelated to Noble), which carries outindependent assessments of engineering planning for offshore systems. Testing includes detailed engineeringplanning, manufacture, construction and operation of the offshore section of the project, adaptation of production andinstallation to regulations and performance specifications. At the date of the report, the Commissioner announcedthat GL Noble Denton is authorized to serve as the supervising company under the terms of the lease.In a letter to the Minister of Energy and Water dated December 10, 2009, the Yam Tethys project partnersexpressed their consent in principle that, subject to obtaining the required approvals and licenses, the Mari reservoirwill serve as a storage facility according to the relevant regulations and reasonable economic considerationsdetermined by the Natural Gas Authority and subject to technical and operational considerations that will be agreedupon.A-45