Avner Oil - Annual Report 2011 - Delek Energy Systems

(B)If the leaseholder asks to store gas in approved storage reservoirs, at its own initiative, thiswill be at the leaseholder’s expense and in accordance with the provisions to the law andany covenants.Cancellation, limitation, expiry of or changes to the leaseCancellation or limitation of the leaseThe lease will come to an end the end of the lease period, upon expiry according to section 29 ofthe Petroleum Law, cancellation according to section 55 of the Petroleum Law, or if one of theconditions set out below occur:(A)(B)The leaseholder significantly deviates from a fundamental provision in the lease deed orfrom the guidelines issued by the Commissioner by virtue of the lease deed.All or part of the guarantee is foreclosed and the leaseholder does not complement theamount of the guarantee as required by the provisions of the lease deedAbandonment plan(A)(B)(C)(D)Guarantees(A)(B)(C)(D)(E)Within 30 months after commencement of production, the leaseholder will submit a generalplant for abandoning the production facilities and plugging the wells, when they are no longerto be used, during and after the lease period.No later than the date on which the leaseholder has produced 170 billion cubic meters of gasfrom the lease area, the leaseholder will submit a detailed plan for dismantling the facilitiesand an estimate of the dismantling costs. If the leaseholder does not submit the plan on timeor if the Commissioner believes that the submitted plan is not suitable for approval and theCommissioner and the leaseholder fail to agree on a plan, the Commissioner will determinethe dismantling plan.At the date the dismantling plan is approved by the Commissioner, the Commissioner willdetermine a plan for the leaseholder according to which the leaseholder will provide aguarantee or deposit in an abandonment fund, at the dates, format and accumulationmethod as instructed by the Commissioner, to ensure that the leaseholder has the meansrequired to implement the abandonment plan.Abandoning existing wells: The leaseholder will inform the Commissioner of the intention toplug a well, at least three months before the operation. The leaseholder will submit noticeand explanation of the need to plug the well and the plugging plan. Plugging of the wellrequires the prior approval of the Commissioner.To guarantee fulfillment of the terms of the lease deed and as a precondition for granting thelease, the leaseholder will provide an autonomous, unconditional and irrevocable bankguarantee in New Israeli Shekels in favor of the State of Israel, by September 1, 2010 andthe amount will be paid to the state or to its representative, subject to receiving a writtenrequest, without the need to prove or substantiate the request.The guarantee will be valid for the entire lease period and for at least two years aftertermination of the lease for any reason, subject to fulfillment of all the liabilities of theleaseholder according to the lease deed, and it will be renewed from time to time, no morethan 30 days before its expiry date. If the guarantee is not renewed at this date, theCommissioner may foreclose the guarantee, at its amount immediately prior to the expirydate.The amount of the guarantee will be NIS 35 million, linked to the CPI (for the Dalit lease, theguarantee will be NIS 5 million).The guarantee will secure the fulfillment of the lease conditions by the leaseholder, thepayments due to the state from the leaseholder by law for compensation and indemnity ofthe state and any state authority for any damage, payment, loss, forfeit, or expense incurredby them directly or indirectly due to failure to fulfill all or part of the lease conditions, at theirdue time and in full, or due to the cancellation, limitation or suspension of any of the leaseconditions, or due to any deed or omission by the leaseholder in connection with the Leaseand the fulfillment of the lease conditions.The Commissioner may foreclose all or part of the guarantee, at the amount at that time, inany of the circumstances set out below:A-46