Delek Group Sign Agreements for Natural Gas Sales

Source: www.gulfoilandgas.com 5/18/2011, Location: Middle East

Delek Group subsidiaries, Delek Drilling L.P. and Avner Oil Exploration L.P. published the following immediate reports:

The partners in the Yam Tethys project signed an agreement with IPP Delek Ashkelon (hereinafter “Delek Ashkelon”), an infrastructure subsidiary of the Delek Group. The agreement is for the occasional sale of natural gas to Delek Ashkelon (hereinafter “the Spot Agreement”).

The Spot Agreement includes general conditions for the supply of additional natural gas on an occasional basis, for any amount above that covered by the original agreement between the two parties in 2005. The agreement also replaces the addition to the agreement between the parties in 2009. The Spot Agreement covers the period between January 1, 2011 and May 31, 2012 and is priced at significant higher prices from the price in the original agreement due to the increase in oil prices.

It is important to note that the agreement does not include a commitment for delivery and/or any obligation to purchase natural gas, only the conditions as applied to the supply as mentioned and therefore the actual quantities delivered and therefore the total financial amount of the transaction are unknown and depend on, among others, a variety of factors but primarily the volume of natural gas supplied to Delek Ashkelon.

In addition, the partners in the Yam Tethys project signed a continuation agreement with Hadera Paper, based upon an original agreement signed in July 29, 2005 (hereinafter: “continuation agreement). The continuation agreement lengthens the scope of the original agreement until June 30, 2013. The agreed selling price of the gas is based on the spot price of Brent Crude Oil less a reduction, including a minimum price of oil but not a maximum. The agreement is for the supply of approximate 0.21 BCM and the value of the deal is estimated at $63 million, based on prices of oil at the time of signing.


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