HAIFA, Israel, November 27, 2012 /PRNewswire/ --
Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter " the C ompany, " " ORL " ), Israel's largest integrated refining and petrochemical group, announced that on November 25, 2012 it entered into a contractual agreement ("the Agreement") with the Tamar Partnership (Noble Energy Mediterranean Ltd., Isramco Negev 2 LP, Avner Oil Exploration LP, Delek Drilling LP, Dor Gas Exploration LP) for the purchase of natural gas, which will serve as an energy source and raw material for the Oil Refineries and its subsidiaries: Carmel Olefins Ltd, Gadiv Petrochemical Industries Ltd and Haifa Basic Oils Ltd.
According to the main points of the Agreement:
- The overall amount of gas the Company expects to purchase from the Tamar Partnership is about 5.8 BCM.
- The Agreement period is for up to seven years or until the Company uses the overall annual amount of gas in the Agreement, whichever is earlier. This is subject to the Company's right to extend the Agreement by a period of up to two years, if by the end of the sixth year of the Agreement the Company will not, in practice, have received the pro-rata amount of the quantity stipulated above.
- The supply of gas shall commence at the date that the Tamar Partnership shall start to operate the field it owns.
- The overall monetary value of the Agreement is likely to reach about USD 1.3 billion. The actual scope will be affected by all the terms and mainly the oil price and the scale and rate of gas consumption.
- The price of gas will be fixed according to a formula that is mainly based on the price of oil (including "floor" and "ceiling" prices), and to a smaller degree, by the price of the production component in the price of electricity (with an "adjustable floor" price).
- In the interim period that begins when the terms stipulated in the Agreement have been fulfilled and until completion of the project (to the extent that it will be completed) to increase the supply capacity of the treatment and transport system of the Tamar project, the supply of gas to the Company shall be subject to the amounts of natural gas available at that time, after supply of gas in accordance with agreements with the Tethys Sea Partnership (Noble Energy Mediterranean Ltd., Avner Oil Exploration LP, Delek Drilling LP, Delek Investments & Properties Ltd) including the agreement the Company signed with the Tethys Sea Partnership ("Tethys Sea Agreement"), and in accordance with agreements signed with the Tamar Partnership prior to the Agreement with the Company.
The Agreement includes additional agreements usual in agreements of this type, including: Undertaking of the Company to take or pay for the minimum annual amount of gas in an amount and in accordance with the arrangements stipulated in the Agreement, compensation mechanisms for short deliveries, quality of the gas, liability limitations, arbitration mechanism and others.