Gas Sales Agreement: Definition & Sample

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What is a Gas Sales Agreement?

A gas sales agreement is a contract between a seller and buyer that documents and affirms the sale and purchase of quality natural gas. Under the agreement, the seller agrees to relinquish and deliver natural gas to the buyer for a certain, pre-determined price. In exchange, the seller agrees to pay the agreed-upon cost by a certain date. Most of the time, a single gas sales agreement covers multiple transactions between the two parties. This practice helps make the business relationship between the two parties easy and convenient.

The gas sales agreement vital documentation that helps both parties understand what's expected of them during the duration of the contract. It also provides support for legal claims if needed.

Common Sections in Gas Sales Agreements

Below is a list of common sections included in Gas Sales Agreements. These sections are linked to the below sample agreement for you to explore.

Gas Sales Agreement Sample

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE REDACTED TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**)

NOBLE ENERGY MEDITERRANEAN LTD.

DELEK DRILLING LIMITED PARTNERSHIP

ISRAMCO NEGEV 2 LIMITED PARTNERSHIP

AVNER OIL EXPLORATION LIMITED PARTNERSHIP

DOR GAS EXPLORATION LIMITED PARTNERSHIP

THE ISRAEL ELECTRIC CORPORATION LIMITED

DATED March 14, 2012

Page Article 1 Definitions 6 Article 2 Period of Agreement and Commissioning 23 Article 3 Agreement for Sale and Purchase 30 Article 4 Warranties, Covenants and Taxes 31 Article 5 Sellers’ Rights/Commingling and Unitization 38 Article 6 Quantities and Nominations 39 Article 7 Facilities 50 Article 8 Exchange of Information 51 Article 9 Take or Pay 55 Article 10 Price, Price Review and Adjustment 59 Article 11 Billing and Payment 68 Article 12 Quality 74 Article 13 Delivery Point 76 Article 14 Pressure 77 Article 15 Measurement 78 Article 16 Force Majeure 80 Article 17 Default 84 Article 18 Assignment and Security Interests 89

Governing Law and Dispute Resolution 95 Security and Credit Cover 103 Relationship and Sellers’ Coordinator 105 Immunity 107

Miscellaneous Provisions 108

1 Sellers’ Petroleum Rights
2 Sellers’ Percentages and Sellers’ Interest
3 Sellers’ Agreements
4 List of Charges on Sellers’ Petroleum Rights
5 Specification
6 Corporate Guarantee
7 Bank Guarantee
8 Letter of Credit
9 Delivery Point Diagram
10 Form of Buyer’s Consent

THIS AGREEMENT is entered into on the 14 th day of March 2012

(1) Noble Energy Mediterranean Ltd ., a Cayman Islands company that has limited liability, registered in Israel as a foreign company No. 560017162, having its principal place of business at 12 Abba Eban Boulevard, Herzlia, 46725 Israel;

Delek Drilling Limited Partnership , an Israeli Limited Partnership having its principal place of business at 12 Abba Eban Boulevard, Herzlia, 46725 Israel;

Isramco Negev 2 Limited Partnership , an Israeli limited partnership having its principal place of business at 8 Granit Street, Petach Tikva, 49222, Israel;

Avner Oil Exploration Limited Partnership , an Israeli Limited Partnership having its principal place of business at 12 Abba Eban Boulevard, Herzlia, 46725 Israel; and

Dor Gas Exploration Limited Partnership , an Israeli limited partnership having its principal place of business at France Building, Europark, P.O. Box 10, Yakum, 60972, Israel;

(each a “ Seller ” and together the “ Sellers ”) of the one part; and

(2) The Israel Electric Corporation Limited , an Israeli Company having its principal place of business at 1 Nativ Haor Street, Haifa, 31000 Israel (the “ Buyer ”) of the other part.

The Sellers on the one part and the Buyer on the other part are a “ Party ” to this Agreement and the Sellers and the Buyer are collectively “ Parties ” to this Agreement.

(A) The Sellers’ Petroleum Rights have been granted to the Sellers and the Sellers have entered into the Sellers’ Agreements.
(B) Under and by virtue of the Sellers’ Petroleum Rights and the Sellers’ Agreements:
(1) Operations have been carried out by the Sellers and as a result accumulations of Natural Gas currently estimated to be in excess of two hundred and fifty Billion Cubic Meters (250 BCM) (Proved and Probable reserves) have been discovered within the Reservoir; and
(2) The Sellers are the owners of the Sellers’ Interest and parties to the Sellers’ Agreements.
(C) The Sellers desire to sell to the Buyer and the Buyer desires to buy from the Sellers, at the Delivery Point Natural Gas during the Contract Period, upon and subject to the terms and conditions herein contained.

NOW IT IS HEREBY AGREED AS FOLLOWS

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1.1 Defined Term s

Except where the context otherwise indicates or requires the following terms in this Agreement shall have the following meanings:

1.1.1 “ Act of Insolvency ” means, if, as to any Person, an order is made by a court or an effective resolution is passed for the reorganization under any bankruptcy law, dissolution, liquidation, administration or winding up of such Person; an application for the dissolution, liquidation, administration or winding up of such Person is submitted to the courts and is not withdrawn or dismissed within ninety (90) days; such Person dissolves, liquidates, is wound up, or otherwise terminates its existence; such Person becomes insolvent, bankrupt or makes an assignment for the benefit of creditors (other than an assignment permitted under Article 18.6 of this Agreement); or a receiver or administrator is appointed for a substantial part of such Person’s assets and such appointment is not withdrawn or cancelled within thirty (30) days.
1.1.2 “ Actual Increase Date ” means the date upon which the Sellers notify the Buyer that they have completed the commissioning and testing of the facilities contemplated by the Sellers’ Additional Development Plan but not later than ninety (90) days following the Additional Flow Date.
1.1.3 “ Additional Delay Period ” has the meaning set out in Article 6.4.11.
1.1.4 “ Additional Delivery Point ” has the meaning set out in Article 13.1.
1.1.5 “ Additional Flow Date ” means the date on which the Sellers’ Additional Facilities are completed to the extent required in order to enable Sellers to deliver Gas at the Delivery Point in accordance with the Buyer’s Proper Nominations following the coming into effect of the increased MaxHQ as a consequence of the Buyer’s exercise of the Increase Option.
1.1.6 “ Adjusted Annual Contract Quantity ” or “ Adjusted ACQ ” has the meaning set out in Article 9.1.2.
1.1.7 “ Affected Party ” has the meaning set out in Article 16.8.
1.1.8 “ Affiliate ” means a company, partnership or other legal entity, which controls, is controlled by, or which is controlled by an entity that controls, any of the Sellers or the Buyer. Control means the ownership, directly or indirectly, of fifty percent (50%) or more of the voting rights, and/or the power to appoint half or more of the directors, in a company, partnership or other legal entity. With respect to any of the Sellers that are limited partnerships, Affiliates shall include the general partner of such limited partnership, and any company, partnership or other legal entity, which controls, or which is controlled by an entity that controls the general partner.
1.1.9 “ Annual Contract Quantity ” or “ ACQ ” has the meaning set out in Article 6.1.
1.1.10 “ Annual Reconciliation Statement ” has the meaning set out in Article 11.2.1.
1.1.11 “ Annual Take or Pay Quantity ” has the meaning set out in Article 9.3.1.
1.1.12 “ Anti-trust Consent ” means any consent or approval required under the Israel Restrictive Trade Practices Law 1988 in relation to this Agreement to be granted by the appropriate authority or court, such consent or approval to be final and unconditional or, if not, then subject to conditions which have been agreed to by the Party or Parties to whom such conditions apply.
1.1.13 “ Approval Date ” means forty five (45) Days following the Effective Date.
1.1.14 “ Ashdod Delivery Point ” has the meaning set out in Article 13.1.
1.1.15 “ Banks ” has the meaning set out in Article 18.6.1.
1.1.16 “ Bar ” means pressure equal to one hundred thousand (100,000) Pascals (Pascal: as defined in ISO 1000:1981(E)).
1.1.17 “ BTU ” means an amount of heat equal to one thousand and fifty-five decimal zero six (1,055.06) Joules (Joules: as defined in ISO 1000:1981(E)).
1.1.18 “ Business Day ” means any day except a Friday, a Saturday and a day on which banks are closed for business in Israel.
1.1.19 “ Buyer’s Actual Generation ” means the aggregate gross quantity of electricity generated in any Contract Year by the Buyer (in TWH) from all types of fuels, including (**).
1.1.20 “ Buyer’s Capacity Notice ” has the meaning set out in Article 17.3.3(c).
1.1.21 “ Buyer’s Facilities ” means the equipment installed by or on behalf of the Buyer at the entry to the Downstream System for the purposes of enabling the Buyer to receive Specification Gas to be delivered under this Agreement at the Delivery Point.
1.1.22 “ Buyer’s Stations ” means the gas fired power stations and all related equipment and machinery, owned or operated by the Buyer, as are necessary from time to time to generate and distribute electricity.
1.1.23 “ Calendar Year ” means a period beginning at 0600 on the first day of January in any calendar year and ending at 0600 on the first day of January of the next succeeding calendar year.
1.1.24 “ Carry Forward ” has the meaning set out in Article 9.2.1.
1.1.25 “ Carry Forward Aggregate ” has the meaning set out in Article 9.2.2.
1.1.26 “ Charged Assets ” has the meaning set out in Article 18.6.3.
1.1.27 “ Cold Start ” means recommencement of supply of Specification Gas through Sellers’ Facilities after the Sellers’ Facilities did not supply Specification Gas to any purchasers for a period of at least one (1) Hour which resulted in a shut-down of the Sellers’ Facilities.
1.1.28 “ Commencement Date ” means the first Day immediately following the last day of the Commissioning Period.
1.1.29 “ (**) ” has the meaning set out in Article 17.3.1.
1.1.30 “ Commissioning Period ” has the meaning set out in Article 2.4.1.
1.1.31 “ Contract Period ” means the period mentioned in Article 2.1.1.
1.1.32 “ Contract Price ” means the amount, in US Dollars, calculated in accordance with Article 10.1.
1.1.33 “ Contract Year ” means the following periods (as applicable):
(a) the period beginning at 0600 on the Commencement Date and ending at 0600 on the immediately following first day of January; and
(b) the period beginning at 0600 on the first day of January immediately after the Commencement Date and ending at the same hour on the first day of January in the immediately succeeding Calendar Year and thereafter during the Contract Period any successive period of twelve (12) consecutive Months commencing at 0600 on the first day of January in each Calendar Year except for the Calendar Year in which the Contract Period ends; and
(c) in the year in which the Contract Period ends, the period beginning at 0600 on the first day of January and ending at 0600 on the last Day of the Contract Period.
1.1.34 “ CPI ” has the meaning set out in Article 10.1.3.
1.1.35 “ Credit Cover ” means any of the following forms of guarantee: (i) a corporate guarantee substantially in the form set out in Schedule 6 (“ Corporate Guarantee ”), provided by Alon Natural Gas Exploration Ltd. for Dor Gas Exploration Limited Partnership; or (ii) a bank guarantee substantially in the form set out in Schedule 7 (“ Bank Guarantee ”); or (iii) a Letter of Credit substantially in the form set out in Schedule 8 (“ Letter of Credit ”), issued by one of the top three (3) Israeli Banks or issued by a non Israeli Bank whose Credit Rating is at least S&P’s rating group “A” or Moody’s rating “A2”.

“ Cubic Meter ” or “ m 3 ” means when applied to gas that quantity of gas which at fifteen (15) degrees Celsius and at an absolute pressure of one decimal zero one three two five (1.01325) Bar and the gas being free of water vapor, occupies the volume of one (1) cubic meter, being a meter as defined in ISO 1000: 1981(E).

1.1.37 “ Daily Delivery Tolerance ” has the meaning set out in Article 6.7.1(b).
1.1.38 “ Daily Contract Quantity ” or “ DCQ ” has the meaning set out in Article 6.2.1.
1.1.39 “ Day ” means a period of twenty-four (24) hours beginning at 0600 on any day and ending at 0600 on the following day.

“ Deemed Increase Date ” means the Day immediately prior to the fourth (4 th ) anniversary of the Sellers’ Additional Conditions Date (if applicable).

1.1.41 “ Delivery Point ” has the meaning set out in Article 13.1.
1.1.42 “ Delivery Pressure ” has the meaning set out in Article 14.1.1.
1.1.43 “ Delivery Tolerances ” has the meaning set out in Article 6.7.1.
1.1.44 “ Disclosed Information ” has the meaning set out in Article 8.5.1.
1.1.45 “ Dispute ” has the meaning set out in Article 19.2.
1.1.46 “ Downstream System ” means the pipelines, installations and other facilities owned and/or operated by the Transporter downstream of the Delivery Point necessary for the transportation of Gas from the Delivery Point to Buyer’s Stations.
1.1.47 “ Effective Date ” means the date of execution of this Agreement.
1.1.48 “ Excess Gas ” has the meaning set out in Article 6.9.3.
1.1.49 “ Expert ” means any Person appointed from time to time under and subject to the provisions of Article 19.3.
1.1.50 “ Extended Contract Period ” has the meaning set out in Article 2.1.2.
1.1.51 “ First Period ” means the period Commencing on the Commencement Date and ending on the earlier of: (i) the Increase Date (if applicable); and (ii) the last Day of the Contract Period.
1.1.52 “ Flow Date ” has the meaning set out in Article 2.2.1.
1.1.53 “ Force Majeure ” has the meaning set out in Article 16.1.
1.1.54 “ Gas ” means Natural Gas, Specification Gas or both, as the context may permit or require.
1.1.55 “ Gauge ” means the pressure in excess of one decimal zero one three two five (1.01325) Bar (which is one (1) standard atmosphere).
1.1.56 “ Governmental Approval ” means the consent or approval of the Government of Israel pursuant to section 11(A)(9A) of the Government Companies Law, 5735-1975 in relation to this Agreement, such consent or approval to be final and unconditional or, if not, then subject to conditions which have been agreed to by the Party or Parties to whom such conditions apply.
1.1.57 “ Higher Heating Value ” means the superior (higher) real calorific value as described in ISO: 6976:1995 (E) of one Cubic Meter of Natural Gas at the reference condition of 15/15 Degrees Celsius and 1.01325 Bar (a) for the actual natural gas in the real state.
1.1.58 “ Hour ” means a period of sixty (60) minutes beginning on the hour.
1.1.59 “ Hourly Delivery Tolerance ” has the meaning set out in Article 6.7.1(a).
1.1.60 “ IF ” has the meaning set out in Article 10.1.3.
1.1.61 “ Increase Date ” means the Actual Increase Date or the Deemed Increase Date, as determined in accordance with Article 6.4.10.
1.1.62 “ Increase Notice ” has the meaning set out in Article 6.4.1.
1.1.63 “ Increase Option ” means the option for the Buyer in accordance with Article 6.4 to increase the MaxHQ to (**) MMBTU together with a corresponding increase of the DCQ to (**) MMBTU.
1.1.64 “ Initial Quota ” has the meaning set out in Article 9.4.1.
1.1.65 “ Installed Capacity ” means (i) with respect to Sellers’ Fueled Electricity Producer’s production units that are supplied exclusively by the Sellers, the aggregate electricity production capacity (in MW) stipulated in the nameplate of such units; and (ii) with respect to Sellers’ Fueled Electricity Producer’s production units that are supplied by the Sellers on a non-exclusive basis, a proportionate part of the aggregate electricity production capacity (in MW) stipulated in the nameplate of such units calculated based on the ratio of: (i) the annual contract quantity of gas to be supplied by the Sellers to such Sellers’ Fueled Electricity Producer; and (ii) the aggregate quantity of gas to be supplied to such Sellers’ Fueled Electricity Producer from Sellers and from other sources.
1.1.66 “ LCIA ” means the London Court of International Arbitration.
1.1.67 “ LIBOR ” means London Interbank Offered Rate for three (3) month maturities, for US Dollar deposits, as published on the first banking day following any relevant due date for payment under this Agreement by the Wall Street Journal or if not so published, then by the Financial Times of London.
1.1.68 “ Maintenance ” has the meaning set out in Article 6.11.1.
1.1.69 “ Maintenance Period ” has the meaning set out in Article 6.11.1.
1.1.70 “ Make-Up Aggregate ” has the meaning set out in Article 9.3.4.
1.1.71 “ Maximum Hourly Quantity ” or “ MaxHQ ” has the meaning set out in Article 6.3.
1.1.72 “ Minimum Bill Quantity ” or “ MBQ ” has the meaning set out in Article 9.1.3.
1.1.73 “ MMBTU ” means one million (1,000,000) BTUs.
1.1.74 “ Month ” means a period beginning at 0600 on the first day of any calendar month and ending at 0600 on the first day of the next succeeding calendar month.
1.1.75 “ Monthly Statement ” has the meaning set out in Article 11.1.1.
1.1.76 “ MW ” means one million watts.
1.1.77 “ Nameplate Capacity of Sellers’ Facilities ” means the expected maximum capacity of the Sellers’ Facilities as determined in the design basis of such facilities.
1.1.78 “ Natural Gas ” means any hydrocarbons (or mixture of hydrocarbons and other gases consisting primarily of methane) which at fifteen (15) Degrees Celsius and atmospheric pressure are or is in the gaseous state.
1.1.79 “ Net Annual TOP Quantity ” has the meaning set out in Article 9.3.2(a).
1.1.80 “ New Producers Adjustment Quantity ” has the meaning set out in Article 9.4.1(a).
1.1.81 “ Non-Interruptible Gas Sales Agreements ” means agreements entered into by the Sellers in which the Sellers undertook to deliver Gas to a purchaser at the Delivery Point through Sellers’ Facilities, but excluding any agreement pursuant to which the Sellers have the right to curtail supply of gas in circumstances of insufficient capacity in Sellers’ Facilities.
1.1.82 “ Off-Spec Gas ” means Natural Gas that does not conform to the Specification.
1.1.83 “ Over Deliveries ” has the meaning set out in Article 6.10.
1.1.84 “ Period Shortfall ” has the meaning set out in Article 17.1.6.
1.1.85 “ Person ” includes any person, firm, partnership, association, company, body corporate, or individual.
1.1.86 “ Petroleum Law ” means the Israel Petroleum Law 5712-1952.
1.1.87 “ Price Adjustment ” has the meaning set out in Article 10.7.1.
1.1.88 “ Price Adjustment Date ” has the meaning set out in Article 10.7.1.
1.1.89 “ Price Adjustment Notice ” has the meaning set out in Article 10.7.1.
1.1.90 “ Price Control Event ” means the issuance, imposition or enactment of a decree, ruling, declaration, regulation, order, directive, instruction or other legal instrument, pursuant to the Israeli Prices of Commodities and Services (Supervision) Law, 5756-1996 or to any other law or regulation, the effect of which is the reduction of the amount to be received by Sellers for Gas to be delivered to the Buyer pursuant to this Agreement.
1.1.91 “ Price Period ” means a Calendar Year.
1.1.92 “ Proper Nomination ” has the meaning set out in Article 6.9.1.
1.1.93 “ Properly Nominated ” has the meaning set out in Article 6.9.1.
1.1.94 “ Proved and Probable Reserves ” means the sum of Proved Reserves and Probable Reserves as these terms are defined in the 2007 Petroleum Resource Management System (PRMS) approved by the Society of Petroleum Engineers (SPE).
1.1.95 “ Provisional Contract Price ” has the meaning set out in Article 10.6.1(a).
1.1.96 “ PUA Approval ” means any consent or approval required in relation to this Agreement to be granted by the Israeli Public Utilities Authority- Electricity, such consent or approval to be final and unconditional or, if not, then subject to conditions which have been agreed to by the Party or Parties to whom such conditions apply.
1.1.97 “ Reasonable and Prudent Operator ” means a Person seeking in good faith to perform its contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator complying with the applicable law and industry standards engaged in the same type of undertaking under the same or similar circumstances and conditions.
1.1.98 “ Representative Rate ” means the representative rate of exchange of the New Israeli Shekel against the US Dollar, as published by the Bank of Israel.
1.1.99 “ Reservoir ” means that reservoir (currently known as the Tamar field) covered by Petroleum Lease I/12”Tamar” and which is more particularly identified in Schedule 1.
1.1.100 “ Reservoir Event ” has the meaning set out in Article 16.2.1.
1.1.101 “ Review Month ” has the meaning set out in Article 10.1.1.
1.1.102 “ Sanction Notice ” has the meaning set out in Article 6.4.2(b).
1.1.103 “ Sanction of the Additional Development ” means the approval by the Sellers under the Sellers’ Agreements of a program and budget for the Sellers’ Additional Development Plan.
1.1.104 “ Second Period ” means the period commencing on the Increase Date (if applicable) and ending on the last Day of the Contract Period.
1.1.105 “ Sellers’ Additional Conditions ” has the meaning set out in Article 6.4.4.
1.1.106 “ Sellers ’ Additional Conditions Date ” means the date on which the Sellers’ Additional Conditions are satisfied or waived by the Sellers.
1.1.107 “ Sellers’ Additional Development Plan ” means the plan for the construction and installation by or on behalf of the Sellers of additional facilities including the Sellers’ Additional Pipeline and if applicable the Sellers’ Additional Receiving Facilities and gas storage facilities in the Mari-B reservoir, as may be required for the increase of the total capacity of the Sellers’ Facilities to enable delivery of Gas to the Ashdod Delivery Point and/or the Additional Delivery Point (as applicable), at cumulative peak rates of at least (**) MMBTU per (**) and (**) MMBTU per (**), for the purposes of fulfilling the Sellers’ obligations to deliver Specification Gas in response to the Buyer’s Proper Nominations in the case of an increase of the MaxHQ pursuant to the provisions of Article 6.4. It is clarified that the Sellers will not be required to increase the maximum rate of production from the Reservoir to more than (**) MMBTU per (**).
1.1.108 “ Sellers’ Additional Facilities ” means the Sellers’ Additional Pipeline and, if applicable, the Sellers’ Additional Receiving Facilities.
1.1.109 “ Sellers’ Additional Pipeline ” means a new pipeline, owned or operated by or on behalf of the Sellers, connecting the new platform to be installed by the Sellers in the area of the “Ashkelon” I/10 Lease to the Sellers’ Additional Receiving Facilities (if applicable) or to the Yam Tethys Facilities.
1.1.110 “ Sellers’ Additional Receiving Facilities ” means the new facilities, to be owned or operated by or on behalf of the Sellers, for the receipt, pressure reduction, processing, treatment, measurement and/or delivery of Gas that will be transported from the Sellers’ Petroleum Rights through the Sellers’ Additional Pipeline to the Ashdod Delivery Point or the Additional Delivery Point.
1.1.111 “ Sellers’ Agreements ” means the agreements or arrangements between the Sellers, listed in Schedule 3.
1.1.112 “ Sellers’ Capacity Increase Notice ” has the meaning set out in Article 17.3.3(b).
1.1.113 “ Sellers’ Coordinator ” has the meaning set out in Article 21.2.1.
1.1.114 “ Sellers’ Delay Period ” has the meaning set out in Article 2.3.2.
1.1.115 “ Sellers’ Facilities ” means such platforms, wells, pipelines, installations and other equipment, installed or to be installed by or on behalf of the Sellers, as are necessary from time to time to produce, process, transport, measure and deliver Specification Gas at the Delivery Point pursuant to this Agreement including the Yam-Tethys Facilities and if applicable, the Sellers’ Additional Facilities.
1.1.116 “ Sellers’ Fueled Electricity Producers ” means any Private Electricity Producer, as defined in the Electricity Sector Law 5756-1996, that is (**).
1.1.117 “ Sellers’ Interest ” means the aggregate total of the Seller’s Percentages.
1.1.118 “ Sellers’ Lenders ” has the meaning set out in Article 18.6.4.
1.1.119 “ Sellers’ (**) ” means Sellers having entered into (**).
1.1.120 “ Sellers’ Petroleum Rights ” means those petroleum rights in relation to the Reservoir under the Petroleum Law, to which the Sellers are party and which are set out in Schedule 1.
1.1.121 “ Seller’s Percentage ” means the respective interests of the Sellers, expressed as a percentage, in the Sellers’ Petroleum Rights as set out in Schedule 2.
1.1.122 “ Shortfall Aggregate ” has the meaning set out in Article 17.2.1.
1.1.123 “ Shortfall Gas ” has the meaning set out in Article 17.1.1.
1.1.124 “ Shortfall Price ” has the meaning set out in Article 10.8.3.
1.1.125 “ Specification ” has the meaning set out in Article 12.1.1.
1.1.126 “ Specification Gas ” means Natural Gas that complies with the Specification and any Off-Spec Gas that the Buyer takes in accordance with the terms of Article 12.2.4.
1.1.127 “ Spot Sales Customer ” has the meaning set out in Article 9.4.1(b).
1.1.128 “ Take or Pay Period ” means the period commencing on the later of the Commencement Date and (**) and ending at the end of the Contract Period.
1.1.129 “ Target Completion Date ” has the meaning set out in Article 6.4.11.
1.1.130 “ Technical MinHQ ” means (**) MMBTU.
1.1.131 “ Three Month Window ” has the meaning set out in Article 6.4.10.
1.1.132 “ Total Contract Quantity ” (or “ TCQ ”) means a quantity of Gas equal to two billion and seven hundred and sixty million (2,760,000,000) MMBTU, and upon the Actual Increase Date (if applicable) the TCQ shall be increased to three billion five hundred and thirty six million (3,536,000,000) MMBTU.

“ Transportation Agreement ” means the agreement dated 13 th January 2009 between Buyer and the Transporter.

1.1.134 “ Transporter ” means the Person granted the license to transport Gas from the Delivery Point to Buyer’s Stations, currently Israel Natural Gas Lines Ltd.
1.1.135 “ Twelve Month Window ” has the meaning set out in Article 6.4.9.
1.1.136 “ TWH ” means one trillion watt hours.
1.1.137 “ Week ” means a period of seven (7) days beginning at 0600 on a Sunday and ending at 0600 on the following Sunday.
1.1.138 “ Weekly Delivery Tolerance ” has the meaning set out in Article 6.7.1(c).
1.1.139 “ Yam-Tethys Agreements ” means the agreement(s) to be entered into by and between the Sellers and the Yam-Tethys Partners providing for the transportation and processing within the Yam-Tethys Facilities and delivering to the Buyer at the Delivery Point, of Gas from the Reservoir pursuant to this Agreement.
1.1.140 “ Yam-Tethys Facilities ” means such platform, wells, pipelines, installations and other equipment, installed or to be installed by or on behalf of the Yam-Tethys Partners (and constituting part of the Sellers’ Facilities) to the extent such are used from time to time to store, process, transport and deliver Gas from the Reservoir to the Buyer at the Delivery Point pursuant to this Agreement.
1.1.141 “ Yam-Tethys Partners ” means the owners of interests in the “Ashkelon” I/10 Lease granted pursuant to the Petroleum Law that covers the Mari-B gas reservoir offshore Israel.
1.1.142 “ YT GSPA ” means the gas sale and purchase agreement dated June 25, 2002 by and between the Buyer and the Yam-Tethys Partners (as amended) and the Agreed Principles dated July 2, 2009 (as amended).
1.2 Interpretation

In this Agreement, Article headings and the index are inserted for convenience only and do not affect the interpretation of this Agreement; and unless the context indicates a contrary intention:

1.2.1 the term “Agreement” includes the Schedules to this Agreement and any amendments to this Agreement;
1.2.2 references to Articles or Schedules shall be deemed to be references to Articles of or Schedules to this Agreement;
1.2.3 the singular shall be deemed to include the plural and vice versa except with respect to the Sellers or to a Seller;
1.2.4 references in this Agreement to any law, decree or statutory provision shall be deemed to include references to any regulations and orders made thereunder;
1.2.5 references in this Agreement to any law shall include references to such law as it may, after the Effective Date, from time to time be amended, supplemented or re-enacted;
1.2.6 references to time shall be construed as a reference to whatever time shall be statutorily in force in Israel;
1.2.7 the words and phrases “other”, “including” and “in particular” shall not limit the generality of any preceding words or be construed as being limited to the same class as the preceding words where a wider construction is possible;
1.2.8 where a word or phrase is defined, its other grammatical forms shall have corresponding meanings;
1.2.9 references to “writing” include any mode of representing or reproducing words, numbers, symbols or drawing in a visible form and includes by facsimile or by electronic mail;
1.2.10 references to any decision, determination, election, discretion or act of the Sellers under this Agreement, mean any decision, determination, election, discretion or act exercised or made unanimously or carried out jointly by the Sellers or, if applicable, by the Sellers’ Coordinator on behalf of all Sellers;
1.2.11 for the purposes of this Agreement, the energy content of Gas delivered hereunder shall be calculated in accordance with its Higher Heating Value;
1.2.12 the words “shall” and “will” shall be construed to have the same meaning and effect.

Period of Agreement and Commissioning

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2.1 Commencement and Period
2.1.1 The Contract Period: This Agreement shall come into force on the Effective Date and subject to Article 2.1.3 shall continue until the earlier of:

the fifteenth (15 th ) anniversary of the Commencement Date ; and

(b) the date of delivery by the Sellers under this Agreement of an aggregate quantity of Gas equal to the Total Contract Quantity;

unless terminated earlier by either Party in accordance with the terms of this Agreement or extended in accordance with the provisions of Articles 2.1.2 and 9.5.6 (“ Contract Period ”).

Extended Contract Period: In the event that by the thirteenth (13 th ) anniversary of the Commencement Date, the Buyer notifies the Sellers in writing that it reasonably anticipates that it will not be able to take from the Sellers an aggregate quantity of Specification Gas equal to the Total Contract Quantity by the fifteenth (15 th ) anniversary of the Commencement Date, and that it requests an extension of the Contract Period, then the Contract Period will be automatically extended by an additional period commencing on the fifteenth (15 th ) anniversary of the Commencement Date and ending on the earlier of: (i) the seventeenth (17 th ) anniversary of the Commencement Date; and (ii) the date by which the Buyer will have taken from the Sellers under this Agreement an aggregate quantity of Gas equal to the Total Contract Quantity (the period from the date on which this Agreement would have come to an end and until such later date being herein called the “ Extended Contract Period ”). During the Extended Contract Period, the provisions of this Agreement (including, inter alia , the provisions of Article 9) shall continue to apply, except that any Carry Forward Aggregate which has accrued under this Agreement prior to the commencement of the Extended Contract Period shall be cancelled and shall not serve to reduce the Annual Take or Pay Quantity attributable to the Extended Contract Period.

2.1.3 Conditionality: This Agreement is conditional upon (i) the Buyer and the Sellers obtaining the Anti-trust Consent or waiving such condition; (ii) the Buyer obtaining the Governmental Approval or waiving such condition; and (iii) the Buyer obtaining the PUA Approval or waiving such condition.
2.1.4 Anti-Trust Consent: The Sellers and the Buyer together shall diligently pursue the application for the Anti-trust Consent and shall make reasonable endeavors to obtain the Anti-trust Consent as soon as possible but in any event before the Approval Date. The Parties shall keep each other informed as to progress made towards obtaining the Anti-trust Consent on at least a weekly basis and shall co-operate with each other and provide reasonable assistance to each other to obtain the Anti-trust Consent.

If the Anti-trust Consent is not obtained before the Approval Date, or such condition is not waived by both Parties:

(a) the Parties shall meet as soon as possible, and in any event within seven (7) days after the Approval Date, to discuss the prospects for obtaining the Anti-trust Consent; and
(b) promptly after the date of such meeting or seven (7) days after the Approval Date (whichever is the later) either Party may, provided that it has complied with its obligations under this Article 2.1.4(a), terminate this Agreement on not less than seven (7) days prior written notice and upon the expiration of such notice period this Agreement will terminate , except if, before the termination date as specified in the notice, the Anti-trust Consent is obtained, then notwithstanding the notice of termination, this Agreement shall not terminate but shall continue in force.
2.1.5 Governmental Approval: The Buyer shall diligently pursue the Governmental Approval and shall make reasonable endeavors to obtain the Governmental Approval as soon as possible but in any event prior to the Approval Date. Buyer shall keep the Sellers informed as to progress made towards obtaining the Governmental Approval.

If the Governmental Approval is not obtained before the Approval Date, or such condition precedent is not waived by the Buyer:

(a) the Parties shall meet as soon as possible, and in any event within seven (7) days after the Approval Date, to discuss the prospects for obtaining the Governmental Approval;
(b) promptly after the date of such meeting or seven (7) days after the Approval Date (whichever is the later) the Sellers may terminate this Agreement on not less than seven (7) days prior written notice and upon the expiration of such notice period this Agreement will terminate except if, before the termination date as specified in the notice, the Government Approval is obtained, then notwithstanding the notice of termination, this Agreement shall not terminate but shall continue in force; and
(c) if the Government Approval is not obtained by September 30, 2012 the Buyer may, provided that it has complied with its obligations under Article 2.1.5, terminate this Agreement on not less than seven (7) days prior written notice and upon the expiration of such notice period this Agreement will terminate, except if, before the termination date as specified in the notice, the Government Approval is obtained, then notwithstanding the notice of termination, this Agreement shall not terminate but shall continue in force.
2.1.6 PUA Approval: The Buyer shall diligently pursue the PUA Approval and shall make reasonable endeavors to obtain the PUA Approval as soon as possible but in any event prior to the Approval Date. Buyer shall keep the Sellers informed as to progress made towards obtaining the PUA Approval.

If the PUA Approval is not obtained before the Approval Date, or such condition precedent is not waived by the Buyer:

(a) the Parties shall meet as soon as possible, and in any event within seven (7) days after the Approval Date, to discuss the prospects for obtaining the PUA Approval;
(b) immediately after the date of such meeting or seven (7) days after the Approval Date (whichever is the later) the Sellers may terminate this Agreement on not less than seven (7) days prior written notice and upon the expiration of such notice period this Agreement will terminate except if, before the termination date as specified in the notice, the PUA Approval is obtained, then notwithstanding the notice of termination, this Agreement shall not terminate but shall continue in force; and
(c) if the PUA Approval is not obtained by September 30, 2012 the Buyer may, provided that it has complied with its obligations under Article 2.1.6, terminate this Agreement on not less than seven (7) days prior written notice and upon the expiration of such notice period this Agreement will terminate, except if, before the termination date as specified in the notice, the PUA Approval is obtained then notwithstanding the notice of termination, this Agreement shall not terminate but shall continue in force.
2.1.7 Effect of Conditionality: Articles 1, 2.1, 2.6, 4, 8.5, 18, 19, 21, 22 and 23 will take effect on and from the Effective Date.
2.2 Flow Date
2.2.1 The “ Flow Date ” is the date on which the Sellers’ Facilities are completed to the extent required in order to deliver Specification Gas from the Reservoir at the Delivery Point in accordance with the terms of this Agreement (**) for the purposes of commissioning and testing the Sellers’ Facilities. The Sellers shall provide the Buyer not less than fourteen (14) days notice prior to the occurrence of the Flow Date. It is the intention of the Sellers that the Flow Date shall occur by July 1, 2013.
2.3 Consequences of Delays in Flow Date
2.3.1 Construction of Sellers’ Facilities: In accordance with the terms of this Agreement, Sellers shall construct the Sellers’ Facilities in order to enable Sellers to deliver Specification Gas produced from the Reservoir at the Delivery Point in accordance with the terms of this Agreement by October 1, 2013.
2.3.2 Sellers’ Delay Period: In the event that by January 1, 2014 the Flow Date has not occurred, then in respect of each Day from and after January 1, 2014 until the Flow Date (the “ Sellers’ Delay Period ”), the Sellers shall make payments to the Buyer in accordance with the provisions of Article 2.3.3 subject to the Sellers’ limitation of liability as set out in Article 17.4.7, and such payments shall be the Sellers’ sole liability to the Buyer and Buyer’s sole remedy in such circumstances. For the avoidance of doubt, the Sellers shall be entitled to claim relief by reason of Force Majeure in accordance with Article 16 in respect of such delay and liability. All such payments shall be made monthly in respect of each Day and shall be set out in a statement to be sent by the Buyer to the Sellers in accordance, mutatis mutandis , with Article 11.
2.3.3 Sellers’ Payments: With respect to each Day during the Sellers’ Delay Period (except to the extent such delay was caused by an event of Force Majeure) the Sellers shall pay the Buyer a sum of money equal to (**) in lieu of Sellers’ liability for Shortfall Gas under Article 17.1 and such payments shall be the limit of the Sellers’ liability and Buyer’s sole remedy in such circumstances.
2.3.4 Termination due to Sellers’ Delay: In the event that Sellers’ Delay Period continues for a period of more than six (6) Months (except to the extent such delay was caused by an event of Force Majeure), then Buyer and Sellers shall meet within seven (7) days after the end of such six (6) Month period, to discuss and seek to agree on appropriate arrangements that will enable delivery of Specification Gas in accordance with the terms of this Agreement until the occurrence of the Flow Date, and if no such agreement is reached within thirty (30) days after the end of such six (6) Month period, the Buyer may, at any time thereafter, by not less than sixty (60) days’ prior written notice to the Sellers, terminate this Agreement, unless prior to the expiry of such notice period the Flow Date has occurred, and in such event, notwithstanding such notice of termination, this Agreement shall not terminate but shall continue in force.
2.4 Commissioning Period
2.4.1 The “Commissioning Period” shall be a period commencing on the Flow Date and ending on the earlier of (i) the date upon which the Sellers notify the Buyer that they have completed the commissioning of the Sellers’ Facilities, and (ii) the date of expiry of ninety (90) days following the Flow Date.
2.4.2 The Sellers will provide to the Buyer not less than fourteen (14) days’ prior notice of the commencement of the Commissioning Period. During the Commissioning Period the Sellers may carry out commissioning activities of the Sellers’ Facilities.
2.4.3 During the Commissioning Period the Buyer shall use reasonable endeavors to nominate and take delivery of Specification Gas in such quantities and at such rates as may reasonably be requested by the Sellers to carry out the commissioning and testing of the Sellers’ Facilities. For the avoidance of doubt, the provisions of Articles 9.3 and 17.1 shall not apply during the Commissioning Period.
2.4.4 The Sellers will notify the Buyer upon completion of the commissioning of the Sellers’ Facilities.
2.5 Information and Inspection
2.5.1 Within thirty (30) days after the Effective Date and once every three (3) months thereafter until the Flow Date, the Sellers and the Buyer shall meet and discuss the state of progress of the Sellers’ Facilities (including permitting) and the plans for the development and commissioning of the Sellers’ Facilities.
2.5.2 On the request of the Buyer, the Sellers shall allow for the inspection of the progress of the construction and installation of the Sellers’ Facilities, upon reasonable advance request by the Buyer, such inspection to occur during normal working hours and provided Buyer complies with Sellers’ standard safety and security procedures.
2.5.3 It is acknowledged and agreed that nothing in this Article 2 shall oblige either Party to do or omit to do anything which would:
(a) breach or otherwise adversely affect any bona fide commitment of confidentiality owed to any Person; or
(b) procure or allow any rights of access or inspection in excess of or contrary to such rights as may be available to and exercisable by one Party in favor of the other.
2.6 Termination
2.6.1 Without prejudice to any other rights that the Sellers may have under this Agreement or pursuant to applicable law, the Sellers may terminate this Agreement in circumstances where the Buyer commits an Act of Insolvency that may reasonably be expected to materially adversely affect the performance by the Buyer of its obligations under this Agreement, by giving the Buyer not less than one hundred and twenty (120) days written notice
2.6.2 Without prejudice to any other rights that the Buyer may have under this Agreement or pursuant to applicable law, the Buyer may terminate this Agreement in circumstances where any or all of the Sellers commit an Act of Insolvency that may reasonably be expected to materially adversely affect the performance by all of the Sellers of their obligations under this Agreement, by giving the Sellers not less than one hundred and twenty (120) days written notice.
2.6.3 The Sellers and the Buyer agree that they will not exercise any termination rights, except in relation to significant or continuing breaches by the other Party of a material provision of this Agreement and only after giving the breaching Party a period of one hundred and twenty (120) days (unless a shorter period is determined under this Agreement) in which to remedy the breach.
2.6.4 Any termination of this Agreement shall not affect any rights or obligations, which may have accrued prior to such termination.
2.6.5 Any notice of termination of this Agreement by the Sellers, shall be given by the Sellers to the Buyer as a single notice binding on all the Sellers on the same terms and being expressed to terminate this Agreement in respect of each of the Seller’s Percentages and in respect of the Sellers’ Interest.
2.6.6 Any notice of termination of this Agreement by the Buyer, shall be given by the Buyer to the Sellers jointly binding on all the Sellers on the same terms and being expressed to terminate this Agreement in respect of the Sellers’ Interest and in respect of each of the Sellers in relation to its respective Seller’s Percentage, except that in circumstances where the grounds for any such notice of termination are given only in respect of Article 2.6.2 and are applicable to any one or more of the Sellers, but not all the Sellers, then such notice shall not have effect if, before its expiry, the Seller (or Sellers) in respect of which such notice has been served shall have signed an agreement or deed providing for the transfer of the relevant Seller’s Percentage (or as the case may be respective Sellers’ Percentages) under this Agreement to another Seller or Sellers or to other transferees in compliance with the provisions of Article 18.

Agreement for Sale and Purchase

3.1 Agreement

Subject to the terms of this Agreement, the Sellers agree to deliver and sell and the Buyer agrees to take and pay for or, if not taken, pay for Gas, in such quantities, at such times and in such manner as shall from time to time be provided for under this Agreement.

3.2 Uses and Sources
3.2.1 The Buyer shall not be limited or restricted in the use of the Specification Gas purchased under this Agreement or in the purpose for which such Specification Gas is purchased by the Buyer.
3.2.2 Without derogating from the Sellers’ obligations in relation to the Sellers’ Facilities under this Agreement, the Sellers shall not be limited or restricted in their sources of Natural Gas (whether from Israel or imported from elsewhere) for the purposes of delivering Specification Gas to the Buyer under this Agreement.

Warranties, Covenants and Taxes

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4.1 Sellers’ Warranties and Title
4.1.1 Without prejudice to any obligation of the Sellers under this Agreement, each of the Sellers (as to its Seller’s Percentage) warrants to the Buyer as of the Effective Date, as follows:
(a) title to all Gas sold and delivered by such Seller under this Agreement and that all Gas delivered by such Seller shall, upon delivery, be free from all liens, charges, encumbrances and adverse interests of any and every kind;
(b) the Sellers’ Petroleum Rights are valid and subsisting and are free from all liens, charges, encumbrances and adverse interests of any and every kind, other than the charges listed in Schedule 4 hereto;
(c) under the Sellers’ Petroleum Rights, the Sellers have discovered accumulations of Natural Gas currently estimated to be in excess of two hundred and fifty (250) BCM (Proved and Probable Reserves) within the Reservoir and have, subject to receiving all permits required under law, the right to produce, sell and deliver Natural Gas from the Reservoir in accordance with the terms of this Agreement for the whole of the Contract Period;
(d) the Sellers together are the owners of the Sellers’ Petroleum Rights and are parties to the Sellers’ Agreements and, subject to receiving all permits required under law and entering into the Yam-Tethys Agreements as required by Article 4.2.1(b), it has no knowledge of any matter which might prevent it from producing Natural Gas from the Reservoir or from transporting, processing, delivering and selling Specification Gas to the Buyer at the Delivery Point through the Sellers’ Facilities in accordance with the terms of this Agreement for the duration of the Contract Period;
(e) it has received no notification of any claims and knows of no grounds for any claim which may be adverse to or inconsistent with the ownership and other rights specified in Article 4.1.1(c) whether from holders of interests adjoining the Reservoir or otherwise;
(f) it is duly organized and validly existing under the laws of the jurisdiction of its formation and it has the legal right, power and authority to conduct its business and execute and deliver this Agreement and observe and perform its obligations under this Agreement;
(g) the entry by it into and performance of this Agreement is within its power and has been duly authorized by all necessary action on its part and shall not breach any law or determination or provision applicable to its governing documents;

the Seller and any director, officer, employee or affiliated company of such Seller has not made, offered, or authorized and will not make, offer, or authorize with respect to the matters which are the subject of this Agreement, any payment, gift, promise or other advantage, whether directly or through any other person or entity, to or for the use or benefit of any public official (i.e., any person holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise or a public international organization) or any political party or political party official or candidate for office, where such payment, gift, promise or advantage would violate (i) the applicable laws of Israel or the United States of America (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended, U.S.C. §78dd-1, et seq.); (ii) the principles described in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1997, which entered into force on February 15, 1999, and the Convention’s Commentaries; or (iii) the principles described in the United Nations Convention Against Corruption, which entered into force on December 14, 2005. Each Seller shall defend, indemnify and hold the other Parties harmless from and against any and all claims, damages, losses, penalties, costs and expenses arising from or related to, any breach by such Seller of such warranty. Such indemnity obligation shall survive termination or expiration of this Agreement. Each Seller shall in good time (i) respond in reasonable detail to any notice from any other Party reasonably connected with the above-stated warranty; (ii) furnish applicable documentary support for such response upon request from such other Party; (iii) maintain adequate internal controls, properly record and report all transactions; and (iv) comply with the laws applicable to it. Each Seller acknowledges and

confirms that: (i) each Party must rely on the other Parties’ system of internal controls, and on the adequacy of full disclosure of the facts, and of financial and other data regarding action undertaken under this Agreement; (ii) No Party is in any way authorized to take any action on behalf of another Party that would result in an inadequate or inaccurate recording and reporting of assets, liabilities or any other transaction, or which would put such Party in violation of its obligations under the laws applicable to the operations under this Agreement;
(i) this Agreement constitutes a legal valid and binding act and obligation enforceable against such Seller in accordance with the terms of this Agreement.
4.2 Sellers’ Covenants
4.2.1 Each of the Sellers (as to its Seller’s Percentage) covenants with the Buyer that throughout the Contract Period:
(a) except in conjunction with a permitted assignment, creation of security or charge or encumbrance made under the provisions of Article 18, its Seller’s Percentage and its rights under this Agreement shall be maintained and preserved free and clear (save as aforesaid) from any assignment, security, charge or encumbrance;
(b) prior to the Commencement Date it shall enter into the Yam-Tethys Agreements on terms which provide for the transportation of Specification Gas to the Delivery Point so as to enable it to comply with its obligations under this Agreement;
(c) it shall not agree to or (to the extent that it is within its power to prevent) permit any amendment or modification of the Sellers’ Agreements or the Sellers’ Petroleum Rights or the Yam-Tethys Agreements, whereby the Sellers’ ability to perform its obligations under this Agreement are likely to be prevented or materially adversely affected and shall observe and perform all terms thereof and exercise its rights thereunder in such manner as to secure that the terms and provisions of this Agreement shall be performed;
(e) it shall obtain all and any necessary consents or approvals required from time to time to permit the performance of the Sellers’ obligations hereunder.
4.3 Buyer’s Warranties and Covenants
4.3.1 The Buyer warrants to the Sellers as of the Effective Date as follows:
(a) it has the right for the whole of the Contract Period to purchase Specification Gas from the Sellers in accordance with the terms of this Agreement;
(b) it is duly organized and validly existing under the laws of the jurisdiction of its formation and it has the legal right, power and authority to conduct its business and execute and deliver this Agreement and observe and perform its obligations under this Agreement;
(c) its entry into and performance of this Agreement is within its power and has been duly authorized by all necessary action on its part and shall not breach any law or determination or provision applicable to its governing documents;
(d) it has entered into the Transportation Agreement with the Transporter providing for the transportation of Specification Gas from the Delivery Point through the Downstream System to the Buyer’s Stations for the duration of the Contract Period;

the Buyer and any director, officer, or employee of the Buyer or any affiliated company has not made, offered, or authorized and will not make, offer, or authorize with respect to the matters which are the subject of this Agreement, any payment, gift, promise or other advantage, whether directly or through any other person or entity, to or for the use or benefit of any public official (i.e., any person holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise or a public international organization) or any political party or political party official or candidate for office, where such payment, gift, promise or advantage would violate (i) the applicable laws of Israel or the United States of America (including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended, U.S.C. §78dd-1, et seq.); (ii) the principles described in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1997, which entered

into force on February 15, 1999, and the Convention’s Commentaries; or (iii) the principles described in the United Nations Convention Against Corruption, which entered into force on December 14, 2005. The Buyer shall defend, indemnify and hold the other Parties harmless from and against any and all claims, damages, losses, penalties, costs and expenses arising from or related to, any breach by the Buyer of such warranty. Such indemnity obligation shall survive termination or expiration of this Agreement. The Buyer shall in good time (i) respond in reasonable detail to any notice from any other Party reasonably connected with the above-stated warranty; (ii) furnish applicable documentary support for such response upon request from such other Party; (iii) maintain adequate internal controls, properly record and report all transactions; and (iv) comply with the laws applicable to it. Buyer acknowledges and confirms that: (i) each Party must rely on the other Parties’ system of internal controls, and on the adequacy of full disclosure of the facts, and of financial and other data regarding action undertaken under this Agreement; (ii) No Party is in any way authorized to take any action on behalf of another Party that would result in an inadequate or inaccurate recording and reporting of assets, liabilities or any other transaction, or which would put such Party in violation of its obligations under the laws applicable to the operations under this Agreement;
(f) this Agreement constitutes a legal, valid and binding act and obligation enforceable against it in accordance with the terms of this Agreement.
4.3.2 The Buyer covenants with the Sellers that throughout the Contract Period, the Buyer shall:
(a) not agree to or (to the extent that it is within its power to prevent) permit any amendment or modification of the Transportation Agreement whereby the Buyer’s ability to perform its obligations under this Agreement are likely to be prevented or materially adversely affected and shall observe and perform all terms thereof and exercise its rights thereunder in such manner as to secure that the terms and provisions of this Agreement shall be performed; and
(b) obtain all and any necessary consents or approvals required to permit the performance of the Buyer’s obligations hereunder.
4.4 Taxes and Royalties
4.4.1 Each of the Sellers as to its Seller’s Percentage shall pay or cause to be paid all royalties, taxes, duties, levies and other sums arising in respect of production, transportation, gathering, processing and handling of Natural Gas before delivery by such Seller to the Buyer at the Delivery Point.
4.4.2 The Buyer shall pay or cause to be paid all taxes, duties, levies and other sums arising in respect of receipt, processing, handling and transportation of Natural Gas after delivery to the Buyer by each of the Sellers at the Delivery Point.
4.4.3 All and any royalties, taxes, duties, levies or other sums arising at the Delivery Point shall be borne by the Parties as specified in the applicable legislation or other charging provisions.
4.4.4 Notwithstanding the above, the Buyer shall also bear and pay or (as the case may be) timely reimburse each of the Sellers in respect of any:
(a) Value Added Tax payable pursuant to Israeli Law in relation to Gas sold by such Seller to the Buyer under this Agreement;
(b) Excise Duty payable pursuant to the Excise Law on Fuels-1958 and Purchase Tax payable pursuant to the Purchase Tax Law- 1952, as applicable, and any other similar law, in relation to Gas sold by such Seller to the Buyer under this Agreement; and
(c) Any new tax, duty or levy imposed pursuant to Israeli Law on Natural Gas in relation to Gas sold by such Seller to the Buyer under this Agreement, provided (**).
4.5 Indemnities and Acknowledgements
4.5.1 Each of the Sellers as to its Seller’s Percentage shall indemnify and hold harmless the Buyer against any and all loss, damage and expense of every kind on account of:
(a) adverse claims relating to such Seller’s title to any or all Gas delivered to the Buyer hereunder; or
(b) any and all royalties, taxes, duties, levies or other sums which the Sellers are obligated to bear and pay pursuant to Article 4.4 above.
4.5.2 The Buyer shall indemnify and hold harmless each of the Sellers as to its Sellers’ Percentage against any and all loss, damage and expense of every kind on account of taxes, duties, levies and other sums which the Buyer is obligated to bear and pay pursuant to Article 4.4 above.

Sellers’ Rights / Commingling and Unitization

5.1 Sellers’ Rights

Nothing in this Article 5 shall be construed as relieving Sellers from any of their specific obligations pursuant to this Agreement, including without limitation the requirement to comply with the pressure and quality requirements provided in this Agreement. Without derogating from the above, Sellers shall be entitled to:

5.1.1 Determine the manner in which they conduct their physical operations;
5.1.2 Supply Natural Gas for delivery under this Agreement from sources other than the Reservoir at their sole discretion;
5.1.3 Commingle Natural Gas produced pursuant to the Sellers’ Petroleum Rights with Natural Gas produced from any other source or sources subject specifically to: (a) the pressure and quality requirements provided in this Agreement; (b) such arrangements as would be made by a Reasonable and Prudent Operator regarding allocation, attribution and measurement procedures in respect of Natural Gas produced at the Reservoir and all Natural Gas delivered at the Delivery Point;
5.1.4 Pool, combine or unitize all or any part of the Sellers’ Interest with interests in any other licenses or leases and in such event this Agreement shall extend and apply to the interest of the Sellers in such unit to the extent that such interest is derived from the Sellers’ Interest; and
5.1.5 Enter into agreements to supply third parties with Natural Gas from the Reservoir or elsewhere; (**).

Quantities and Nominations

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6.1 The ACQ
6.1.1 For each Contract Year the “ Annual Contract Quantity ” (or “ ACQ ”) shall be the aggregate of the respective DCQs applicable on each Day during that Contract Year.
6.2 The DCQ
6.2.1 Except as otherwise provided for in this Agreement, the “ Daily Contract Quantity ” or “ DCQ ” shall be as follows:
(a) In respect of each Day of the Commissioning Period, the DCQ shall be zero (0);

In respect of each Day of the period commencing on the Commencement Date and ending on the Day immediately prior to the fifth (5 th ) anniversary of the Commencement Date, the DCQ shall be (**) MMBTU;

In respect of each Day of the period commencing on the fifth (5 th ) anniversary of the Commencement Date (provided such date falls within the First Period) and ending on the last Day of the First Period, the DCQ shall be (**) MMBTU; and

(d) Notwithstanding the above, in respect of each Day of the Second Period (if applicable), the DCQ shall be (**) MMBTU.
6.3 Hourly Quantities

Except as otherwise provided for in this Agreement, the “ Maximum Hourly Quantity ” (or “ MaxHQ ”) shall be as follows:

6.3.1 In respect of each Day of the Commissioning Period, the MaxHQ is not applicable.
6.3.2 In respect of each Day of the First Period, the MaxHQ shall be equal to the lower of: (i) (**) MMBTU and (ii) (**).
6.3.3 In respect of each Day of the Second Period (if applicable), the MaxHQ shall be equal to the lower of: (i) (**) MMBTU; and (ii) (**).
6.4 Increased Quantities and Additional Facilities
6.4.1 Subject to the provisions of this Article 6.4, upon the Buyer serving on the Sellers the Increase Notice, the Sellers will be obliged to seek to fulfill certain conditions to obtain approvals, permits and rights to the effect that, subject to the fulfillment of such conditions (or their waiver by the Sellers), the Sellers will be obliged to construct, install, maintain and operate such additional Sellers’ Facilities as may be required to increase the MaxHQ to (**) MMBTU.

With effect from the Additional Flow Date to be established in accordance with this Article 6.4, (but subject to any intervening occurrence of a Price Control Event) the MaxHQ will be so increased to (**) MMBTU together with the corresponding increase of the DCQ to (**) MMBTU), all in accordance with and subject to the provisions of this Article 6.4.

6.4.2 Buyer’s Notice to Increase Quantities: The Buyer shall have the right to exercise the Increase Option by written notice to be delivered to the Sellers (the “ Increase Notice ”) by the earlier of:
(a) April 2, 2013; or
(b) in the event that prior to February 1, 2013 the Sellers notify the Buyer in writing that the Sanction of the Additional Development has occurred (the “ Sanction Notice ”), by the later of: (i) December 31, 2012 (if Sellers’ notification was delivered before October 15, 2012); and (ii) forty five (45) Days after the Sanction Notice.
6.4.3 Additional Flow Date: Following receipt of the Increase Notice, the Sellers shall be obliged to seek to satisfy the Sellers’ Additional Conditions with the aim that the Additional Flow Date will occur within forty eight (48) Months after the Sellers’ Additional Conditions Date.
6.4.4 Sellers’ Additional Conditions: The Increase Option will be subject to the following conditions (the “ Sellers’ Additional Conditions ”):
(a) the obtaining by the Sellers of the approval of the Ministry of Energy and Water Resources for the Sellers’ Additional Development Plan in a form and on terms reasonably acceptable to the Sellers;
(b) the obtaining by the Sellers of the rights to land on shore in Israel as may be required to construct the facilities contemplated in Sellers’ Additional Development Plan, in a form and on terms reasonably acceptable to the Sellers; and
(c) the obtaining of the building permits and the approvals required for the construction and operation of the facilities contemplated in Sellers’ Additional Development Plan.
6.4.5 Satisfaction of Sellers’ Additional Conditions: The Sellers shall employ reasonable endeavors to procure that the Sellers’ Additional Conditions are satisfied within six (6) months after Sellers receive the Increase Notice (or such later date as may be mutually agreed to in writing by the Parties). The Sellers shall keep the Buyer informed on a periodical basis and on reasonable request as to progress made towards achieving Sellers’ Additional Conditions.
6.4.6 Termination due to Non-Satisfaction of Sellers’ Additional Conditions: In the event that Sellers’ Additional Conditions have not been satisfied or were not waived by the Sellers within twelve (12) Months after Sellers receive the Increase Notice (or such later date as may be mutually agreed to in writing by the Parties), the Buyer may terminate the Increase Option by not less than fourteen (14) days written notice and the provisions of Article 6.4.8 will apply. In the event that Sellers’ Additional Conditions have not been satisfied or were not waived by the Sellers within eighteen (18) Months after Sellers received the Increase Notice or such later date as may be mutually agreed to in writing by the Parties, and the Increase Option has not been terminated by the Buyer, then the Sellers, provided they have sought to obtain the Sellers’ Additional Conditions, shall also have the right to terminate the Increase Option by not less than fourteen (14) days written notice and the provisions of Article 6.4.8 will apply.
6.4.7 Termination due to Price Control: Notwithstanding the provisions of Articles 6.4.1 to 6.4.6, in the event that prior to the Increase Date a Price Control Event occurs, the Sellers shall have the right, at their sole and absolute discretion, to terminate the Increase Option by ninety (90) days’ notice to the Buyer and the provisions of Article 6.4.8 will apply.
6.4.8 Effect of Termination: Upon expiry of a termination notice pursuant to Articles 6.4.6, 6.4.7 or 6.4.12, the Increase Notice shall be null and void ab initio , the Sellers will be relieved from their obligations under Article 6.4, and the Increase of the MaxHQ, DCQ and TCQ shall not become effective.
6.4.9 The Twelve Month Window: The Sellers shall use reasonable endeavors to ensure that the Additional Flow Date occurs within a twelve (12) month period, such period to commence no earlier than twenty four (24) Months after the Sellers’ Additional Conditions Date; and end no later than forty eight (48) Months after the Sellers’ Additional Conditions Date (such 12 month period, the “ Twelve Month Window ”). The Sellers will inform the Buyer of the commencement date of the Twelve Month Window within six (6) Months after the Sellers’ Additional Conditions Date.
6.4.10 The Three Month Window: At least ninety (90) days prior to the first day of the Twelve Month Window, the Sellers will notify Buyer of a ninety (90) Day period in which they anticipate the Additional Flow Date to occur, such period to be within the Twelve Month Window (the “ Three Month Window ”). Within thirty (30) days after receipt of Sellers’ notice specifying the Three Month Window, the Buyer will notify Sellers whether it has elected that the Increase Date will be the Actual Increase Date or the Deemed Increase Date. If Buyer fails to give such notice, the Increase Date will be the Actual Increase Date.
6.4.11 Additional Delay Period: If Buyer notified Sellers in accordance with Article 6.4.10 that the Increase Date will be the Actual Increase Date and the Additional Flow Date has not occurred (except due to circumstances in which the Sellers were relieved from liability for reasons of Force Majeure or Article 6.4.8) by the earlier of:

(i) the fourth (4 th ) anniversary of the Sellers’ Additional Conditions Date; or (ii) the last day of the Three Month Window (such earlier date, the “ Target Completion Date ”), then in respect of each Day from the Target Completion Date (as such date may be postponed due to an event of Force Majeure) until the Additional Flow Date (the “ Additional Delay Period ”), the Buyer will have the right to nominate Gas under this Agreement as if the Increase Date had occurred and the Sellers shall make reasonable endeavors to make deliveries in accordance with Buyer’s Proper Nominations and any quantities of Gas not delivered by the Sellers shall be deemed to constitute Shortfall Gas in accordance with the provisions of Article 17, and the delivery of Gas by Sellers in reduction of such quantity of Shortfall Gas from the Shortfall Aggregate shall be the Sellers’ sole liability to the Buyer and Buyer’s sole remedy in such circumstances.

6.4.12 Termination due to Delays: In the event that the Additional Delay Period continues for a period of more than twelve (12) Months (except to the extent such delay was caused by an event of Force Majeure), Buyer and Sellers shall meet within seven (7) days from such date, to discuss and seek to agree on appropriate arrangements that will enable delivery of such part of the Buyer’s Proper Nominations that is attributable to such Increase Notice. If no such agreement is reached within thirty (30) days after such meeting, the Buyer may, at any time after the expiry of such period, by written notice to the Sellers, terminate the Increase Option effective sixty (60) days after the giving of such notice, unless prior to the expiry of such notice period the Additional Flow Date has occurred, in which event, the Increase Option is not terminated but is effective. On termination of the Increase Option as above the provisions of Article 6.4.8 will apply.
6.4.13 Available Capacity: Without derogating from the provisions of Articles 6.4.1 to 6.4.8, if by December 31, 2012 the Increase Notice has not been given, then at Buyer’s request the Sellers shall advise the Buyer whether they have available uncontracted capacity in the Sellers’ Facilities and are able to increase the MaxHQ and DCQ under this Agreement using the existing Sellers’ Facilities. In the event the Sellers advise the Buyer that they do have available capacity as aforesaid and within thirty (30) days thereafter the Buyer notifies the Sellers that it would like to increase the MaxHQ and the DCQ hereunder, the Buyer and Sellers shall meet within fourteen (14) days from the date of Buyer’s notice in order to discuss such increase.
6.4.14 Commissioning of Sellers’ Facilities: Following the Additional Flow Date, the Sellers shall be entitled to carry out commissioning activities and the provisions of Articles 2.4 and 2.5, will apply, mutatis mutandis , in relation to the commissioning of such facilities.
6.6 Deliveries
6.6.1 In respect of each Hour during the Commissioning Period, the Sellers shall use reasonable endeavors to deliver at the Delivery Point the quantities of Specification Gas nominated by the Buyer for delivery in respect of such Hour in accordance with the provisions of Article 2.4.
6.6.2 In respect of each Hour from the Commencement Date, the Sellers shall tender for delivery at the Delivery Point the quantities of Specification Gas Properly Nominated by the Buyer in respect of such Hour.
6.6.3 Subject to applicable law and unless otherwise instructed by any governmental authority, (**).
6.7 Operational Delivery Tolerances
6.7.1 The Parties agree that the following operational tolerances will apply in respect of deliveries that fall short of or exceed the quantity Properly Nominated for delivery at the Delivery Point (“ Delivery Tolerances ”):
6.8 Notification of Requirements
6.8.1 Not later than 1500 on the Wednesday immediately preceding the beginning of each Month, the Buyer shall give notice to the Sellers of the quantity of Specification Gas it then forecasts to be required in respect of each Day of that Month. This forecast is indicative and non-binding.
6.8.2 Not later than 1500 on the Wednesday immediately preceding each Week, the Buyer shall give notice to the Sellers of the quantity of Specification Gas it then forecasts to be required in respect of each Hour of that Week. This forecast is indicative and non-binding.
6.8.3 Not later than 1500 each Day, the Buyer shall give notice to the Sellers nominating the quantity of Specification Gas it requires to be delivered at the Delivery Point in respect of each Hour of the immediately following Day. This nomination will be binding and final, subject to variations in accordance with Articles 6.8.5 and 6.8.6.
6.8.4 No later than 1600 on each Day, the Sellers shall inform the Buyer of their ability to meet the Buyer’s nominations, fully or partially in respect of any Hour of the immediately following Day. The above shall not derogate from nor add to the Sellers’ obligations and liabilities to deliver quantities of Gas under Article 6.8.3 above.
6.8.5 The Buyer shall be entitled by notice to the Sellers at any time to vary the quantities of Specification Gas so nominated pursuant to Article 6.8.3 provided that such notice is given not less than fourteen (14) Hours before the Hour to which it relates and provided such variation complies with Article 6.9.2.
6.8.6 The Buyer may at any time before any Hour request any variation in the Proper Nomination at shorter notice than is prescribed in Article 6.8.5, provided such variation complies with Article 6.9.2 and the Sellers shall use reasonable endeavors to comply fully with the variation so requested, it being specifically agreed that:
(a) the Sellers’ failure to comply with the variation so requested shall not constitute Shortfall Gas; and
(b) any such request to increase the Proper Nomination shall not affect the Sellers’ obligations in relation to the delivery of the quantity as previously nominated under Article 6.8.3 (or as varied under Article 6.8.5) in respect of such Hour.
6.8.7 In the event that the Buyer does not make a Proper Nomination in respect of any Hour pursuant to this Article 6.8, the Buyer shall be deemed to have nominated a quantity equal to the quantity Properly Nominated for that Hour in the preceding Day.
6.8.8 If due to an event of Force Majeure Buyer is unable to take, or if for any reason Sellers are unable to deliver, the quantities Properly Nominated by the Buyer, then for the duration of the Day covered by the then current Proper Nomination, the Properly Nominated quantity for each Hour in such Day shall continue to be the quantity specified in such Proper Nomination, and if such inability continues after the end of the Day covered by the then current Proper Nomination, then thereafter for the continuation of such inability the Properly Nominated quantity for each Hour during such period shall be deemed to be the average Properly Nominated quantity for that same Hour of the same Day of the Week with respect to the three (3) previous Weeks.
6.8.9 Notwithstanding Article 6.8.3, any nomination of zero (0) by the Buyer in respect of any Hour shall be subject to the Buyer giving of not less than seven (7) Days’ prior notice.
6.8.10 Notwithstanding the above, in the event that nomination procedures are imposed on the Parties by the Transporter which are inconsistent with the nomination procedures specified in this Article 6.8, the Parties shall revise the nomination procedures set out in this Article 6.8 so as to make them consistent with those imposed by the Transporter provided that the Sellers shall not be required to agree to procedures which are more onerous on the Sellers than the procedures specified in Article 6.8.5. In default of agreement between the Parties on such revisions, either Party may, by notice to the other, require the matter to be referred for determination by the Expert pursuant to Article 19.3.
6.9 Proper Nominations
6.9.1 For the purposes of this Agreement, “ Proper Nomination ” means a nomination which has been made in accordance with the requirements of Articles 6.8.3, 6.8.5, 6.8.7 or 6.8.9 and Article 6.9.2 and “ Properly Nominated ” means in relation to a quantity of Gas in respect of an Hour, the Proper Nomination.
6.9.2 A Proper Nomination made by the Buyer in respect of any Hour:
(a) shall not exceed the applicable MaxHQ;
(b) during the First Period, shall not exceed the quantity of Specification Gas Properly Nominated in respect of the immediately preceding Hour by more than:
(i) (**) MMBTU if the Proper Nomination for the preceding Hour was equal to or lower than (**) MMBTU; and
(ii) (**) MMBTU if the Proper Nomination for the preceding Hour was higher than (**) MMBTU;
(c) during the Second Period (if applicable), shall not exceed the quantity of Specification Gas Properly Nominated in respect of the immediately preceding Hour by more than:
(i) (**) MMBTU if the Proper Nomination for the preceding Hour was equal to or lower than five thousand (5,000) MMBTU; and
(ii) (**) MMBTU if the Proper Nomination for the preceding Hour was higher than five thousand (5,000) MMBTU;
(e) shall not be less than (**).
(f) shall not, together with the aggregate hourly quantity nominated by the Buyer under the YT GSPA (to the extent applicable), exceed (**) MMBTU during the First Period and (**) MMBTU during the Second Period.
(g) during the Maintenance Period shall not exceed the MaxHQ specified in the notice provided pursuant to Article 6.11.7.
6.9.3 Without derogating from the provisions of Article 6.9.2(a), during the First Period, Buyer may at any time nominate additional volumes of up to (**) MMBTU above the applicable MaxHQ (“ Excess Gas ”) and Sellers shall make reasonable endeavors to comply with such nomination of additional volumes. For the avoidance of doubt, Excess Gas nominated by the Buyer in accordance with this Article 6.9.3 shall not be considered a Proper Nomination.
6.9.4 Without derogating from the provisions of Article 6.9.2(b) the Sellers will use reasonable endeavors, (**).
6.9.5 Without derogating from the provisions of Article 6.9.2(f), in the event that in any Hour, Buyer’s nomination, together with the aggregate hourly quantity nominated by the Buyer under the YT GSPA (to the extent applicable) exceed (**) MMBTU, then the Sellers may, at their sole and absolute discretion, elect whether to comply with such nomination.
6.9.6 Subject to the provisions regarding Proper Nominations as above and without derogating from the provisions of Article 6.10, the Buyer is entitled to nominate every Hour, a quantity of Specification Gas between zero (0) and the MaxHQ, provided however that the Buyer will not nominate for any Hour a quantity of gas that is less than its pro-rata share of the Technical MinHQ, such share to be calculated based on the ratio between the ACQ in this Agreement and the cumulative annual contract quantities in all the gas sales agreements of the Sellers pursuant to which the Sellers will be delivering Natural Gas from the Reservoir at such date.
6.9.7 All nominations or notifications of quantities of Specification Gas under this Agreement shall (except where the context otherwise requires) be made in MMBTU.
6.9.8 The Buyer shall use reasonable endeavors to take at the Delivery Point the quantities of Specification Gas Properly Nominated by the Buyer and tendered for delivery by the Sellers in respect of such Hour.
6.10 Over Deliveries

For the avoidance of doubt, it is confirmed that the Buyer shall not be obliged to take amounts of Specification Gas tendered for delivery by the Sellers in excess of the amount Properly Nominated (“ Over Deliveries ”).

6.11 Planned Maintenance
6.11.1 If the Sellers have reason in any Contract Year to expect that the necessities of maintenance, repair, modification, installation of new equipment, or replacement of the Sellers’ Facilities (“ Maintenance ”) would require a reduction in the ability to deliver Specification Gas to the Buyer under this Agreement, the Sellers shall, by not less than six (6) months’ notice to the Buyer and subject to reasonable endeavors to coordinate with the Yam Tethys Partners (to the extent the Sellers are delivering gas hereunder through the Yam Tethys Facilities) and the Buyer, specify a period (“ Maintenance Period ”) during which the Sellers intend to conduct such Maintenance.
6.11.2 Any Maintenance Period specified by the Sellers pursuant to Article 6.11.1 may not exceed fourteen (14) consecutive days and thirty (30) Days in aggregate in any two (2) consecutive Contract Years.
6.11.3 The Sellers shall periodically update the Buyer in accordance with the table below as to the estimated start date and duration of the Maintenance Period and as to the level to which the MaxHQ will be reduced.