American Israeli Paper Mills Ltd. Signed An Agreement With Thetis Sea Group HADERA, Israel, Aug. 1 /PRNewswire-FirstCall/ -- American Israeli Paper Mills Ltd. (ASE:AIP) (the "Company") announced that on July 29, 2005 it had signed an agreement in London with Thetis Sea Group for the purchase of natural gas. The purchased gas will provide the Company's needs for the next few years for the operation of its cogeneration power plant in its Hadera site, which will be converted to use natural gas rather than fuel oil. The supply of the gas according to the agreement will commence upon the completion of the pipeline and the facilities required in the Company's site, the operation of which is expected in July 2006, and will be terminated upon the earliest of the following: (1) 5 years after the date of commencement of the gas flow; (2) the time at which the Company shall have purchased an aggregate of 0.43 BCM of natural gas from Thetis Sea Group; but not later than July 1, 2011. Total estimated amount of the consideration to be paid by the Company to Thetis Sea Group under the agreement is about $40 million throughout its term. Simultaneously, as previously announced, the Company is continuing to advance and review the project of establishing a new power plant at its site in Hadera according to the basic permit for an electricity production license, which it received from the Israeli Ministry of National Infrastructures. DATASOURCE: American Israeli Paper Mills, Ltd. CONTACT: Philip Y. Sardoff, +1-908-686-7500

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