1. January 2006 Ashdod Refinery Presentation Company and transaction overview

2. ONSCREEN Disclaimer This Document (the Document) has been prepared by HSBC Bank plc ("HSBC"). HSBC is acting as financial advisor to the Government Companies Authority of Israel (the "GCA") and no one else in connection with the proposed privatisation of Oil Refineries – Ashdod Limited (ORA, or the Company). This Document contains forward-looking statements, sourced exclusively from publicly available information, the GCA or Oil Refineries Limited (ORL). These statements are based on certain assumptions, which include a number of known and unknown risks and uncertainties that may lead to the non-occurrence of these statements. The information contained in this Document has been provided by the GCA, ORL, or from publicly available information and has not been independently verified by HSBC. None of GCA, ORL, ORA, HSBC nor any other person makes any representations or warranties as to the accuracy, completeness or fairness of this Document and, no responsibility or liability is accepted for its accuracy or sufficiency. No representations or warranties are given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, forward-looking statements, estimates, forecasts or targets contained herein. None of the GCA, ORL, ORA nor HSBC undertakes to provide any additional information, to update the information included herein or to remedy any omissions in this Document. This Document does not constitute an offer or invitation for the sale or purchase of securities or of any of the assets, business or undertaking described herein. Nor does this Document constitute an obligation or undertaking to conduct a future sale of securities or of any of the assets, business or undertaking described herein. This Document is not intended to form the basis of any investment decision to purchase ORA. The selection of a buyer for all of the ORA shares, as a single stake, will be conducted according to the sale procedure of the shares of ORA (the Sale Procedure) to be published by the State of Israel. This Document and its contents are based on the assumption that at the time of the sale of the Shares, the shares of ORL will be owned 100% by the State of Israel. The assumed shareholder structure is subject to completion of arrangements between the current shareholders of ORL (The State of Israel, 74%, and Israel Corporation, 26%). The information relating to the sale process, structure and timetable is purely indicative and may be altered, modified or cancelled at any time by the GCA. Details of the sale process and sale structure of the Shares, if applicable, are officially announced in the Sale Procedure. By accepting this Document, the recipient agrees to be bound by the foregoing limitations.

3. ONSCREEN Notice to Reader This Document and its contents are based on the assumption that at the time of the sale of the Shares, the shares of ORL will be owned 100% by the State of Israel. The assumed shareholder structure is subject to completion of arrangements between the current shareholders of ORL (The State of Israel, 74%, and Israel Corporation, 26%). Information in this Overview has been prepared as at 9 January 2006.

4. ONSCREEN Contents Transaction background Overview of the Ashdod Refinery Overview of Israels oil market Section 1 Section 2 Section 3

5. Transaction background

6. ONSCREEN Transaction overview The State of Israel, through the Government Companies Authority (GCA), has initiated the process of privatising Oil Refineries Limited (ORL) The process involves the restructuring of ORL, whereby the Ashdod Refinery will be carved out of ORL, transferred into a newly established subsidiary company and sold in a private sale process (the Transaction) –The Company, called Oil Refinery – Ashdod Limited (ORA), was incorporated in January 2006 –The Ashdod Refinery and other associated assets and liabilities are to be transferred into ORA simultaneously with the completion of the Transaction The GCA is managing the Transaction in collaboration with ORLs management HSBC Bank plc is advising the GCA in relation to the sale process ORL, which will continue to own the Haifa Refinery, will subsequently be privatised through an Initial Public Offering

7. ONSCREEN ORA transaction overview ORL situation after ORA sale ORA is sold to an investor through a private sale process ORA becomes active independent company upon completion of the Transaction Competition between ORL and ORA Industry liberalisation ORL situation before ORA sale Israels only refining player Ownership in several petrochemical subsidiaries Operates in regulated environment –Price controls –Vertical integration prohibited 1. This document and its contents are based on the assumption that at the time of the sale of the ORA shares, the shares of ORL will be owned 100% by the State of Israel. The above shareholder structure is subject to completion of arrangements between the current shareholders of ORL (The State of Israel, 74%, and Israel Corporation, 26%). 2.Includes major subsidiaries only 3.Petrochemical subsidiaries 4.Lubricants oil subsidiary New Investor ORA Ashdod Refinery 100% 50% State of Israel 1 ORL 1 Gadiv 3 Carmel Olefins 3 Haifa Basic Oil 4 100% Haifa Refinery 100% 50% State of Israel 1 Gadiv 3 Carmel Olefins 3 Haifa Basic Oil 4 100% ORL 2 Ashdod Refinery Haifa Refinery

8. ONSCREEN Overview of ORL refinery operations Ashdod Refinery Commissioned in 1973 90,000bbls/d crude refining capacity 7.5 Nelson Complexity Index Storage capacity of 700,000m3 Private sale process initiated Haifa Refinery Commissioned in 1938 180,000bbls/d crude refining capacity 7.2 Nelson Complexity Index To be privatised through Initial Public Offering Source: ORL Source: ORL, industry research

9. ONSCREEN ORL financial summary Turnover11,513,78014,072,74418,862,79820,187,228 Total operating costs11,643,37313,821,97917,767,37718,519,289 EBITDA166,364574,1301,435,7021,932,866 DD&A295,957323,365340,281264,927 EBIT(129,593)250,7651,095,4211,667,939 Interest expenses(78,187)82,896(176,882)(133,713) Other expenses-(17,400)(2,200)- Profit before tax(207,780)316,261916,3191,534,226 Net income(109,498)220,404773,2921,168,300 Current assets2,731,4863,719,4815,122,4807,065,997 Long term investments and loans74,55684,590113,818116,223 Fixed assets3,649,4253,598,8983,623,8073,879,446 Other assets and deferred expenses180,979222,072339,442445,162 Total assets6,636,4467,625,0419,199,54711,506,828 Current liabilities2,444,3643,260,6473,476,4124,755,417 Long term liabilities2,287,5292,272,4362,890,9542,768,072 Total liabilities4,731,8935,533,0836,367,3667,523,489 Shareholders equity1,904,5532,091,9582,832,1813,983,339 Total liabilities and shareholders equity6,636,4467,625,0419,199,54711,506,828 P&L (financial year) Balance sheet (at end of period) 000s NIS2002200320041 st 9 months 2005 1 Source: ORL (1) Balance sheet as at 30 September 2005

10. ONSCREEN Changing Israeli regulatory environment Increased liberalisation Vertical integration allowed between refiners and retailers Entry into other businesses such as power generation and water desalination allowed Industry structure Removal of price controls at the refinery gate However, competition monitored to avoid market failure Price controls No vertical integration permitted across the downstream value chain Price controls in effect –For all products at refinery gate –For gasoline at the pump Current situationPost-ORA sale

11. ONSCREEN Legal framework of privatisation and liberalisation Main documents: State of Israels Resolution on Privatisation of 26 December 2004 National Interest Order Interested parties should inform themselves of all other relevant laws, regulations and Government resolutions

12. ONSCREEN Key milestones of ORA sale process Transaction announcement 1 Submission of Expressions of Interest to GCA 2 Initial screening of participants 3 Due diligence and review 4 Submission of proposals 7 5 Final screening of participants 6 Sign-off of Sale and Purchase Agreement Selection of preferred offeror 8 Completion and closing 9

13. Overview of the Ashdod Refinery

14. ONSCREEN Background and history Ashdod Refinery Located 4km north of Ashdod city Considerable population growth in Ashdod in last 30 years Refinery construction started in 1970 Completed in 1973 Rationale for construction at location: Services high oil products demand area in the centre of Israel Benefits from close proximity to an existing crude oil terminal and the coastal power plant, and access to main product pipelines Provides employment for immigrant population Enhances Israels diversity and security of energy supply Haifa Refinery Ashdod Refinery

15. ONSCREEN Transportation Ashdod Refinery connected to –Ashdod, Ashkelon and Eilat ports and terminals –Haifa Refinery Own storage capacity of ~700,000 cubic metres –~200,000m 3 for crude oil and feedstock –~500,000m 3 for intermediates and products Other transport infrastructure –Modern truck loading rack –Connected to two sea-lines Product shipments –Directly by pipeline or truck –Indirectly by sea –Pipeline shipping accounts for approximately 60% of product transport Haifa Refinery Midstream and downstream infrastructure Haifa port Third party terminal Ashkelon port and terminal Eilat port Ashdod Refinery IEC sea-lines Pipeline Trucks Ships National pipeline grid Truck load rack for Fuel oil LPG Distillates Crude oil Source: ORL (1) The pipeline does not cross the sea-line and is thus represented differently Import / export of intermediates & products Pipeline 1 Pipeline

16. ONSCREEN Plant capacity Crude90,000bbls/d Vacuum46,000bbls/d Visbreaking26,000bbls/d Fluid catalytic cracking29,000bbls/d Catalytic reforming 1 12,000bbls/d Catalytic hydrotreating –Naphtha22,000bbls/d –Kerosene14,000bbls/d –Gasoil17,500bbls/d –FCC gasoline18,500bbls/d Oxygenates900bbls/d Source: ORL (1) Semi-regeneration Source: ORL

17. ONSCREEN Upgrade and new builds 1984 – Vacuum tower modernised 1987 – Visbreaker overhaul 1990/1992 – Major expansion programme with addition of FCC 1 unit, SRU 2 and MTBE 3 plant 2003 –New FCC gasoline HDS 4 introduced –Debottlenecking of naphtha and distillate hydrotreaters –New truck loading terminal –FCC reactor replacement and modernised 2005 - Piped natural gas from offshore field Upgrades and new builds (1973-2005) 43MW natural gas-powered co-generation plant New SRU 2 plant Safety, environmental and reliability projects Ongoing and future projects (1) Fluid catalytic cracker (2) Sulphur recovery unit (3) Methyl tertiary butyl ether (4) Hydro desulphurisation Source: ORL

18. ONSCREEN Health, safety and environment Good safety record All projects meet current Israeli HSE specifications Capable of producing EURO IV 1 compliant products ISO certification: –9000 – quality –14000 – environment –18000 – safety Efficient ongoing co-operation with local authorities Source: ORL (1) European Regulatory Standard for Transportation Fuels effective 2005

19. ONSCREEN Employees and management ~200 permanent operating staff –Highly skilled workforce –High proportion of engineers ~30 additional temporary employees Limited management staff –Many functions provided/controlled centrally by ORL Source: ORL (1) This unit is based in Asdod Refinery, but is under the control of and reports to ORLs management in Haifa Maintenance Health Safety Environment Quality Production Planning and Supervision of Maintenance Work Central & Regional Maintenance Instrumentation Electricity and Control Safety and Risk Quality Laboratory EcologyPlant Inspection Process Management Process Units Products and Loading Manpower and Organisational Extension 1 Projects Extension 1 Ashdod Refinery Manager Security and Administration

20. ONSCREEN HVGO500,000 High octane components49,000 PropaneVariable ProductQuantity (tons per annum) Inter-refinery relationships Essential feedstocks and blendstocks transferred between the Haifa and Ashdod Refineries –Approximately 7-10% of throughput of each refinery transferred from one site to the other –Currently treated as internal transfers Formal procedures established and agreements drafted between ORL and ORA to maintain these important relationships –One-year agreements will be effective at the time of the Transaction –Renewable by mutual consent after 12 months Product flows from Haifa to Ashdod Heavy/light naphtha188,000 Propylene50,000 Blending componentsVariable ProductQuantity (tons per annum) Product flows from Ashdod to Haifa Source: ORL

21. ONSCREEN Transitional arrangements Current situation Ashdod Refinery managed and operated as an integral part of ORL Approximately 200 operating staff, with limited management / supporting functions Ashdod Refinery dependent on ORL at the time of Transaction Additional employees required to manage Ashdod Refinery as a stand- alone operation –Commercial and financial functions –HR, legal, technical, comptroller, IT Transition period Effective upon closing of Transaction Purpose is to transfer all relevant responsibilities and management to ORAs new owner ORL will offer specific services to ORA upon request in specific areas of operation, until functions can be operated by new owner –Transition Period may last between 3 to 12 months depending on the nature of service(s) provided –Will enable seamless transition of Ashdod Refinery management

22. ONSCREEN ORA pro-forma balance sheet Receivables and debit balances453 Inventory1,230,494 1,230,947 Long-term investments and loans Loans1,359 1,359 Fixed assets Property, plant and equipment640,775 Materials and spare parts34,935 675,710 Other assets and deferred expenses91,846 Total assets1,999,862 AssetsLiabilities and shareholders equity Source: ORL (1) The pro-forma balance sheet is subject to amendments and will be finalised at a later stage in the sale process Current maturities of long term loans123,560 Payables and credit balances15,636 139,196 Long-term liabilities Debentures455,308 Bank loans219,993 Deferred taxes148,897 Liabilities for severance pay, net11,619 835,817 Total liabilities975,013 Contingent liabilities and commitments Shareholders equity1,024,849 Total liabilities and shareholders equity1,999,862 Balance sheet 1 as of 31 December 2004 (000s NIS)

23. Overview of Israels oil market

24. ONSCREEN ORL product flows Approximately 8.9million tons of crude processed in the 9 months to September 2005 100% of crude oil needs imported, mostly from Russia, FSU 1 and the Caspian Sea Historically imports from Egypt, Norway, West Africa and Mexico also featured ORL currently imports crude oil for both refineries Crude oil 9 months to end of September 2005 2,3 –9.2 million tons sold –Export sales account for ~25% of total product sales Refined products (1) Former Soviet Union (2) Includes both Ashdod and Haifa refineries product sales (3) Source: ORL (4) YTD 2005 Refined products split – Ashdod Refinery 4 Source: ORL

25. ONSCREEN Israel oil product demand Stable motor gasoline demand due to increased efficiency of vehicle fleet Diesel demand growth in line with economic growth Gasoil growth driven by electricity demand Gradual decline in heavy fuel oil due to natural gas substitution Increasing naphtha demand supported by growing petrochemical industry Modest increases in kerosene demand LPG use in line with economic growth Source: ORL estimates (1) Data does not include ORLs own consumption and military use Israel oil product domestic consumption (000s tons) 1 Israel oil product imports (000s tons) LPGKeroseneGasolineDiesel GasoilFuel OilBitumenPetrochemical feedstock

26. ONSCREEN Current oil market structure Source: ORL, industry research Crude import (ORL) Storage and supply (PEI, EAPC and Pi-Gliloth) Fuel companies (Paz, Delek, Sonol, Dor Alon) Fuel StationsAgricultureIndustry Power Stations Trade and Services Airports Crude Refined products Midstream Downstream Import of distillates (Fuel companies) Storage and transportation of crude (PEI – Tashan) (EAPC – Katza) Import, heavy oils and coal (Israel Electric Co.) ORL Ashdod RefineryHaifa Refinery Ports (Bunkering) UNEX