Eni Signs Deal With Gazprom To Revise Terms Of Gas Supply Contracts

(RTTNews) - Italian oil and gas company Eni SpA (E) said Friday that it has signed an agreement with Russian gas pipeline systems operator OAO Gazprom (OGZPF.PK, OGZPY.PK, GAZP) to revise the terms of their long-term gas supply contracts. This includes a reduction in the price paid by Eni for the gas supplied to it by Gazprom.

The deal was signed on Friday in Saint Petersburg, Russia, by Gazprom CEO Alexey Miller and Eni CEO Claudio Descalzi.

In a statement, Eni said, "The deal involves a reduction in supply prices and an important change in the price indexation to fully align it with the market. In addition, in 2014 Eni's ability to recover gas pre-paid under 'take or pay' clauses will be significantly enhanced."

The terms of the gas supply contracts apply retroactively from the start of 2014. Eni noted that the deal reached with Gazprom is a key part of its efforts to renegotiate all third-party long-term gas supply contracts, in order to achieve a fully competitive portfolio.

Italy is the second largest importer of Russian gas to the EU, after Germany. In 2013, the volume of Gazprom's supplies to Italy made up 25.3 billion cubic meters of gas.

In 2006, Gazprom and Eni signed the Strategic Partnership Agreement. Under the deal, Gazprom started to supply up to 3 billion cubic meters of gas per year directly to Italian market, and was also enabled to acquire Eni's stakes abroad.

Eni holds a 15 per cent stake in South Stream Transport, a joint project company focused on the construction of South Stream's offshore section.

In Friday's regular session, E is trading at $50.65, up $0.40 or 0.79 percent on a volume of 30,288 shares. OGZPY is trading at $8.44, up $0.02 or 0.30 percent on a volume of 125,990 shares.