Edison Renegotiates Russian Long-Term Gas Contracts

Edison SpA, said it had successfully renegotiated the pricing of its long-term contracts from Promgas, a joint venture between Russia’s Gazprom and Italy’s ENI, for the supply of natural gas from Russia.

“With this agreement Edison, which has an important portfolio of long-term gas supply contracts, begins to emerge from the difficulties, in which all European gas companies with long-term take or pay commitments, have entered into in the last years,” Edison said.

The agreement would have an estimated 200 million euro overall value to Edison.

In August 2010, Edison started the arbitration proceeding against Promgas in order to secure more favorable pricing in line present  market conditions. This agreement terminates such arbitration.

The long-term gas supply contracts between producers such as Gazprom and its European customers including PGNiG and RWE are linked to the price of oil, but that pricing formula has attracted increasing criticism since crude peaked at over $140 a barrel in 2008.