The Moscow Times: Italy's Eni Inks Landmark Non-Indexed Gas Supply Deal With Gazprom

Italy's Eni struck a landmark deal with Russia's Gazprom that abandons a 50-year old system of indexing gas supplies to oil prices, setting a precedent other European buyers may be able to use in negotiations.

The agreement, signed by the groups' chief executives in St. Petersburg on Friday, sets "an important change" in the price-indexation mechanism in the contracts to align them fully with the spot market, Eni said in a statement.

Gazprom has for years defended oil-indexed gas sales as a cornerstone of its business, even while high costs relative to spot gas prices have forced its European clients to swallow multi-billion euro losses.

The backlash against oil-linked contracts has gained ground in recent years as waning demand for gas and economic recession across Europe have forced utilities to defend dwindling profit margins.
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