Share price of Italy's
) moved up 0.5% on its announcement of having moved closer to a
settlement with Norwegian giant
) with the signing of a Heads of Agreement (HoA). The agreement
relates to the revision of the terms of its long-term gas supply
contract including price and volume. However, the share price
surprised with a drop of 2% in the following trading session.
In order to facilitate the parties to carry out an exhaustive
agreement in the context of a changing European gas market the
arbitration proceedings started by Eni has been suspended for 30
Eni had slapped a NOK 60 billion ($10 billion) arbitration case
against Statoil and claimed compensation from the Norwegian
supplier for charging prices above prevailing market levels since
the deal was signed in 1998.
While Eni had earlier renegotiated prices on supply deals with
Russia's Gazprom and Sonatrach of Algeria, Statoil had declined
to alter its long-term supply contract with the Italian customer.
However, Statoil was reportedly offering price concessions to
The contract price was linked to the oil price. As per Eni, it
had been paying 30% to 40% higher than the European market levels
for Statoil's gas.
Eni decided to suspend the arbitration case against Staoil after
the pair reached a preliminary pact to modify a long-term supply
The HoA with Statoil forms part of Eni's endeavor to renegotiate
all third-party gas supply contracts, with the aim of achieving a
competitive portfolio by Jan 1, 2016.
Eni currently holds a Zacks Rank #5 (Strong Sell). Other stocks
in the oil and gas sector such as
Helmerich & Payne, Inc.
Patterson-UTI Energy Inc.
) with a Zacks Rank #1 (Strong Buy) are expected to outperform.
ENI SPA-ADR (E): Free Stock Analysis Report
HELMERICH&PAYNE (HP): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
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