GasTerra Ruling to Cost Eni €604 Million
Italian explorer and producer Eni has said that it has been hit by an arbitration decision with Dutch supplier GasTerra, which will cost the company €604 million this quarter.
The arbitration decision relates to the price Eni paid to GasTerra from 2003-2006 for one of two supply contracts with the company. The arbitration ruling will cost Eni a total of €690 million pre-tax with interest expense of €143 million. However, a €229 million reduction in tax charges will bring the cost down to €604 million.
In a statement yesterday, Eni said that it was considering taking legal action against the arbitration decision. Despite this, it will avail of a reduction in price on both contracts from 2005 until June 2013.
"Based on the arbitration ruling – and notwithstanding pending negotiations for price reductions claimed by Eni on both contracts - Eni has reassessed the provision relating to the gas supplied by Gas Terra in subsequent reference and supply periods, from 2005 through 2012," the statement said. "Overall, the price adjustment regards the purchase of approximately 44 billion cubic meters in the period 2005 through to June 2012."
The €604 million cost will nonetheless be taken into account for this quarter's financial results for Eni, due to be released on the 30th of October this year.