Reuters reported that Italian utility Ascopiave SpA has signed a gas supply deal with Russia's Gazprom and moved closer to a merger with a fellow utility Acegas Aps. Italian financial daily Il Sole 24 Ore said Gazprom and Ascotrade, the commercial unit of Ascopiave, signed the contract in the last few days.

It is said that Gazprom will supply Ascopiave with 120 million cubic meters of gas in the current thermal year which runs from October to September under Ascopiave's first direct deal with the world's largest gas producer.

Mr Gildo Salton, Chairman of Ascopiave's said that "Our activity will be borderline compared to the very big international operators. But we have now created an independent space in the gas market that favors the process of mergers that we have been pursuing for some time."

According to source Ascopiave and its Italian partners in newly created company Sinergie Italiane have been aiming to clinch a multi year supply deal with Gazprom, but uncertainty over the Italian partnership's structure has put talks on hold.