(Reuters) - Concessions on Russian gas contracts won by Italian energy company ENI include a backdated price cut which will effectively hand back $700 million paid to Russia's Gazprom for gas deliveries in 2011 , Citigroup said on Friday. Gazprom and ENI, the Russian gas export monopoly's largest single customer, announced a revamp of their long-term gas supply contracts on Thursday. A handful of small and mid-sized utilities, including the Sinergie Italiane consortium, received average price cuts of 10 percent in a round of renegotiations begun in early 2011. But larger utilities are also struggling under onerous take or pay obligations which force them to pay Gazprom for expensive oil-linked contract gas, even when they don't need it to meet physical supply obligations. Italian utilities were among European consumers seeking extra Russian gas in an extreme cold snap which engulfed Europe at the end of January, but the preceding months had been marked by warm weather which reduced their overall requirements for the year. Many booked multi-billion euro losses in 2011 due to very high long-term contract prices linked to a basket of oil products. The contract revision granted to ENI also included some unspecified flexibility on volumes, and the effect of the cut on Gazprom's profitability will be modest, Citi analysts wrote in a note on Friday morning. "The price break has reportedly been back-dated over a year to January 1st, 2011, which we estimate will cost Gazprom about$490 million or 0.8 percent of the $60 billion in EBITDA the company earned last year," Citi analysts said. "Otherwise, this deal fits with our existing assumption that Gazprom's average price formula will be cut by 10 percent in 2011." Citi said Gazprom likely granted concessions in response to a sustained rally in crude oil, suggesting that in future it would be more likely to lower contract prices when oil prices spike, then re-adjust them again when oil prices came down. "As our long-term oil price assumption is $80 per barrel, this allows us to assume that Gazprom's traditional European gas price of roughly 4 times Brent crude will return as oil prices decline," Citi said. According to Societe Generale estimates, Gazprom's discount for gas supply to ENI amounted to around 6 percent, or $24 per 1,000 cubic metres, "if we assume that the formula stays oil-indexed." Estimates differed on the amount of Russian gas imported last year by Italian clients. Gazprom said imports amounted to 17 billion cubic metres in 2011, while SocGen said in a research note Friday that as much as 26 bcm of gas crossed the border at Tarviso last year. (Writing by Melissa Akin and Vladimir Soldatkin, editing by William Hardy)

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