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Edison SpA (EDN.MI) will pursue an arbitration process against its suppliers of natural gas unless they agree to reduce prices as the weakness of the fossil fuel lowers the earnings at the Italian energy company, said the chief executive Tuesday.

"We are suffering from the price of gas and we need renegotiate of the price," said Edison's Umberto Quadrino at a conference call to comment on third-quarter results. It isn't "acceptable" for the company to take such losses, he added.

Earlier Tuesday, Edison said third-quarter net profit more than halved on the year to EUR37 million due to weaker gas operations.

Edison's suppliers of gas are Russia's OAO Gazprom (GAZP.RS), Algeria, Qatar and Eni SpA (E), said Quadrino.

Arbitration with Russia will continue after the two failed to agree on revised prices, he added, although discussions are continuing.

Discussion with Algeria and Qatar are ongoing and Edison expects to reach a conclusion by the first quarter of 2011, said Quadrino. In the event one isn't reached then arbitration will start, he added.

If talks with Eni don't reach an agreement by the end of 2010, then the two will head for arbitration, said Edison's CEO.

The renegotiation of the gas procurement contracts is so essential to the growth of the company that until they are concluded Edison won't present a new strategic plan, said Quadrino.

Edison's is seeking in the renegotiation the right to buy a higher portion of gas from the spot market as a way to become more competitive, he said.

Edison has committed credit lines worth EUR1.2 billion and these will allow the repayment of a bond worth about EUR700 million set to expire in December, said Chief Financial Officer Marco Andreasi on the same conference call.

Company website: www.edison.it

-By Liam Moloney, Dow Jones Newswires; +39 06 6976 6924; liam.moloney@dowjones.com

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