MILAN- Italy's biggest utility Enel has agreed with Algeria's Sonatrach to extend a gas supply contract by eight years with the possibility of a further two years if both sides agree.

The news confirms what sources told Reuters earlier this month.

In a statement on Wednesday, Enel said the new contract period will kick in on January 1.

The current contract to receive Algerian gas from Sonatrach is set to expire at the end of 2019.

(Reporting by Stephen Jewkes) ((stephen.jewkes@thomsonreuters.com; +39.0266129695; Reuters Messaging: stephen.jewkes.thomsonreuters.com@reuters.net))