Oil-indexed gas supplies face further pressure-IEA

* Says influence of oil prices to weaken

* Unconventional gas glut drives shift to spot indexation

* Oil-indexed system here to stay but in reduced role

LONDON, Nov 9 (Reuters) - The International Energy Agency (IEA) said new long-term gas supply deals will increasingly be tied to spot gas prices, weakening a pricing system based on indexation to oil prices that dates back to the 1960s.

"Now is the time" for producers and suppliers to agree on more indexation to spot gas prices, IEA Chief Economist Fatih Birol said on the sidelines of the IEA's launch of its World Energy Outlook 2011.

"We hope to see in new long-term gas contracts more market elements to make prices more flexible for consumers," Birol said.

"Producers should also introduce more indexation to spot markets, because it will make gas prices more attractive relative to oil and help boost their market share," he added.

The IEA's latest outlook, published on Wednesday, showed that differing fundamentals would drive more of a wedge between oil and gas prices, making gas increasingly unaffordable under oil-linked supply agreements.

In its main scenario, the IEA said oil prices could hit economically damaging levels of $150 a barrel in the near term, while gas prices face downward pressure from a potential glut of unconventional supply.

The West's energy watchdog lowered its gas price assumptions to $12 per million British thermal units for Europe, $14 per mmBtu in the Pacific and $9 per mmBtu in North America.

The growing mismatch between oil and gas prices will add pressure on suppliers to move away from indexing gas to oil prices, Birol said, as buyers demand relief from high prices. He added that the oil-indexed system will continue in some form.

"There is definitely room still for indexation to oil, but now is the time perhaps for introducing more market elements," he said.

Moves to link long-term supplies of gas to hubs, where the fuel is freely traded, are partly driven by the improving commercial production of unconventional gas, Birol said.

New drilling techniques have unlocked vast reserves of gas trapped in shale rocks in the United States, pushing domestic gas prices far below oil prices and transforming international gas markets. (Reporting by Oleg Vukmanovic, editing by Jane Baird)