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Infrastructure integration and incomplete contracts: natural gas in the Southern Cone

Navajas, Fernando H. (2008): Infrastructure integration and incomplete contracts: natural gas in the Southern Cone. Published in: Integration and Trade No. No. 28 (February 2008): pp. 25-48.

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Abstract

This paper uses evidence on policies, markets and private transactions to discuss the experience of natural gas infrastructure integration in the Southern Cone of Latin America. The argument is that contracts on international exchanges supported by infrastructure may become incomplete due to contingencies related to policy-induced price distortions not anticipated at the moment of writing. Beyond regulatory risk mitigation, it calls for back-up contract provisions designed to cope with aggregate imbalances and for some supranational coordination related to information about market conditions and on energy planning dialogues that test consistency and stress situations in markets where exports originate

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