Longterm Contracts and Take-or-Pay Clauses in Natural Gas Markets

Anna Creti, Bertrand Villeneuve

Abstract


This paper surveys the existing theoretical and empirical research on long term contracts inspired by the American experience. We analyze the role of take-or-pay clauses and price indexation rules, questioning whether regulation distorts optimal contract duration. The models we summarize allows us to discuss the economic fundamentals of the ED provisions on long-term contracts in the natural gas industry, pointing out that the ED position on long-term contracting seems to mix up contract duration and flexibility.


Full Text:

PDF


DOI: https://doi.org/10.15173/esr.v13i1.466


Anna Creti

Bertrand Villeneuve