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Contractual Issues in Moving Natural Gas Across Borders in the Southern Cone

Mario J. Orts, Mining and Oil & Gas Development in Latin America (2001)

As taught by Messineo,1 the juristic concept of the contract presupposes an economic motivation and depends on the same. The contract is the typical instrument for economic collaboration among individuals, but it cannot escape dominant political criteria, as well as the economic phenomena of the market in which it is conceived and materialized. The contract is, in the words of Mosset Iturraspe and Lorenzetti,2 an economic instrument that aids the parties' development in the market, and it is precisely within market dynamics where the contract acquires its outline and structure.

The influence of the economic and legal context, added, in the case of the Southern Cone, to the infrastructure existing throughout a vast territory, are reflected to a remarkable extent in the drafting of the gas export contracts which we outline in this paper.

On the basis of this premise, we observe that transborder natural gas sales contracts pose certain peculiarities which, generally, are caused by the following:

1.Regulations in force and market conditions in both the exporting and importing country.

2.Prevailing tax situations on both sides of the border.

3.The economic scenario of the target market.

4.Financing needs related to the existing transportation infrastructure required by the exportation, especially in the case of a single-export pi