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when the infrastructure already exists, and you're talking about playing with existing flows within a single business (gas trading, or LNG, as in your example).

It breaks down when you need to build the infrastructure. The players that build the infrastructure have no interest in playing any role in the flow business. They just want to be paid for building the pipes and faucets. The money needed to pay for that can only be apportioned by "taxing" each future flow through that infrastructure and allocating that to whoever is paying today for the construction.

That transaction requires someone to put up money upfront, in exchange for future payments. That someone takes a risk on the infrastructure being built, and on the flows happening as promised/contracted. That someone puts money on the table, and wants money out, on a (mostly) predictable schedule.

That someone may take various risks (on the volume of flows, on the tariff paid, on the fraction of the value of the flows, etc...) and its repayment can follow many scenarios. That's fine, and that's happening via existing commercial/banking structures (which use a bewildering variety of legal entities according to needs). And that's called commercial banking.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Nov 28th, 2007 at 10:39:15 AM EST
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