Through the history of oil and gas production around the world, the oil and gas is found in places where there are not many people. The oil and gas needed to be transported, first by the railroad and the railroad is a good alternative, then by pipelines. Transporting by pipelines is the less expensive for the oil companies and for the pipeline, as long as the oil and gas flows, the company can pay dividends.
Across the world, the building of pipelines has become more complicated as people weigh the advantages and disadvantages of the pipeline crossing their lands and of course political considerations come into place. Some see pipelines in black and white differences, others see the grey.
In an article by Vladimir Soldatkin of Reuters, the situation in Europe is more complicated than the US because of the rise of Green Parties or environmental parties. However, the reality is Russia has enormous supplies of natural gas and needs to export it to finance the country. There is a pipeline to Europe going through the Ukraine and often there is where geo-political considerations come into play because the US can influence how much gas flows to Europe.
In the commercial scene, Gazprom from Russia, Germany’s Uniper SE, BASF SE, Anglo-Dutch Shell, Austria’s OMV AG and French based Engie SA are building a pipeline under the Baltic Sea and it crosses various countries borders. The part going through Denmark to Germany is completed. The pipeline has a capacity of 110 billion cubic meters of gas and politically Germany has said the project is a commercial project and wants it to go forth.
Linking to dividend paying stocks, once the pipeline is in place, the pipeline will produce a consistent return of profits and dividends to the owners because there is a need for the oil and natural gas. The drama of how the pipeline was built will be long over and customers will use the products. All developments have back stories but often times they become less important to users as time goes by.
There are more questions than answers, till the next time – to raising questions.