Editorial: countries, companies and consumers
"The guillotine is the masterpiece of the plastic arts / Its click / Creates perpetual motion" - Blaise Cendrars (1887 – 1961)
Last week the price of Brent crude sank to $65 per barrel, its lowest point since September 2009. After a slight rebound, today a barrel of the benchmark sweet light crude oil stood above $66. Lower oil prices are starting to take their toll across the globe.
The South Stream pipeline, a multibillion dollar collaboration between Gazprom, Eni, Êlectricitê de France and Wintershall to transport natural gas from the Russian Federation through the Black Sea and across Central Europe, has been shelved.
At 2,380 kilometres in length, the South Stream would have become the ninth longest gas pipeline on Earth, twice the length of its sister, the Nord Stream, and discharging 13 per cent more gas per annum at 63 billion cubic metres. Russian state-owned petro giant, Gazprom, which has spent more than $5 billion on its obligations to the project (one eighth of the total project capex) has decided to pull the plug on a venture that has been fraught with difficulty since the get-go.
Despite the upwelling of political turbulence caused by the Ukrainian crisis, it was the dramatic nosedive in the value of the black stuff that nailed the coffin lid shut on this ambitious transnational undertaking.
The South Stream Pipeline is the first major infrastructure project to face the chop in the world of $65 oil, a reality that will be perpetuated for at least the next six months according to Nizar Al-Adsani, CEO of OPEC member Kuwait’s state run oil company. Companies and countries will feel the pinch in the first half of 2015, and the South Stream will not be the only flagship scuppered in the wake of high tides of turmoil.
Even the grateful consumer will eventually feel the pinch, as falling oil prices tend towards a general "deflationary drift", leading to particular problems in a fiscally-ailing Eurozone and Japan and another bout of financial instability that will grease printer wheels in national mints.
Despite the general thrust of history, perpetual motion is not always forward…..
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