Next LNG’s Rudolf Huber’s predictions of the future

Earlier this week, we asked Rudolf Huber, CEO of Next LNG and speaker for LNG Outlook Australasia 2012 about the future of LNG in Australia and the world’s market.

What are the biggest challenges facing the LNG industry today?

LNG is still struggling with becoming a normal industry. The business model that serves for getting new projects off the ground is still largely the same as almost 50 years ago. Monopolies slowly give way to a much more competitive and transparent world, yet LNG still thrives on locked up relationships and a level of obscurity virtually unseen in any other part of the energy universe.

The current high oil prices and the respective relative shortage of LNG have masked this fundamental problem in the Pacific. In the Atlantic, the wound has opened and is bleeding.

What LNG needs is no simple shift to more spot trading. It needs a fundamental change in attitudes which is not really on the horizon. Change to LNG will come from the place that suffers most, the toxic Atlantic basin. Only pain creates the will to do something about it and there can be no doubt that pain is greatest there.

Which region(s ) are the biggest competitors to Australian produced LNG? What can Australia do to be more competitive?

It will still be the Middle East but also East Africa (Mozambique and Tanzania). But the question dodges the real issue. What will be the biggest competitor to LNG from Australia and the question should include non LNG technologies and industries. I think that there is still a lot of oomph in oil. Over the next 10 years we will see new oil raffination technologies and combustion methods that will prove to be far cleaner and way more efficient than anything we have ever seen before. I also think that the Chinese shale gas economy will inflate to unseen proportions and if its only to provide jobs to millions of migrant labor. I also think that nuclear cannot be laid to rest. There will be a new nuclear renaissance not only in Japan.

LNG was able to gain market share in every crisis as it always was the cheap alternative. With that being gone, times will change for LNG as well. Some Australian projects will be in peril when that happens. He question is not IF, its rather WHEN.

What will the LNG industry look like in 10 years time?

Large scale LNG terminals will share the fate of mainframe computers. They will come to resemble dinosaurs only here for hsitorical reasons or in order to deal with very specific circumstances that cannot be dealt with by the upcoming standards.

Mid scale liquefaction and logistics, LNG as a fuel in the marine but also in vehicle transport will dent middle distilates power and provide a whole new market. The LNG player of the future will look much more like a service company rather than an integrated colossus.

I think that most big players got it wrong and the next 10 years will show why. As Victor Hugo once said: the strongest army cannot defeat ideas when their time has come.

Of course, you can meet and hear from Rudolf at LNG Outlook Australasia 2012 this year.