The LNG Crisis - HK RH

Link: https://www.youtube.com/watch?v=HtFDt7AAKh4 Please see link above for source video and comments.

The LNG Crisis - A video interview Hugo Kruger interviewing Rudolph Huber November 10, 2021 Rudolph Huber is the president of LNG Europe and LNG Austria and the editor of the Methanist website.

LNG as a fuel has existed for many years in Europe. Still, it has always been an outlier.

This is about to change. Not only has the European Union pinned LNG on its clean air targets, but even single countries also come to realize that this is truly the only operational option for clean trucking. There are numerous fueling stations in the planning and LNG can also be easily integrated into existing fueling stations.

In 2020, the oil price war and resulting extreme oil prices, the standoff in the Persian Gulf, world LNG markets in historical oversupply, riots in many US cities, and deep scars in many countries economies due to overuse of the money-printing-press have done their bit and there is so much more.

It’s a year that has started to rip the blinders off our eyes. Because for many years we were running on fumes and on broken ideas, fears, and assumptions. We start to see the true cost of many policies that were lauded to be the solution for all our ills just recently.

Some so-called environmental movements have dropped every pretense that their battles are about improving the planet. They now resort to open threats and veiled terrorism.

Russia has, of course, many more new fields to drill into and to develop. But those fields are even harder to develop than the original ones. Hence they are way more expensive which ergo leads to even worse economics than the original fields at the moment of development. Technological progress helps somewhat but its no magic wand.

But today, Russia cannot use Soviet-Union-style economics to make those impossible fields work. Those developments cost what they cost and the locations of the fields have not become any better since then.

The sage decision would have been to produce as much gas as they can from the older fields and call it a day when they are depleted. Any new field required new upstream, new pipelines, and new export routes. And I have always argued that the cost of setting those up doesn’t justify building them in the first place. So, don’t.

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So we are back at where Soviet planners were in the Sixties. Those gas fields may all be world-class. But their location and the resulting financial pain of developing and connecting them to world markets make them stranded gas.

And now comes the killer. The regions the gas pipelines used to run through have become independent countries that want transfer fees as compensation at best. Thats already a cost factor on top. Plus, they often cannot be pressured into compliance anymore as they have learned to emancipate themselves from the old overlord.

So, Russia goes offshore. But offshore pipelines are expensive, much more expensive than onshore in most cases.

I would argue that North Stream 1 was a loss-making venture and North Stream 2 is even more so. Only massive financial trickery and decades of disinformation plus an overly credulous Western audience could mask this.

Gas exports as a source of revenue for Russia will one day be a thing of the past. That must have been clear for the last 25 years. But we like to put our heads in the sand until its too late. We have seen that with many other issues such as being dependent on one single country for everything we use. Or believing that highly indebted countries would somehow miraculously find a way out of their mess without some very painful changes.

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