USD 51 billion for a 12-million-ton LNG project is not small change.
It is not cheap LNG.
Granted, the upstream component is included, which complicates the comparison. But that only makes the underlying question more important: does the world economy still need very expensive LNG projects?
We have already seen a long procession of LNG projects carrying spectacular price tags, producing equally spectacular presentations and then spending years—sometimes close to two decades—searching for a Final Investment Decision.
The PowerPoint presentation is easy.
The business plan is always going to get there.
Reality is less cooperative.
So will the Argentine project become another beautifully presented project that almost happens, repeatedly gets close, and ultimately spends its life waiting for somebody else to take the risk?
Argentina is a particularly difficult proposition because geography works against it.
It is far away.
LNG is a global commodity, but distance still matters. Shipping gas halfway around the world is not free, and any project that depends on premium-paying markets must first overcome the transportation cost required to reach them.
Europe is unlikely to be the obvious answer.
Europe already has access to US LNG that is geographically closer and, depending on market conditions, can be supplied through an established export infrastructure. European buyers are unlikely to volunteer for a substantial Argentine premium merely because Argentina has built an impressive project.
So the obvious alternative is Asia.
But Asia is a very long way from Argentina.
Every additional mile has to be paid for somewhere in the chain.
And there is another problem that seems strangely easy to overlook when the discussion turns to exports.
Argentina itself needs energy.
A great deal of it.
This is one of the more interesting countries on Earth. Argentina possesses extraordinary agricultural potential, an extensive navigable river system and access to productive coasts. Geographically and materially, it should be something close to an economic paradise.
Instead, its economy has been repeatedly damaged by politics, mismanagement and the remarkable human ability to destroy advantages that other countries would kill to possess.
That is the resource Argentina really needs to develop.
Not merely its gas.
Its economy.
Once Argentina becomes a normal economy again—one in which capital can be invested with some reasonable expectation that the rules will still exist tomorrow—it will require enormous quantities of reliable energy.
That is where the real opportunity lies.
Export projects produce glossy prospects. They generate impressive numbers, enormous investment figures and the sort of charts that look wonderful in a board presentation.
Managers like that.
Governments like it even more.
Billions of dollars of foreign investment. Millions of tonnes of LNG. Export revenues. Jobs. Infrastructure. A new chapter.
All very attractive.
But Argentina does not merely need another export project.
It needs an economy capable of consuming the energy it already has.
It needs reliable electricity, industrial development, manufacturing, transport, investment and growth. It needs to turn its extraordinary natural advantages into actual prosperity rather than another round of promises about what prosperity might look like someday.
The irony is that the gas could be the easier part.
Argentina has the resource.
What it has lacked is the economic and political framework capable of turning that resource into sustained wealth.
If that framework is finally repaired, domestic energy demand will follow naturally.
And perhaps that is the better business case.
Argentina should not build expensive LNG merely because exporting gas looks good on a PowerPoint slide.
It should build the energy system that allows Argentina itself to become rich.
Exports can come afterwards.
Argentina needs better than exports.