I have no doubt there’s an abundance of natural gas—not only in the Middle East, but scattered generously across the globe. That part has never been in question. But gas lying peacefully several kilometers beneath the earth’s surface isn’t worth a damn to anyone. Russia, for instance, sits atop some of the most massive gas reserves known to man in the Universkaya field of the Kara Sea. It’s a geological marvel. But developing it would cost far more than the gas could ever fetch on the market. A fortune trapped in rock is still just rock.
And this is the part people tend to forget—or deliberately ignore. What is gas in a reservoir actually worth? Nothing. Not until you spend the blood and treasure to bring it into existence. I remember sitting across the table from a negotiator in a Middle Eastern country during talks over an undeveloped gas field. My company was considering joining an LNG venture, and the man across from me, with the confidence only bureaucrats and dreamers possess, informed me that the gas was worth a certain handsome sum in Tokyo.
I told him, quite simply, that he was welcome to that price—if he could first develop the field, bring the gas to the surface, clean up the gas stream, liquefy it, load it onto an LNG tanker, and sail it across the seas to Tokyo Bay. Only then would his number mean anything.Resources in the ground are not commodities. They are potential—nothing more. Converting that potential into a tradable product requires work, technology, time, and enormous investment, none of which are free. People love to wave around “reserves” as if they were stacks of cash sitting in a vault, but reality is far less forgiving.