“The barrier to many Gulf Coast L.N.G. projects hasn’t been government permitting but the lack of financial backing,” said Jason Bordoff, a founding director of the Center on Global Energy Policy at Columbia University. “But the Europeans sent a signal that they intend to sign more long-term contracts for L.N.G. supply, so this should help those projects reach final investment decisions.”
It isn’t only the financial backers that have been reluctant to fund new exploration and production. Shareholders have been demanding a bigger piece of the profits after years of lousy investment returns on energy funds. A typical investor who bought an energy stock fund five years ago would only recently have broken even, according to Morningstar Direct. So the energy industry has been focusing on shareholder returns rather than pouring profits back into its businesses, a strategy the markets refer to as capital discipline.
“Capital discipline isn’t just about which fields you’re going to drill,” said David Lebovitz, a global market strategist at J.P. Morgan Asset Management. “The new approach is going to the profitable fields and drilling five to seven wells, rather than 10. If you’re an energy company, you don’t want to overwhelm the world with oversupply.”
Russia-Ukraine War: Key Developments
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Missile attack. A missile strike at a crowded train station in eastern Ukraine killed at least 50 and wounded nearly 100, according to Ukrainian officials, who blamed Russia for hitting a major evacuation point for those trying to flee before an expected stepped-up offensive.
In the city of Mariupol. More than 5,000 people have died in the southeastern city since the start of the war, according to the city’s mayor. President Volodymyr Zelensky warned that Russia could try to stage scenes to make it look as though Ukrainian forces had killed civilians.
Peace talks. Hope for progress dimmed after Russia’s foreign minister said the Ukrainian side had proposed a new draft deal that deviated from previous versions. Belarus further complicated the situation by demanding to be included in the negotiations.
In the portfolios Mr. Maloney manages for clients, he includes the Vanguard Energy exchange-traded fund. This $8.3 billion fund had returns of 39 percent in the first quarter after a management fee of 0.1 percent. Exxon and Chevron are the top two holdings, with a combined weighting of 38 percent. Exxon’s shares grew 36.5 percent in the first three months of the year; shares of Chevron rose 40.1 percent.
Chevron has paused sales of certain chemicals and consumer products in Russia and says it does not have exploration or production operations there. It has a 15 percent stake in an oil pipeline that transports crude oil from Kazakhstan to a Russian terminal on the Black Sea, where shipments have continued uninterrupted. There, Kazakh oil can be blended with Russian crude, though Chevron has said its “efforts are carried out in compliance with U.S. law.”
Exxon, which has done much more business in Russia, announced on March 1 that it was leaving the country and would not make further investments there, “given the current situation.” It had been operating a major exploration project in Russia’s Far East known as Sakhalin-1.
Article source: https://www.nytimes.com/2022/04/08/your-money/mutual-funds-and-etfs/energy-funds-russia-oil.html
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