Private investors are putting more and more money into oil and gas
In February of this year, The Guardian exclusively released a report by two nonprofits detailing the participation of the world's largest private equity firms in the oil, gas and coal industry.
Referred to as "the dirty dozen of private equity," the report featured the names of giants such as KKR, Carlyle Group, Blackstone and others. It was an example of the rapidly evolving new trend in naming and shaming that had sprung up on social media but has clearly found fertile ground in traditional media as well.
Now, as the Wall Street Journal reports, private equity firms must convince investors that there is still money to be gained in the oil and gas sector. Some companies, the report reads, "have sent investors articles, reports and presentations highlighting the importance of oil and natural gas in the transition to renewable energy." This effort comes as investors continue to invest less money in fossil fuels ”. evidently the strong profits of the sector are not enough….
The reason why investors are betting less on fossil fuels is the energy transition. With company after company, including energy majors and Big Oil, committing to net zero, and with institutional investors saying they want to dump their oil and gas holdings, it's not hard to understand. because investors are becoming wary of the fossil fuel industry.
The countryside is also strong. Recently, the president of the Church of England Pensions Board was targeted for holding onto shares in Shell, where he worked in the past. The Church of England itself has come under criticism for not divesting its holdings in oil and gas, unlike a couple of other British churches.
Recently, Reuters reported that an Australian pension fund divested $ 133 million of investments in oil, gas and coal. Of course, the most important news was that of the Norwegian sovereign fund which, a couple of years ago, declared its intention to divest its holdings in the oil and gas sector, even if many missed the detail: the fund only intended to divest E&P activities, keeping the integrated oil and gas companies in the portfolio.
Overall, however, there was a clear trend out of the oil and gas sector, at a time when their reputations quickly crumbled and report after report blamed a single sector for all the negative effects. human activity on climate.
No wonder, in such a context, investors think twice about where to put their money. For some, it's about being environmentally responsible – the trend in ESG investing isn't just on paper. For others, the question is much more pragmatic: oil and gas continue to make money in the long run.
According to the WSJ, oil and gas advocates currently have an easy time convincing investors of the value of investing. The arguments focus on renewables and the fact that they cannot be introduced fast enough and on a scale to make oil and gas obsolete. An important help is given by the current energy crisis gripping Europe, which has pushed the continent to significantly increase the consumption of fossil fuels.
Some have noticed. They also noted how quickly – much faster than expected – oil demand has recovered after the Covid blockades. They also noted that it returned to growth despite BP predicting demand to peak in 2019. And then BlackRock said in May of this year that it would vote against climate resolutions because they were becoming too extreme or prescriptive. .
According to a recent article by Mike Preston, partner of Cleary Gottlieb, published on Energy Voice, private equity investments in the oil and gas sector are increasing. He said that, with oil and gas prices soaring over the past year, investments in the sector have also increased, and are still growing.
While committed to achieving the "net zero" target in its portfolio by 2050, Vanguard doubled investment in fossil fuel projects and refused to end support for coal, oil and gas production, citing the its fiduciary duty to maximize investment returns, ”Preston noted as an example.
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The article Private investors are putting more and more money into oil and gas comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/investitori-privati-mettono-sempre-piu-denaro-nel-petrolio-e-nel-gas/ on Sat, 20 Aug 2022 22:51:55 +0000.