Capital discipline, buybacks and dividends will persist in 2023 amid varied political and economic uncertainties surrounding Russian President Vladimir Putin’s ongoing war in Ukraine.

That’s the common message permeating from the boardrooms of big energy players such as Exxon Mobil Corp. and Chevron Corp. in North America and BP Plc and Shell Plc in the U.K., as well as Spain’s Repsol, Italy’s Eni and France’s TotalEnergies.

A similar sentiment is shared by most independents and small-to-medium sized companies—and not only in the upstream sector.

The start of the Russia-Ukraine war further disrupted global supply chains that were still recovering from COVID-19. U.S. bans on Russian oil imports and other energy commodities and moves by European countries to reduce their reliance on Russian oil and gas, coupled with Moscow’s decision to reduce energy exports to Europe, set off a global energy crisis, stoked inflation and pumped the brakes on global economic growth—just as world economies were looking to put the worst of the pandemic behind them.

At the governmental level, what is certain in 2023 is that the U.S. and its allies will continue to stand with Ukraine, keeping energy security a topical issue not only in Washington but around the world as well as countries continue to grapple with energy security—and will for the unforeseeable future, even as the LNG sector elevated its game last year and was seen as the preferred energy source in the U.K. and Europe.

U.S. and European leaders aren’t alone; Beijing and New Delhi are also dealing with energy security headwinds. The Russia-Ukraine conflict saw China and India, the world’s most populated countries, turn increasingly to coal, which led to elevated greenhouse-gas emissions. Even Germany was forced to turn to coal amid the incorporation of floating LNG facilities.

This year, global gas and LNG markets are expected to evolve as market dynamics point to a structural change, Shell reported in February in its “LNG Outlook 2023.” Importantly, the company said “continued volatility [is] expected in the near term … [as] the global LNG market is expected to remain tight and exposed to supply and demand shocks, with limited new supply coming online. 

More investment in supply will be needed to meet future LNG demand.”

The uncertainties in 2023 are varied and complicated but some in key markets warrant heightened vigilance. 

The U.S.’ plan to boost production could meet resistance as a “value over volume” proposition starts to gain pace. Likewise, the U.S. can’t immediately bring on liquefaction capacity over the near term, even as Europe and an awakening China boost demand for LNG. 

Last year’s energy crisis in Europe, including the U.K., pushed LNG imports to 121 million tonnes in 2022, up 60% compared to 2021, according to Shell, as lower demand in China and high gas prices in South Asia allowed Europe to pull in more cargoes. This year will likely be different, and many governments are already fixated on next winter.

A decision by China’s President, Xi Jinping, to walk back a zero-COVID policy is likely to translate into higher domestic demand for oil, gas, LNG, gasoline and jet fuel. The pace of China’s economic recovery will depend on COVID infection rates, and energy pundits fear a spike in cases in the first half of 2023, but China is still an attractive market for energy.

Surging LNG prices pushed India to consume more coal in 2022. With gas and LNG prices in retreat and sanctioned Russia looking for other energy markets, India looks like a good candidate to receive more Russian energy. 

Certainly, China and India are pondering their options around Russian energy.

The likely biggest wildcard this year surrounds Putin’s ability to continue to wage war in Ukraine as the U.S. and its allies boost military equipment deliveries to Ukraine.

Putin’s invasion of Ukraine seemingly crashed an energy transition party that was starting to gather momentum. The conflict reminded the world that renewables still have a way to go and fossil fuels will remain in demand for decades to come. 

Europe’s earlier decision to keep all its eggs in Putin’s energy basket wasn’t a good one. And Europe’s pivot to the U.S. to replace Russian energy, primarily gas, while a good decision for now, may not be the best over the longer term. 

The most certain thing to do this year is prepare for more uncertainties.