Global infrastructure: a more resilient way to invest in energy?

This is where listed infrastructure – particularly energy infrastructure – appears most compelling.

Why infrastructure matters in volatile energy markets

Within global listed infrastructure, energy sits alongside utilities and transport as one of the three core pillars of the asset class. But unlike broad energy equity indices, infrastructure strategies approach the sector differently.

Rather than focusing on upstream exploration or downstream refining, infrastructure equity investors typically concentrate on the midstream segment of the energy value chain – the transportation, storage, and distribution of energy resources.

These assets sit at the heart of the global energy system. Pipelines, storage facilities and associated networks are essential to economic activity, regardless of where commodity prices move next. Crucially, they are characterised by long asset lives, strong market positioning, and business models that prioritise stability over growth.

For investors, that distinction allows them to retain energy exposure while reducing some of the cyclicality that typically defines the sector – a sizeable benefit in the current climate.

Why midstream stands out

Midstream energy infrastructure is different from traditional energy equities in several important ways.

First, revenues are typically built on long-term contracts. Pipeline operators earn fee-based income through multi-year transportation and storage agreements, often underpinned by take-or-pay provisions. This significantly reduces exposure to swings in commodity prices.

Second, cash flows tend to be less sensitive to energy price volatility. Unlike upstream producers or refiners, midstream companies are paid per volumes moved, not the price of the underlying commodity. As long as energy continues to flow through the system, revenues remain comparatively stable.

Third, these assets are essential infrastructure with consistent demand. Pipelines form the backbone of modern energy systems. Hydrocarbons continue to be delivered to power plants, industries, and homes even when prices fall or economic growth slows, which helps maintain consistent usage levels.

Fourth, revenue models are often regulated or contractually defined, providing greater predictability of future earnings. For long-term investors, that visibility can be a valuable anchor in uncertain markets.

Finally, midstream businesses typically face lower operational and capital risk than other parts of the energy value chain. They are not exposed to geological risk in the same way as upstream producers, nor to margin compression driven by refining spreads. The result is a more stable operating profile.

Taken together, these features help explain why midstream infrastructure has historically offered a more defensive way to access energy-related returns.

What does this mean for investors?

For investors navigating volatile markets, midstream infrastructure can play several roles in a portfolio.

At a high level, it offers a way to retain exposure to energy without taking a direct view on oil prices. That can be particularly valuable when geopolitical risks are elevated.

Predictable cash flows also support potential income generation. Because revenues are more stable, many midstream companies can return capital through regular dividends, underpinned by contracted earnings.

Importantly, energy infrastructure is not just about defensive investing. Its essential role means it is often an indirect beneficiary of long-term structural trends. Natural gas infrastructure, for example, continues to play a critical role in power generation and grid stability. Demand is reinforced by energy-intensive growth areas such as data centres and digital infrastructure.

Midstream in practice: Williams Companies

An example is Williams Companies, which operates critical energy infrastructure across the US, transporting natural gas and petroleum products through an extensive pipeline network. Its assets move roughly one third of US natural gas, making the company a core component of the country’s power generation system.

Demand for its services is underpinned by long-term structural needs rather than short-term price movements. The company also stands to benefit from rising electricity demand linked to the new energy-intensive digital economy.

From an investment perspective, we believe Williams combines strategic advantages with a visible growth pipeline. A backlog of contracted pipeline expansions and power-related projects would appear to underpin earnings visibility well into the future.

Most importantly, the company’s cash flows are highly predictable. Long-term, contract-driven revenues mean customers pay regardless of volumes moved. This should help support stable dividends and help reduce downside risk during periods of market stress.

Final thoughts…

Energy markets are unlikely to become less volatile any time soon. For investors, the challenge is not avoiding that reality but finding ways to navigate it more effectively.

Midstream energy infrastructure offers a differentiated approach. By focusing on essential assets with contracted revenues and lower sensitivity to commodity prices, it can provide a more resilient way to access the energy theme.

In an environment shaped by geopolitical uncertainty, volatile oil prices and rising demand for reliable power, that combination of stability, income potential and long-term relevance remains compelling.

Company selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.