Norway wealth fund to drop oil, gas stocks

Norway wealth fund to drop oil, gas stocks”

Norway's sovereign wealth fund will drop oil and gas companies from its trillion-dollar investment index in a decisive blow against the fossil fuel industry.

After more than a year of deliberation, the government on Friday approved excluding 134 companies classified as exploration and production companies by FTSE Russell, including Anadarko Petroleum Corp., Chesapeake Energy Corp., Cnooc Ltd. and Tullow Oil Plc.

The country's wealth fund - built with the revenues of its oil and gas production - will gradually sell some US$8-billion in shares of exploration and production companies, but keep its holdings in integrated firms that have both production and refining which total more than US$20-billion.

Although the decision focuses on upstream oil and gas companies, not large integrated groups such as BP and Shell, shares in some of the world's largest oil companies fell in reaction to the news. Articles appear on for a limited time. In total, the shift in strategy will affect about 1.2% of the fund's holdings.

However the finance ministry said the divestment does not reflect any specific view on oil price, future profitability or sustainability of the sector.

The Norwegian Government Pension Fund Global is to sell out of more than 160 companies, among them Swedish oil producer Lundin. The country's sovereign wealth fund was built up using wealth from Norway's hydrocarbon production, and as of past year had around $37bn invested in oil and gas stocks.

The partial move underscores the changing political climate in Norway, where opposition to oil and gas exploration is on the rise.

At the end of 2018, the fund's equity investments were split between the financial sector (23.7%), industrial companies (12.9%), technology (12.6%), consumer goods (11.9%), healthcare (11.4%), consumer services (10.8%), oil and gas (5.9%), basic materials (5.0%), telecoms (3.0%) and utilities (2.8%). Finance Minister Siv Jensen is expected to present the government's position at a press conference at 12:15 pm (1115 GMT).

Sony Kapoor, managing director of the think tank Redefine, said diluting the central bank's plan "represents a victory of Big Oil lobbying over financial prudence and common sense".

But if you make all your money out of producing and selling oil and gas, putting your savings in oil and gas is not very sensible.

Norway has already converted a large portion of its oil and gas resources into diversified wealth overseas, and most of its remaining resources will be extracted in the next decade, meaning its oil price risk is "historically low and declining".

The government goes part of the way in meeting a 2017 proposal from the fund, which rattled global markets by arguing for a full divestment of the sector to limit Norway's overall exposure to oil.

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