Norway: Sovereign Wealth Fund is planning to get out of oil
Norges Bank Investment Management, which runs Norway’s $1tn oil fund, has recommended that the sovereign wealth fund ditches its investments in oil and gas stocks.
The finance ministry said it would present its conclusions in the autumn of 2018.
For nearly three decades, Norway has been putting surplus revenues from its oil and gas production into a sovereign wealth fund.
The advice constitutes the next major step in scrubbing the world’s biggest wealth fund of climate risk after it largely sold out of coal stocks. Norway depends on the oil and gas industry for about 20% of its economic output.
At the end of 2016, the fund held stakes of 2.3 percent in Royal Dutch Shell, 1.7 percent of BP, 0.9 percent of Chevron and 0.8 percent of Exxon Mobil. It also has shares worth more than $1bn in oil services firm Schlumberger and Italy’s Eni, whose share price slumped 0.86%.
The fund was built on the back of Norway’s hydrocarbon wealth, and around 300bn krone (£27.73bn), or 6%, is invested in oil and gas companies. At the end of the third quarter, Royal Dutch Shell was the fund’s third-biggest equity investment at more than $5bn. However, it made clear that its recommendation involved divesting from existing oil and gas shares as well as ruling out future investments.
“It clearly stands out, perhaps not surprisingly, but not obviously, that indeed there is a substantial difference.in return between the oil and gas sector and the broad stock market in periods when the oil price changes substantially”, Matsen said. Green campaigners welcomed the news.