Norway's oil fund wants to divest from ... oil

Norway's oil fund wants to divest from ... oil

Norway's oil fund wants to divest from ... oil

It invests Norway's revenues from oil and gas production for future generations in stocks, bonds and real estate overseas.

Matsen said the decision does not reflect a particular view on energy prices or the sustainability of the sector. Oil and gas are seen as increasingly risky investments as more countries turn to cleaner energy sources in order to meet requirements under the Paris climate agreement, which aims to keep global warming under two degrees Celsius above pre-industrial levels. In periods of stable oil prices, the returns on oil and gas stocks have largely moved in tandem with the broad equity market.

"Our perspective here is to spread the risks for the state's wealth", Egil Matsen, the deputy governor at the central bank in charge of overseeing the fund, said in an interview in Oslo on Thursday. The government, which also controls Statoil ASA and offshore oil and gas fields, was forced to withdrew cash from the fund for the first time a year ago to meet spending commitments after oil prices dropped.

In addition to its holdings via the fund, Norway has exposure to oil and gas via large untapped offshore hydrocarbon reserves, as well as its 67 per cent stake in the national oil company, Statoil. The wealth fund, which controls about 1.5 percent of global stocks, proposes dropping %37 billion of shares in worldwide giants such as BP, Exxon Mobil Corp., Royal Dutch Shell Plc. and other holdings. Norges Bank Investment Management is the part of the Norwegian central bank responsible for managing the fund.

"That would mean buying more stocks in the oil and gas sector", said Matsen.


Government finances in Norway have been hit hard by the drop in oil prices in recent years. Green campaigners also welcomed the news.

"This is astonishing - as astonishing as the moment when the Rockefellers divested the world's oldest oil fortune", said Bill McKibben, founder of the 350.org campaign group. "We can do that better by not adding oil-price risk". "The straight answer is that all other sectors would be weighted up in proportion". The finance ministry said it would study the plan and decide at the earliest in "autumn 2018".

At the end of 2016, the fund's equity investments were split between investments in the financial sector (23.3 per cent), industrial companies (14.1 per cent), consumer goods (13.7 per cent), consumer services (10.3 per cent), healthcare (10.2 per cent), technology (9,5 per cent), oil and gas (6.4 per cent), basic materials (5.6 per cent), telecoms (3.2 per cent) and utilities (3.1 per cent).

"It's great to have that luxury, isn't it?" "You make all your money from one asset class and then you sell your holdings".

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