Subject to parliamentary approval, the move is to protect the Scandinavian country’s economy to oil price falls.

Norway’s Government Pension Fund Global, which is the world’s largest sovereign wealth fund, owns $37bn of shares in oil companies, such as BP, Shell and France’s Total and manages $1trn of the country’s assets. 

It has announced it plans to phase out oil explorations from its “investment universe”.

The finance ministry added in a statement: “The oil industry will be an important and major industry in Norway for many years to come.”

But it added that “a permanent reduction in oil price will have long-term implications for public finances”. 

The country has also been under pressure to sell its holdings in the oil and gas sector for environmental reasons. 

It said it will retain stakes in fossil fuel companies if they have some involvement in renewable energy.

Norway is the biggest oil and gas producer in western Europe.