Norway’s wealth fund drops oil majors

14 Jun 19

Norway’s $1trn wealth fund is set to drop several oil and gas majors after its parliament made changes to the list of companies included in its portfolio.

The decision means that the Nordic country’s sovereign fund must divest itself of large US oil companies such as ConocoPhillips and Hess.

Environmental campaigners have praised the move as an example of a sovereign investor turning away from the fossil fuel industry.

“This is of course great news for Norway since this means another big egg out of the Norwegian oil basket, but other oil companies should see the writing on the wall: transform or die,” Martin Norman, sustainable finance campaigner at Greenpeace, told Reuters.

The Norwegian parliament agreed to drop dedicated oil and gas explorers and producers from the fund’s benchmark index as part of the country’s efforts to shift away from oil investments.

According to Reuters, Norway has said the decision is to reduce the exposure of the country’s wealth to the risk of a permanent drop in oil prices.

The move targets companies classified as “exploration and production” firms as defined by the stock market indices provider FTSE Russell, and the fund can still invest in companies with refineries and other downstream activities such as Royal Dutch Shell and ExxonMobil.

Norway’s sovereign fund reportedly held stakes in ConocoPhillips worth $714m by the end of 2018 plus $64m worth of bonds, and in Hess worth $102m.

In 2017 Norway’s central bank called for the fund to drop all oil and gas stocks from its benchmark index.

However, the proposal – which would have affected 6% of the fund’s holdings – was rejected by the finance ministry, which advanced alternative plans affecting just 1.2% of equity holdings.

Environmental campaigners say Norway’s decision – which also tightens rules on how the fund can invest in coal – is potentially the largest single divestment from fossil fuels ever.

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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