Norway’s $1tn fund to cut oil and gas investments

The government intends to make the fund less vulnerable to a permanent drop in oil prices

Norway’s sovereign wealth fund, worth $1 trillion (£0.76tn), is expected to sell stocks in oil and gas exploration companies.

The government is proposing to sell companies which explore and produce oil and gas, with the aim to “reduce the vulnerability of our common wealth to a permanent oil price decline”.

Companies classified as exploration and production companies by the index provider FTSE Russell will be excluded from the Government Pension Fund Global’s (GPFG) benchmark index and investment.

The fund owns billions of dollars of shares in oil companies such as BP, Shell and Total.

The government does not plan to sell shares in the state’s Direct Financial Interest (SDFI) or in Equinor in order to reduce the state’s oil price risk.

It said in a statement: “The oil industry will be an important and major industry in Norway for many years to come. The state’s revenues from the continental shelf are, as a general rule, a consequence of the profitability of exploration and production activities. Therefore, this measure is about diversification.

“Exploration and production companies will be phased out from the Fund gradually over time and plans will be prepared in consultation with Norges Bank, after the Storting’s deliberation of the white paper, published today.”

Finance Minister Siv Jensen added it is anticipated almost all of the growth in renewable energy over the next decade will be driven by companies that do no have renewables as their main business – and the fund should be able to participate in that growth.

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