Norway's $1T fund to dump oil and gas shares

A KNOT oil tanker sails past a refinery in the Norwegian fjords

Norway's $1tn Wealth Fund to Dump Oil Shares Hand Over Rigs to Big Oil Firms Sputnik Demond Cureton

By Mikael Holter Norway took a half step toward divesting oil and gas stocks in its massive $1 trillion wealth fund, approving the sale of pure exploration companies while sparing the biggest integrated producers.

The government of Norway, the biggest oil and gas producer in western Europe, said it was specifically targeting exploration and production companies, "rather than selling a broadly diversified energy sector".

"The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline", Finance Minister Siv Jensen said in a statement.

Norway has watered down plans for its sovereign wealth fund to shun investing in all oil and gas companies, announcing that it will boycott only pure oil explorers.

Companies involved in downstream operations, such as distribution and refining, and, more importantly, integrated companies which do both down- and upstream - such as giants ExxonMobil, Shell, BP and Total - will not be affected. Articles appear on for a limited time.

Grant and others said the Norwegian government, perhaps as a political compromise, was dumping the oil companies in the fund that had the greatest perceived risk because they were focused on fossil fuels, while encouraging those that remained to invest more in renewables. "This assessment is thus independent of the government's current petroleum policy, which remains unchanged", the government said.

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The government insists oil will continue to be an "important and major industry in Norway for many years to come".

The government said it would exclude companies classified as exploration and production companies from the fund. These include Cairn Energy Plc, Anadarko Petroleum Corp., Chesapeake Energy Corp., Cnooc Ltd. and Tullow Oil Plc. "This partial divestment from oil and gas is welcome, but not enough to mitigate Norway's exposure to both global oil and gas prices and the wider financial ramifications of climate change", he told The Guardian. "It's not a debate about climate, it's about financial risk".

Jensen did, however, say Norway was looking to capitalize on expected growth in renewable energy.

The government goes part of the way in meeting a 2017 proposal from the fund, which rattled global markets by arguing for a full divestment of the sector to limit Norway's overall exposure to oil.

On Friday oil prices dropped more than three per cent amid a worsening economic outlook, as the European Central Bank (ECB) warned of continued weakness and new data reported that US job growth almost stalled in February. So reinvesting those proceeds in other sectors is considered a way to keep the money safe should oil and gas prices fall.

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