Norway's $1T pension fund wants out of oil stocks

$1tn Norwegian oil fund plans to ditch oil and gas stocks

Norway government to conclude on potential wealth fund oil, gas divestments in 2018

Oil and gas equities now account for around 6 percent of the GPFG's benchmark index, or just over 300 billion kroner (36.6 billion US dollars), according to the bank.

Around six percent of the fund's holdings, or $37 billion, consist of oil- and gas stocks such as BP, Royal Dutch Shell and ExxonMobil. 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.

"Our advice is to simply remove the oil and gas sector, as it is defined in the FTSE reference index, from the fund's reference index", Matsen said.

McKibben compared the bank's recommendation to "the moment when the Rockefellers divested the world's oldest oil fortune" in 2014, when the heirs to Standard Oil said that if founder John D. Rockefeller were alive in the 21st century, "he would be moving out of fossil fuels and investing in clean, renewable energy".

"Our perspective here is to spread the risks for the state's wealth", Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo.

"The return on oil and gas stocks has been significantly lower than in the broad equity market in periods of falling oil prices", the bank explained in a statement. The Stoxx Europe 600 oil and gas index reversed gains after the announcement, sliding 0.4% as of 1.14pm in London.

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Norway is a major oil producer, and it has plowed its energy earnings into the fund in order to fund pensions and other government expenses. It owns owns more than $660bn-worth of shares in over 9,000 companies globally, and reached the $1tn-mark in terms of assets under management in September.

The pension fund's managers said they remain anxious about the impact of falling oil prices on overall government revenue. The fund was initially set up to invest the proceeds from Norway's oil reserves.

"This is the biggest pile of money on the planet, most of it derived from oil - but that hasn't blinded its owners to the realities of the world we now inhabit".

"That would mean buying more stocks in the oil and gas sector", said Matsen. The proposal has to be reviewed by the Finance Ministry, which in turn needs to decide whether to propose it to parliament. However, it made clear that its recommendation involved divesting from existing oil and gas shares as well as ruling out future investments.

If it backs the central bank's proposal, Parliament could vote on it in June 2019 at the earliest.

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