November 17, 2017 Read More →

Big Oil, ‘Unloved and On Sale’

Sydney Morning Herald:

Big Oil is under pressure, unloved and on sale.

Energy giants from Exxon Mobil to Royal Dutch Shell are struggling back to their feet after a three-year oil slump, while also fighting to prove they can survive for decades to come amid an accelerating shift to clean energy.

So getting dumped by the world’s biggest investment fund wouldn’t be welcome news.

Norway’s $US1 trillion ($1.25 trillion) sovereign wealth fund said on Thursday that it wants to sell about $US35 billion of shares in oil and gas companies to make the nation “less vulnerable” to a drop in crude prices.

Norges Bank Investment Management has nearly 380 investments oil and gas investments worldwide, the majority of which are in the US.

If the strategy is implemented it will have an enormous impact on the market as the fund is amongst the top ten largest institutional investors in some of the world’s largest oil and gas companies. It holds stakes worth more than US$5 billion in Shell, US$3 billion in ExxonMobil, and US$2 billion in Chevron, BP and Total.

Institute for Energy Economics and Financial Analysis director of finance, Tom Sanzillo, said the move as a reminder that ongoing low oil prices were a continued risk.

“The Norges Bank recommendation that the Norwegian Fund remove oil and gas stocks from its benchmark indexes reflects the long-term deterioration of these stocks,” Mr Sanzillo said.

“Oil and gas stocks are no longer stable providers of cash or value added contributors to institutional investment funds. The bank’s decision now incorporates the risks from these increasingly speculative investments.

More: For sale: $25 billion oil shares dumped by world’s biggest fund seek new owner

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