March 8, 2019 Read More →

Norway’s $1tn wealth fund to divest from oil and gas exploration

The Guardian:

The world’s largest sovereign wealth fund, which manages $1tn (£770bn) of Norway’s assets, is to dump investments in firms that explore for oil and gas but will still hold stakes in firms such as BP and Shell that have renewable energy divisions.

The Government Pension Fund Global (GPFG), whose assets exceed those of rival sovereign wealth funds such as China’s, said it would phase out oil exploration from its “investment universe”.

The strategy shift, on the back of advice from the country’s central Norges Bank, will affect 1.2% of its equity holdings, worth about 66bn Norwegian krone (£5.7bn).

GPFG said the decision was motivated by a desire to protect the Norwegian economy by reducing exposure to oil price falls rather than climate concerns.

It will retain stakes in fossil fuel companies as long as they have some involvement in renewable energy. Its stakes in large firms with renewable units include 2.4% of Shell and 2.3% of BP, because it believes they will play a major role in developing green energy.

It will sell stakes in 134 companies, including UK-listed firms Tullow Oil, Premier Oil, Soco International, Ophir Energy and Nostrum Oil & Gas, all of which experienced a fall in share price after the announcement, knocking £130m off their combined stock market value.

Tom Sanzillo, director of finance for the Institute for Energy Economics and Financial Analysis, said: “These are very important statements from a big fund. They’re doing it because fossil fuel stocks are not producing the value that they have historically.

“It’s also a warning to the integrated oil companies that investors are looking at them to move the economy forward to renewable energy.”

He said GPFG’s investment strategy also “underscores that the fracking business model is unsustainable”.

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