OSLO: The world’s biggest sovereign wealth fund, which derives its $1 trillion in assets from oil and gas revenues, is bailing out of oil and gas stocks.
The decision by the Norwegian fund paves the way for a huge divestment in the likes of Royal Dutch Shell and Exxon Mobil.
The fund, which derives its income from the country’s own oil and gas industry, has $6 billion tied up in Royal Dutch Shell alone.
Finance Minister Siv Jensen said in a statement that he decision was meant to “reduce the vulnerability of our common wealth to permanent oil price decline”.
The fossil fuels industry accounts for half of the exports and 20% of the GDP of Norway, which has a population of 5.3 million.
While the decision by Oslo is based solely on financial considerations and not on the environment or climate change, a divestment by an investor worth more than $1 trillion will undoubtedly be seen as a major blow to polluting fossil fuels.
The government said it would exclude companies classified as exploration and production companies from the fund.
The decision follows a recommendation made the central bank in 2017.
The revenue from state-owned oil and gas companies is placed in the Government Pension Fund Global — as it is officially known — which Oslo then taps to balance its budget.
At the end of 2018, the fund had holdings worth around $37 billion in the oil sector, with significant stakes in Shell, BP, Total and ExxonMobil among others.
The decision “does not reflect any specific view on the oil price, future profitability or sustainability of the petroleum sector. This assessment is thus independent of the government’s current petroleum policy, which remains unchanged”, the government said.
