Norway's pension fund could cut billions in oil stocks to spread risk

17 November, 2017, 02:04 | Author: Lora Ball
  • Norway’s sovereign wealth fund to disinvest from oil and gas   
  

by Gavin Hinks

The advice constitutes the next major step in scrubbing the world's biggest wealth fund of climate risk after it largely sold out of coal stocks.

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 USA dollars), according to the bank.

Deputy Governor Egil Matsen said: "This advice is based exclusively on financial arguments and analyses of the government's total oil and gas exposure and does not reflect any particular view of future movements in oil and gas prices or the profitability or sustainability of the oil and gas sector". The government, which also controls Statoil ASA and offshore oil and gas fields, was forced to withdrew cash from the fund for the first time previous year to meet spending commitments after oil prices dropped.

The sovereign wealth fund, fuelled by the state's oil revenues which have dropped sharply in recent years, is now worth around 8.24 trillion kroner (854 billion euros, $1 trillion), invested primarily in shares (65.9 percent) as well as bonds and real estate.

Now, the fund is planning to dump oil and gas stocks.

"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".

Europe's index of oil and gas shares hit its lowest level since mid-October on the news and was trading down 0.39 percent at 16.41 GMT. The Finance Ministry said it will study the proposal and make a decision "in the fall of 2018" at the earliest. Norway's fossil-fuel investments are coming under increasing scrutiny from a public that aims to be a climate leader without jeopardizing one of the world's highest standards of living.

Norwegian oil Norges Bank Norway oil and gas fossil fuels
Norwegian oil platform under construction

The fund has doubled in value over the past five years and was given the go-ahead in 2017 to boost its stock holding to 70% of its portfolio to help drive returns.

The oil and gas sector accounts for 5.5 percent of its equity investments.

"The risk for the oil sector is how many investment funds will downsize their exposure to extractive industries", said Jason Kenney, oil analyst at bank Santander.

Thursday's recommendation comes at a "good time because the stock portion will now be increased to 70% and that would also mean that we would buy more oil and gas stocks", Matsen said.

"The issues raised by Norges Bank are complex and multifaceted", the finance ministry said.

"The government is responsible for the Norwegian economy in its entirety and has to adopt a broad and comprehensive approach to this question", she said.

More news: Authorities Respond to Stabbing at Mall of America

Recommended:



Popular

RATNER Out Of WONDER WOMAN 2 As Movie Plans Production Start 'Soon'
Jenkins said Ratner's removal was a "foregone conclusion" that had been settled prior to the first unconfirmed reports of an ultimatum.

Federal Bureau of Investigation data shows hate crimes appeared to drop in Wisconsin
In 2016, there were 684 anti-Jewish hate crime incidents , marking a slight increase from 664 in 2015 , the release said . The report showed a rise in crimes motivated by hatred of a religion, and a majority were against Jews and Muslims.

Trump's New HHS Nominee Is a Former Pharma Executive
Previously, he was president of Lilly USA , an affiliate of Eli Lilly, from January 2012 to January 2017. If confirmed, Azar will oversee the National Institute of Health, the CDC, the FDA and other agencies.

Get 300GB data, unlimited calling on Airtel prepaid recharge of Rs 3999
Recently Vodafone also announced a Rs 38 pack with 100 minutes of voice calls bundled alongside 100 MB data a day. The Rs 399 plan offers free local and STD calls but the applicable national roaming call charges are applicable.

Oman to attend OPEC meeting on November 30, supports oil cuts extension
Regional concerns in the Middle East include the war in Yemen and growing tensions between Saudi Arabia and Iran. Stocks were 154 million barrels above the five-year average, the excess that OPEC aims to eliminate.

Abe and Modi talk teamwork on open Indo-Pacific
Trump ratcheted up pressure on North Korea even before he met Abe, saying before a crowd of U.S. and Japanese troops at the U.S.

Moscow accuses U.S. and allies of helping ISIS to escape
Another photo was taken from a mobile game AC-130 Gunship Simulator: "Special Ops Squadron". The pictures turned out to be screenshots from a video game and old videos shot in Iraq.

Taylor Swift announces Detroit date for 'Reputation' tour
Look what we made her do, you guys. " Reputation ", which is Swift's sixth studio album, was released Friday, Nov. 10. Swift will bring her reputation Stadium Tour to town on August 28 at Ford Field.

New King of Corvettes
Two aero packages will be available for the all-new ZR1; the standard Low Wing and the two-way adjustable High Wing. Along with baseball , hot dogs, and the Fourth of July, the Chevrolet Corvette is about as American is it gets.

Dream Chaser Space Plane Passes Landing Test
The company said several hours after the test that the glide flight was a success, and would release more details November 13. It is being created to land on runways and then allow crews to access the materials flown back to Earth soon after landing.