Norwegian sovereign wealth fund jettisons oil companies

The Norwegian government has decided to exclude oil companies from the country's sovereign wealth fund "to reduce the vulnerability of the common wealth to a permanent oil price decline", says Norwegian finance minister Siv Jensen.

Photo: Rune Kongsro

The Norwegian government now takes the consequence of the declining oil price and has decided to exclude several oil companies from its sovereign wealth fund, writes the government in a press release.

Specifically, upstream exploration and production oil companies will be excluded from the fund's investments to reduce national economic risk caused by oil price fluctuations.

"The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline. Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector", says the Norwegian Minister of Finance, Siv Jensen, in the press release.

The exploration and production companies will be phased out from the fund gradually over time, and plans will be prepared in consultation with Norges Bank, after the Storting’s deliberation of the white paper, says the press release.

The decision is based on the advice and assessments of Norges Bank and an expert group, as well as the public consultations of these. Back in 2017, Norges Bank Finansdepartementet pointed to the vulnerability of the sovereign wealth fund, and thereby the aggregate national wealth, in the event of a declining oil price.

According to business daily Dagens Næringsliv, however, the government only chose to exclude 20 percent of the oil companies recommended by the central bank and expert panel, and the large, integrated oil outfits such as ExxonMobil, BP and Shell did not make it to the divestment list.

134 companies will be impacted by the decision. In 2018, these firms had a total market value of NOK 70 billion (EUR 7.09 billion), while the central bank and panel recommended the exclusion an energy sector commercial pool worth NOK 340 billion.

English Edit: Daniel Frank Christensen

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