Financial and Monetary Systems

Norway's Central Bank has recommended oil and gas holdings are removed from its sovereign wealth fund

Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area where Tidelands Oil Production Company, which is owned by Occidental Petroleum Corporation (Oxy), operates near Long Beach, California July 30, 2013. Occidental Petroleum posted a smaller-than-expected quarterly profit on Tuesday, hurt by lower oil prices in the Middle East and North Africa, where the fourth-largest U.S. oil company is considering an exit. REUTERS/David McNew  (UNITED STATES - Tags: ENERGY BUSINESS)

Norway's bank is dropping its holdings on oil and gas to make the government's wealth less vulnerable. Image: REUTERS/David McNew

Thomas Colson
Digital Fellow, Business Insider

Norway's central bank has recommended that the Ministry of Finance remove oil and gas holdings from its $1 trillion (£760 billion) sovereign wealth fund – a move that could have significant consequences for the sector.

In a letter to the Ministry of Finance on Thursday, Norges Bank recommended the removal of oil and gas stocks from the Government Pension Fund Global (GPFG). The fund, which was built on the back of Norway's oil wealth, has approximately £27.73 billion, or 6%, invested in oil and gas companies.

Image: Statista

The bank said the move would make the government's wealth less vulnerable to a permanent drop in oil and gas prices.

"The return on oil and gas stocks has been significantly lower than in the broad equity market in periods of falling oil prices," said the bank in a statement.

"Therefore, it is the Bank's assessment that the government's wealth can be made less vulnerable to a permanent drop in oil prices if the GPFG is not invested in oil and gas stocks."

"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," said Deputy Governor Egil Matsen.

The fund has holdings in firms including Shell, ExxonMobil, Chevron, and BP.

Mindy Lubber, president of sustainable investment non-profit Ceres, told Bloomberg: "This is an enormous change. It’s a shot heard around the world."

The proposal continued to shake equity markets on Friday morning, with the Stoxx Europe 600 Oil and Gas index down 0.17% in early trading. Shares in Shell B, Exxon, BP, were also down.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Stay up to date:

Oil and Gas

Related topics:
Financial and Monetary SystemsNature and Biodiversity
Share:
The Big Picture
Explore and monitor how Oil and Gas is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Beyond promises: Why COP29 must secure a $1trn climate finance goal for global action

Debbie Hillier

November 5, 2024

Bridging the Divide: Private Markets and New Drivers of Value Creation

About us

Engage with us

  • Sign in
  • Partner with us
  • Become a member
  • Sign up for our press releases
  • Subscribe to our newsletters
  • Contact us

Quick links

Language editions

Privacy Policy & Terms of Service

Sitemap

© 2024 World Economic Forum