World’s largest sovereign wealth fund in Norway to dump oil stocks
“The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline,” the Finance Ministry said, announcing the decision on Friday.
It noted that the move is aimed at diversification and that the oil industry will remain a “major industry in Norway for many years to come.” However, the statement noted that permanent reduction in the crude prices “will have long-term implications for public finances.”
Norway is one of western Europe’s biggest oil and gas producers. The sovereign wealth fund, known officially as the Government Pension Fund, owns around $40 billion of shares in oil companies such as BP, ExxonMobil and Chevron.
The integrated companies like Royal Dutch Shell and Exxon Mobil are not to be caught in the sellout, according to Reuters, while one of Europe's leading independent oil and gas companies Cairn Energy, UK-based Tullow Oil and Premier Oil, in which the fund held stakes totaling $100 million, are to be excluded.
The ministry’s decision which was earlier backed by the country’s central bank, is still not the final word. It is now to be debated in the Norwegian parliament before going ahead.
The move might send shockwaves through the energy sector, and stocks in energy companies, already stricken by lowering crude prices, extended their losses following the announcement. Meanwhile, Stoxx Europe 600 Oil & Gas index plunged around 1.3 percent.
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