Norway’s trillion-dollar sovereign wealth fund is to sell its oil and gas stocks in a move that is likely to have far-reaching implications for the energy sector.
The world’s largest fund holds $37 billion (£28.3 billion) in oil and gas holdings and the move sent shares in oil giants BP, Royal Dutch Shell lower on Friday. The fund has a $6 billion (£4.6 billion) stake in Shell alone.
In a statement, Norway’s finance ministry said: “The Government is proposing to exclude companies classified as exploration and production companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy.”
It maintained that the oil industry will be an “important and major industry in Norway for many years to come” and that the measure was about diversifying its fund to make it less vulnerable to a permanent fall in the price of oil.
The sell-off in oil stocks will be “phased out from the fund gradually over time”.
Norway has the largest oil industry in Western Europe, and it accounts for about 20% of the country’s output.
The proposal was first revealed two years ago when Norges Bank, the country’s central bank which manages the fund, advised the Government to exclude the oil and gas sector from the benchmark index for the fund.
The move is likely to ramp up pressure on both investors to diversify away from oil stocks, and oil firms to produce cleaner energy to tackle climate change.
Charlie Kronick, oil campaigner for environment group Greenpeace UK, said: “This partial divestment from oil and gas is welcome, but not enough to mitigate Norway’s exposure to both global oil and gas prices and the wider financial ramifications of climate change.
“However, it does send a clear signal that companies betting on the expansion of their oil and gas businesses present an unacceptable risk, not only to the climate but also to investors.”