Government Pension Fund of Norway meets resistance on the plans to drop its oil and gas assets

August 26, 2018 7:10 amComments Off on Government Pension Fund of Norway meets resistance on the plans to drop its oil and gas assetsViews: 12

NorwayThe Government Pension Fund of Norway, worth 1 trillion USD, meets resistance on the plans to drop its 40 billion USD oil and gas assets. A commission appointed by the government published its recommendation against such sale. According to it, such a measure would have little effect on protecting Norway from the cheaper prices of “black gold”, and will also change the successful investment philosophy of the fund.

“This investment strategy is simple, with a good foundation and serves the fund well”, said the report of the three-member committee. By selling the energy shares, the fund returns might be affected negatively.

The government is expected to make its own assessment of the issue before its discussion with the Parliament. But according to Finance Minister Siv Jensen, the report, as well as the advice of the Fund and the round of public consultations, “provide a solid basis for decision-making”.

The world’s largest sovereign fund was surprised by the markets after the end of last year proposed to cut its shares in the oil and gas sector. Since then, the opposition in the Norwegian Parliament has signaled that it could support the plan, and the conservative minority government has not yet come up with a firm stance.

In its November proposal, the Fund states that Norway as a whole is excessively exposed to the volatility of the “black gold” price as the largest European exporter and investor in the industry. Withdrawing the gas and oil stocks will make the country less vulnerable to a possible “steady decline” in prices.

The largest Norwegian party, the opposition Workers’ Party, said it still remains positive about the Fund’s recommendation but will wait for the government’s analysis before it takes a final decision.

The news of the commission’s decision is another success story for oil activists after the fund said on Tuesday it had added 1.8% to its second-quarter earnings, helped in part by 13% return on oil and gas assets. The Fund holds 6.2% of its capital portfolios in gas and oil companies, which at the end of June equals 41 billion USD.

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