An oil fund without oil. The divestment of all petroleum companies would be a momentous change for Norway’s huge $1tn investment fund, itself fuelled by the country’s oil and gas revenues. But the recommendation last month from the world’s largest sovereign wealth fund that it sell its oil and gas stocks is forcing top Norwegian policymakers to grapple with the question of what the fund and the country wants to stand for. Officials say there is a good chance that the proposal could be delayed, even shelved. But they also say that there is a discussion coming that policymakers cannot avoid. “I think the government will try to park this discussion. But they can’t avoid it forever because Norway will still be massively exposed to the oil price. What is Norway about? What is the fund going to be?
This debate is coming one way or the other,” said a senior Norwegian official. Strikingly, the oil fund’s advice for it to be allowed to sell out of petroleum stocks was grounded not in climate change arguments but financial ones. The fund owns about NKr320bn ($39bn) of oil and gas stocks, compared with the NKr350bn value of Norway’s stake in Statoil and about NKr4,000bn in petroleum still in the ground. The fund’s own research found it could reduce Norway’s sensitivity to oil prices by selling petroleum stocks, without reducing returns. “Our results hence indicate that it might be beneficial for an investor that already has substantial oil price exposure outside their financial portfolio, not to add to this exposure by investing in oil and gas stocks,” the fund said.