Norway's sovereign-wealth fund said on Thursday it may stop buying oil and gas stocks, a move that would deprive the energy sector of investment from a $1 trillion asset manager. The fund owns large stakes in most of the world's major oil companies, including a 0.92% stake in Chevron Corp., a 0.82% stake in Exxon Mobil Corp., 1.65% in BP PLC and 2.23% in Royal Dutch Shell PLC as of the end of 2016.
It also held 1.7 per cent of Italy's Eni, 1.6 per cent of France's Total and 0.9 per cent of Sweden's Lundin Petroleum, among others.
If accepted by the finance ministry and adopted by parliament, the fund would gradually divest billions of dollars from oil and gas stocks.
"The return on oil and gas stocks has been significantly lower than in the broad equity market in periods of falling oil prices", the bank explained in a statement.
The bank said its analyses of the oil price risk in the government's wealth are based on the government's future oil and gas revenues, the government's direct holdings in Norwegian multinational oil and gas company Statoil and the GPFG.
It said the step would make the country "less vulnerable to a permanent drop in oil and gas prices", and its advice was not based on a price forecast or the sector's sustainability.
McKibben compared the bank's recommendation to "the moment when the Rockefellers divested the world's oldest oil fortune" in 2014, when the heirs to Standard Oil said that if founder John D. Rockefeller were alive in the 21st century, "he would be moving out of fossil fuels and investing in clean, renewable energy". Now, the fund is planning to dump oil and gas stocks.
At the end of the third quarter, Royal Dutch Shell was the fund's third-biggest equity investment overall, worth around US$5.34 billion and exceeded only by its ownership in Apple and Nestle. Furthermore, the Government is responsible for the Norwegian economy as a whole and must take a broad and comprehensive approach to this issue, says Finance Minister Siv Jensen.
"This is the biggest pile of money on the planet, most of it derived from oil-but that hasn't blinded its owners to the realities of the world we now inhabit", said McKibben.
"Oil price exposure of the government's wealth position can be reduced by not having the fund invested in oil and gas stocks".
If it decides to back the central bank's proposal, the country's parliament would be able to vote on it in June 2019 at the earliest.