• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 4 hours Long Range Attack On Saudi Oil Field Ends War On Yemen
  • 2 hours Will Uncle Sam Step Up and Cut Production
  • 8 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 1 min Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on terrorism, wars, lopping off heads * Too late now
  • 17 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 17 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 12 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 23 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 18 hours Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 1 day Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 1 day Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 21 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 13 hours US Petroleum Demand Strongest Since 2007
Alt Text

The U.S. Plans To Send Nuclear Reactors To Space

Despite the nuclear industry stumbling…

Alt Text

Oil Demand Growth Slowdown Isn’t Over Yet

Oil demand growth forecasts continue…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Norway’s $35B Oil Stock Dump Could Hurt The Industry

Last week the world’s biggest sovereign wealth fund—Norway’s $1-trillion oil fund—proposed to ditch $35 billion worth of oil and gas stocks, sending shockwaves through the European oil indexes and rekindling the debate on the rationale of owning oil stocks in the long term.  

The proposal to remove oil and gas stocks from the equity benchmark index of Government Pension Fund Global raised questions about how Norway will keep oil companies investing in its fossil-fuel industry if it indeed dropped billions of dollars’ worth of oil stocks, including stakes worth a combined $14 billion in Shell, Exxon, Chevron, BP, and Total.

According to Norway’s oil associations and energy unions, the proposal—which needs government approval expected by the fall of 2018—will not mar Big Oil’s investment plans for Norway. That’s because the possible dumping of oil stocks is part of a financial planning and has nothing to do with the country’s energy policy that has been and is expected to continue to be supportive of the industry that accounts for 14 percent of GDP, 14 percent of state revenues, 19 percent of total investments, 39 percent of total exports, and 7 percent of employment in the country with population of 5.3 million residents.

Sure, the proposal to drop oil and gas investments is a huge thing, considering that it is oil revenue that has allowed the fund to grow to $1 trillion and to hold 1.3 percent of listed companies worldwide and 2.3 percent of listed companies in Europe.

Related: Is U.S. Energy Independence Realistic?

It’s also a big story because it could prompt other funds and fund managers to reconsider how healthy oil stocks investment will be in the face of an uncertain long-term oil future amid the ‘peak oil demand’ narrative.

But Norway’s oil bosses insist that as long as the government’s energy policy and investment and tax incentives for oil companies remain in place, the proposal to dump oil stocks will not stifle interest in doing business offshore Norway.

“This is just one of several negative news stories that are piling up—that’s probably what made me shake my head at the beginning,” Frode Alfheim, the head of Norway’s biggest oil union, Industry Energy, told Bloomberg.

“But I both hope and believe that this isn’t something that will impair international investors’ desire to invest on the Norwegian shelf,” he added.

Even more confident was the Norwegian Oil and Gas Association—an oil industry lobby for companies including Shell, Exxon, and Total. The group’s head Karl Eirik Schjott-Pedersen told Bloomberg that the proposal to reduce financial exposure seems “a lot more reasonable than suggestions from the environmental movement that Norway should reduce this risk by reducing oil activity in Norway.”

“That would lead to the loss of thousands of jobs and huge tax income for Norway,” Schjott-Pedersen noted.

Environmentalists aren’t only calling for reduction of oil activity offshore Norway. They’re also suing the country over the awarding of oil drilling licenses in the Arctic, claiming that they violate Norway’s constitution and the country’s pledge to fulfill the terms of the Paris Climate Agreement.

Related: Who's Next? Venezuela's Collapse Puts These Nations At Risk

While the green groups continue to advocate abandoning oil exploration, the oil industry regulator, Norwegian Petroleum Directorate (NPD), and oil major Statoil—in which the government holds 67 percent­—warn that without new oil discoveries, the decline in Norway’s oil production after 2025 would be even bigger than expected.

The ruling Conservative-led minority government is supportive of the oil industry, and two months ago it won re-election in a vote where oil policies took center stage.  

If approved next year, the proposal of the wealth fund to drop oil and gas stocks will have more consequences on Norwegian finances and economy by spreading the financial risk, rather than on the country’s energy policy toward the industry, at least in the short term.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • Al on November 23 2017 said:
    Norway has done a lot of good things with their oil revenue over the years. Unless something has changed recently since last I checked, they should be buying some protection against their enormous equity position, specifically gold and silver. It's not like they haven't been advised to do so. If the market crashes without some serious downside protection, Norway will have a lot less money to spread around, internally and externally.
  • Josh Gregner on November 23 2017 said:
    We are seeing smart money backing out of oil: Oil is, where coal was some 7 to 10 years ago. And we see what a financial mess coal has become.

    Now if you have 35B to divest, you can't pack and go just like this. So are you really going to be truthful with your reasons for divestment (and in the process risk a panic and sell at much lower prices)? Or are you going to say something like this:

    "Dumping of oil stocks is part of a financial planning and has nothing to do with the country’s energy policy that has been and is expected to continue to be supportive of the [oil] industry"

    I expect the country to kill investments and industry as quickly (and as silently) as they can and back for the exit while oil companies under chapter 11 are not the norm yet.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play