• 4 minutes "Saudi Armada heading to U.S.", "Dumping" is a WTO VIOLATION.
  • 7 minutes Trump will be holding back funds that were going to W.H.O. Good move
  • 11 minutes Washington doctor removed from his post, over covid
  • 15 minutes Which producers will shut in first?
  • 44 mins Why Trump Is Right to Re-Open the Economy
  • 46 mins A small trial finds that hydroxychloroquine is not effective for treating coronavirus
  • 4 hours Charts of COVID-19 Fatality Rate by Age and Sex
  • 5 hours 80's GOM Oil Fam: Mid-80's Oil Glut Part Deux?
  • 11 hours Wouldn't fall in demand balance it out?
  • 7 hours US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 7 hours Its going to be an oil bloodbath
  • 32 mins CCP holding back virus data . . . . . . Spanish Flu 1918 MUTATED, Came in 3 waves, Lasted 14 months and killed upward 5% World population
  • 20 hours Free market or Freeloading off the work of others?
  • 20 hours Trump will meet with executives in the energy industry to discuss the impact of COVID-19
  • 20 hours ‘If it saves a life’: Power cut to 1.5 million Californians
Alt Text

U.S. Rig Count Could Collapse By 65%

The American oil and gas…

Alt Text

The Hottest Tech Startup To Watch In 2020

Investors are going green in…

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