• 4 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 9 hours Keystone Pipeline Restart Still Unknown
  • 13 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 15 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 17 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 19 hours German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 20 hours Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 22 hours Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 7 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 7 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 7 days Santos Admits It Rejected $7.2B Takeover Bid
  • 7 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 8 days Oil And Gas M&A Deal Appetite Highest Since 2013
Alt Text

China Is The World’s Biggest Energy Market Mover

China is the foremost consumer…

Alt Text

EU Aims To Reform World’s Biggest Carbon Market

The European Union is divided…

Norway’s Oil Fund Makes Every Norwegian a Kroner Millionaire

Norway’s Oil Fund Makes Every Norwegian a Kroner Millionaire

While oil and graft frequently go hand in hand, such is not the case in Norway, where on 6 January the country’s Government Pension Fund – Global, more commonly referred to as the Oljefondet, through careful investment has made every Norwegian a millionaire in the country’s currency, the kroner. Norway’s success with its Oljefondet stands in stark contrast to Britain, with whom it jointly developed the North Sea after oil was found there in 1969.

The Oljefondet, set up in 1990, is now the world's biggest sovereign wealth fund, with its income surging thanks to high oil and gas prices. Norway now pumps roughly 1.9 million barrels of oil per day and is the world's number 14 oil exporter. The pension fund now owns around 1 percent of the world's stocks, as well as bonds and real estate from London to Paris to San Francisco, where the Oljefondet spent roughly $500 million to purchase a 47.5 percent share in a 36-storey building in San Francisco's financial district, along with picking up real estate in Washington DC.

According to the website of the Norges Bank, which manages the fund, the Oljefondet reached $828.66 billion, and in the third quarter of 2013 returned 5.0 percent, or $37.1 billion.

Norwegians now enjoy the fourth highest gross domestic product per-capita in the world, with Norway ranking as the world’s second wealthiest country in monetary value, with the largest capital reserve per capita of any nation and net external creditor of debt.

Related article: Statoil Strikes Again in North Sea

Export revenues from oil and gas have risen to almost 50 percent of Norway’s total exports and constitute more than 20 percent of the country’s GDP. But it is not a member of OPEC.

Norway has sought to avoid the boom and bust cycle by investing the cash abroad, rather than at home. Governments can spend 4 percent of the fund in Norway each year, slightly more than the annual return on investment. The Oljefondet is now equivalent to 183 percent of Norway’s 2013 gross domestic product and is expected to peak at 220 percent around 2030. In the wake of its U.S. real estate purchases the fund placed approximately $8.1 billion in real estate and the Oljefondet has been given permission by Parliament to invest up to five percent of the total fund in real estate.

Still not everyone is so upbeat about the future of the Oljefondet. Swedbank First Securities chief strategist Peter Hermanrud dourly observed, “What we make a living from in Norway is more vulnerable to competition. It may be that an increasing number of companies want to explore for gas onshore in the U.S. rather than offshore in Norway. We've experienced an acute shortage of rigs, seismic vessels and engineers in recent years. This has occurred concurrently with a sharp increase in investments by oil companies. The current problem is oil companies' lack of capital and investment willingness.”

Related article: European Energy Security and the Quiet Close to the Pipeline Opera

While economists have every right to be cautious in the their predictions, consider the following statistics from the U.S. government’s Energy Information Administration: Norway is Europe's largest oil producer, the world's second largest natural gas exporter, and is an important supplier of both oil and natural gas to other European countries; Norway is the largest oil producer and exporter in Western Europe; Norway is the second largest exporter of natural gas after Russia and ranks fourth in world natural gas production.

Many British economists are looking wistfully at the Oljefondet’s roaring success, contrasting it with the reckless spending habits of a succession of governments that largely squandered the country’s North Sea oil windfall. In a 2008 study of British profligacy entitled "Dude, where's my oil money?" PricewaterhouseCoopers chief economist John Hawksworth estimated that had all the North Sea revenue been set aside and invested in ultra-safe assets it would have been worth $737 billion by 2008, but acknowledged that is a very conservative estimate: Sukhdev Johal, professor of accounting at Queen Mary University of London, thinks the total might well have been $1.39 trillion by now.

Accordingly, nations such as Kazakhstan, Angola and Mozambique, all on the cusp of major oil revenue income, have been provided with a cautionary tale from the North Sea.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News