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Norway’s US$1.1-trillion Government Pension Fund Global—the world’s largest sovereign wealth fund—is removing Brazil’s state-controlled oil firm Petrobras from its watchlist of companies that are destined to be excluded from the fund’s investment universe due to ethics violations.
Norges Bank, the manager of the Norwegian wealth fund, has decided to revoke the observation of Petrobras under which it had placed it in 2016 following the massive corruption scandal that engulfed the state oil firm and the whole of Brazil in 2015.
In January 2016, the Norwegian fund—which is invested in many major international oil companies—decided to place Petrobras under observation because of the risk of severe corruption.
Under the fund’s guidelines for ethical investment, companies may be placed under observation or dropped from investment completely if those companies contribute to, or are responsible for, human rights violations, severe environmental damage, gross corruption, and other serious violations of fundamental ethical norms.
Nearly four years after placing Petrobras under observation, the Council on Ethics of the fund now believes that the risk of corruption at the Brazilian firm is reduced.
“This assessment is based, among other things, on the legal settlement with the US authorities, which confirms that Petrobras has implemented comprehensive improvement measures since the investigation began in 2014,” the Norwegian fund said.
In the past year, Petrobras has tried to shake off the corruption scandal and is looking to reduce its mountain of debt by selling non-core upstream assets and by divesting from eight refineries across Brazil that have a combined capacity of 1.1 million bpd and could fetch as much as US$18 billion in total.
At the end of November, Petrobras launched the binding phase of the sale of four refineries out of the eight that it has earmarked for divestment, with China’s oil giant Sinopec, Abu Dhabi’s Mubadala Investment Company, and two Brazilian firms including a joint venture of Shell, reportedly in the running to submit binding bids for those four refineries.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.