Norway's $1 trillion oil fund may turn its back on oil

Norway's $1T pension fund wants out of oil stocks

"But clearly the direction is that. if the ministry and the politicians think it is good advice and they say yes to it, clearly the investments in the oil and gas sector will decrease over time", he added.

Norway's trillion-dollar sovereign wealth fund is proposing to drop oil and gas companies from its benchmark index, which would mean cutting its investments in those companies, the deputy central bank chief supervising the fund told Reuters, sending energy stocks lower.

The advice constitutes the next major step in scrubbing the world's biggest wealth fund of climate risk after it largely sold out of coal stocks.

At the end of 2016, the fund's equity investments were split between investments in the financial sector (23.3 per cent), industrial companies (14.1 per cent), consumer goods (13.7 per cent), consumer services (10.3 per cent), healthcare (10.2 per cent), technology (9,5 per cent), oil and gas (6.4 per cent), basic materials (5.6 per cent), telecoms (3.2 per cent) and utilities (3.1 per cent). "We can do that better by not adding oil price risk through the fund". The wealth fund, which controls about 1.5 percent of global stocks, proposes dropping %37 billion of shares in worldwide giants such as BP, Exxon Mobil Corp., Royal Dutch Shell Plc. and other holdings.

Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday.

The $1 trillion fund that Norway has amassed pumping oil and gas over the past two decades wants out of petroleum stocks.

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"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".

The Central Bank of Norway, which runs the fund, sent a proposal to the Ministry of Finance today.

The Finance Ministry said it would study the plan and come to a decision next autumn at the earliest. Norway's fossil-fuel investments are coming under increasing scrutiny from a public that aims to be a climate leader without jeopardizing one of the world's highest standards of living.

The bank did not set a deadline for when the fund should drop its oil and gas holdings. The fund's exposure to fossil fuel markets is now double that of a standard global fund, the Central Bank said.

"The Government is responsible for the Norwegian economy as a whole and must take a broad and comprehensive approach to this issue", she was quoted as saying in a statement.

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