The $ 1 trillion Norwegian Sovereign Wealth Fund has offered to divest about $ 35 billion from oil assets, including Royal Dutch Shell and Exxon Mobil, to protect the country's economy.
The nation will be "less vulnerable" to a drop in oil prices if it does not invest in oil and gas stocks, a fund spokesman said. The Treasury Department said it would review the plan and make a decision by early fall 2018.
"Our perspective is to smear risks to the welfare of the state," Egil Matsen, deputy central bank governor in charge of overseeing the fund, said in an interview Thursday in Oslo. "We can do this better without adding the risk of oil price changes through the fund." …
While the fund claims the plan is not based on any outlook on the future of oil prices or the entire industry, it will likely add pressure on oil producers who are already suffering from renewable energy competition.
Based on the revenues from Norway's oil and gas sales, over the past two decades has taken ethical considerations into account when making investment decisions.
The foundation refused to deal with human rights abuses associated with the production and sale of weapons, tobacco companies and polluting corporations.
The fund's fossil fuel investment is also under scrutiny as Norwegians increasingly struggle to reconcile their ambitions as one of the world's most serious environmental activists while remaining a major oil and gas producer.
The state also controls a majority stake in oil and gas company Statoil ASA, which is estimated at $ 66 billion, and also directly owns offshore oil and gas fields. Norway depends on the oil and gas industry for about 20% of the country's GDP.
The Norwegian fund has reached $ 1 trillion this year for the first time, as the rise in global equity markets and the strengthening of the euro have increased the value of its assets.
The fund was founded in 1998 to preserve oil and gas revenues for future generations. Now its cost is about 2.5 times the size of Norway's GDP.
Initially, the fund was expected to exceed GDP by 1.3 times in the 2020s.
Under the recently revised rules, the government can spend 3% of the fund's value per year instead of the previously allowed 4%, that is, 235 billion kroons, based on the current fund size. The 2017 budget provides for expenditures of 221 billion kroons.