Norway GPFG to Purge Upstream Companies, Keeps Oil Majors and Downstream
Posted on 10/02/2019
Norway is the largest oil and gas producer in western Europe, and Norway Government Pension Fund Global (GPFG) is Norway’s flagship sovereign wealth fund. After a recommendation from supervisory institution Norges Bank, the massive sovereign fund is halting its plan to drop ownership positions in all oil and gas companies. The overseers of the sovereign fund considered exiting companies involved in oil and gas. However, the Norwegian government revealed plans for a compromise and exit out of companies that are involved in upstream activities, such as oil and gas exploration and production. The Norwegian Ministry of Finance had re-assessed the classification of companies involved in upstream activities.
The Norwegian Ministry of Finance announced that downstream activities, such as refining and marketing, as well as integrated companies involved in both downstream and upstream activities, will be unaffected by the purge. This means that Norway’s GFPG will not be exiting its position from the oil majors such as BP, Total SA, ExxonMobil Corporation, and Royal Dutch Shell. The Norwegian government’s decision to not exclude the oil majors is rooted in the belief that these companies have the scale and technological ability to move activities toward renewable energy.
The purge of pure-play upstream companies, estimated at 95 companies as of mid-September 2019 by Norges Bank Investment Management, will be exited on a timely basis. This would impact around 54 billion NOK, or about 0.8% of the fund.
