Norway’s sovereign wealth fund — a state-owned funding fund price roughly a trillion — not too long ago introduced it was divesting from oil and gasoline exploration firms world wide. Not surprisingly, many oil and gasoline shares declined following the announcement.
While that is excellent news for the local weather, this was merely a wise enterprise choice. Norway’s sovereign wealth fund, generally known as the Government Pension Fund Global (GPFG), primarily exists as a result of Norwegian oil manufacturing. And the fund will proceed to be a serious investor in firms like Exxon.
It seems it’s simply reducing its losses on money-losing endeavors like fracking in America, tar sands oil manufacturing in Canada, and frontier exploration by UK firms in Africa and South-East Asia.
“The authorities is proposing to exclude firms categorised as exploration and manufacturing (E&P) firms inside the power sector from the [fund] to scale back the combination oil worth danger within the Norwegian financial system,” the Finance Ministry defined in an announcement saying the transfer.
Dumping Losing Assets
What that interprets to in America is basically a divestment from the shale oil and gasoline producers like EOG Resources, Apache, Continental, Diamondback, and Chesapeake. Apparently, the fund managers are bored with shedding cash on fracked oil and gasoline.
The transfer definitely comes at a nasty time for the American fracking trade. Their beforehand countless provide of loans from Wall Street has additionally began to dry up, resulting in price range cuts, layoffs, and lowered oil manufacturing.
In Canada, among the many firms focused for divestment is Canadian Natural Resources, LTD — an Alberta tar sands oil producer. The Canadian tar sands oil trade has been shedding cash for a number of years and a number of other main oil firms have offered tar sands property, together with Devon Energy's current announcement it was getting out of the tar sands manufacturing enterprise.
The Canadian authorities is now propping up the failing enterprise mannequin for Alberta's tar sands, however Norway’s state fund doesn't appear impressed. Of course, Norwegian traders sitting on a trillion within the authorities’s sovereign wealth fund have cause to be skeptical of the Canadian authorities's acumen for dealing with the oil enterprise. Compared to Norway, Canada’s personal oil-backed sovereign wealth fund is a whole catastrophe, with a mere $17 billion .
Norway's state wealth managers seem to have taken a great, arduous take a look at the funds of those American and Canadian firms and acknowledged shedding cash was dangerous for enterprise.
In addition, Norway appears to have peered throughout the ocean towards the UK and seen nothing however wells (and earnings) drying up.
The UK's North Sea fossil gasoline sector has hit a “$10 billion deadlock” since oil costs plummeted final 12 months. And among the many firms that Norway has pledged to drag its investments from are Nostrum, Ophir, Premier, Soco, and Tullow — all of that are listed on the London Stock Exchange.
Premier stays a serious participant in oil and gasoline extraction on the UK's facet of the North Sea. But the development in that area is unquestionably in the direction of decommissioning slightly than exploration — and Norway's fund has clearly learn the runes.
That downward development is partly what has led quite a lot of UK fossil gasoline firms to look additional afield. Tullow claims to be Africa's “largest unbiased oil and gasoline producer,” and Ophir has property in Tanzania, Mexico, and South East Asia. Nostrum operates in former Soviet Union nations, and Soco has property in Vietnam.
DeSmog UK's Empire Oil investigation beforehand outlined how firms like these have been working in frontier markets in among the most politically unstable areas on this planet with restricted regulatory oversight or concern for the communites they affect.
With tons of of hundreds of schoolchildren taking to the streets calling on leaders to not lock nations into high-carbon futures, Norway appears to be going with the circulation and now not needs to be related to this oddly neo-colonialist…