Norway's $1 Trillion Sovereign Wealth Fund Is Dumping Oil Stocks

The $1 trillion sovereign wealth fund of Europe's biggest energy producer is hedging against a scenario where oil prices never return to their levels from 2014.

In a statement released Friday, the Norwegian sovereign wealth fund, which derives its income from the country's oil and gas revenues, said it planned to sell shares of pure-play exploration companies, while holding on to shares of the biggest integrated producers. The Norwegian government approved the plan on Friday after a year of deliberation.


It calls for shares of 134 companies classified as exploration and production companies to be removed from the FTSE Russell. Shares of bigger oil firms, like Royal Dutch Shell and Exxon Mobil, will remain.

"The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline," Finance Minister Siv Jensen said in a statement. "Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector."

Ironically, the proposal was hailed by climate activists in 2017 as a sign that an increasingly environmentally conscious Norway was looking beyond the carbon-based energy industry.

News that the plan had finally been approved sent shares of energy companies reeling...