Norway wealth fund should ‘sell oil holdings quickly’

Norway’s $1.1 trillion (Dh4.04 trillion) wealth fund shocked the world last year when it announced a plan to divest all its oil and gas stocks, worth $35 billion at the time.

As the government and parliament prepare to give their responses, a former senior economic adviser who used to work for the fund says the investing giant shouldn’t waste any time and start selling now.

Espen Henriksen, who now works as an associate professor at the Norwegian Business School in Oslo, said the fund “should probably use its room for active positions to immediately, but gradually, decrease its oil and gas holdings.”

The fund’s plan to exit oil is based on a desire to improve the country’s risk exposure. As western Europe’s biggest oil and gas producer, Norway gets about 50 per cent of its goods exports from its commodities. But with the rapid growth of renewable energies, there’s speculation that demand for petroleum is close to peaking.

The matter is being analysed by the Finance Ministry, which is due to release a white paper this spring. The fund, which is part of the central bank, gets its investment guidelines from the government.

Henriksen says the fund’s move “risks creating an unfortunate precedent by giving the asset manager more political power to define its mandate.”