World’s biggest sovereign wealth fund to decide on dumping oil

Norwegian wealth fund CEO Yngve Slyngstad speaks at a news conference in Oslo, Norway, on Febuary 27, 2018. (REUTERS/Gwladys Fouche)
Updated 08 March 2019
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World’s biggest sovereign wealth fund to decide on dumping oil

  • Oil and gas represent almost half of Norweay's exports and 20 percent of the state’s revenues
  • All revenue from the state-owned oil and gas companies are placed in the sovereign wealth fund

OSLO: Norway will announce on Friday whether its sovereign wealth fund, which is the world’s biggest and has been fueled by petrodollars, will divest its oil and gas holdings in a decision keenly awaited by climate activists.
While the decision is said to be based solely on financial considerations and not on the environment or climate change, a divestment by an investor worth more than $1 trillion would be a major blow to polluting fossil fuels.
Finance Minister Siv Jensen is expected to present the government’s position at a press conference at 12:15 p.m. (1115 GMT).
Norway’s central bank, tasked with managing the mammoth fund — commonly referred to as the “oil fund” but formally known as the Government Pension Fund — made headlines in November 2017 when it called for the divestment of oil stocks in order to reduce the Norwegian state’s exposure to the volatile oil sector.
“This advice is based exclusively on financial arguments and analyzes of the government’s total oil and gas exposure,” the bank’s deputy governor Egil Matsen said at the time.
It “does not reflect any particular view of future movements in oil and gas prices or the profitability or sustainability of the oil and gas sector,” he added.
In Norway, the biggest hydrocarbon producer in western Europe, oil and gas represent almost half of exports and 20 percent of the state’s revenues.
All revenue from the state-owned oil and gas companies are placed in the sovereign wealth fund, which Oslo then taps to balance its budget.
In order to limit the state’s exposure in the event of a steep drop in oil prices — as was the case in 2014 — the idea would be to no longer allow the fund to invest in oil stocks and sell its existing holdings.
At the end of 2018, the fund had holdings worth around $37 billion in the oil sector, with significant stakes in Shell, BP, Total and ExxonMobil among others.

Global warming
Given the sums involved, a divestment would likely take years, but it would be seen as a clear victory in the fight against global warming at a time when the world is at pains to meet its Paris treaty goals.
While the climate change aspect is not officially part of Norway’s justification for the move, a sell-off would “obviously be very important,” said Greenpeace, which has campaigned for divestment for years.
Norway “could be a role model and show that it is entirely possible to have a fund that both makes money, with moderate risks, and stays out of oil and natural gas,” said Martin Norman of Greenpeace’s Norwegian branch.
Last year, a panel of experts appointed by the government advised against divesting oil stocks, arguing it would only have a marginal impact on Norway’s oil exposure.
But business newspaper Dagens Naeringsliv reported on Thursday that there are indications the rightwing government is nonetheless leaning in that direction.
Friday’s announcement is scheduled just hours before the annual congress for the Liberal party, a junior member of the coalition currently struggling in the polls and in need of a political victory to boost its popularity.
The decision is also important given the fact that the positions taken by the fund — which controls 1.4 percent of global market capitalization — are closely watched by other investors.
In another significant move, the fund has already pulled out of the coal industry, both for environmental and financial reasons.

 


China’s crude oil imports from Saudi Arabia up 43%

Updated 25 May 2019
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China’s crude oil imports from Saudi Arabia up 43%

  • Imports grew to 1.53 million barrels per day compared with 1.07 million a year ago
  • Sinopec Group and China National Petroleum Corp., the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said

BEIJING: China’s crude oil imports from Saudi Arabia rose 43 percent in April, making the Middle Eastern OPEC kingpin once again the top supplier to the world’s second-biggest economy, boosted by demand from new private refiners.
Saudi imports grew to 6.30 million tons, or 1.53 million barrels per day (bpd) on a daily basis, compared with 1.07 million bpd in the year ago period, according to data from the General Administration of Customs released on Saturday.
Saudi shipments were supported by higher refinery run rates at Hengli Petrochemical Co. Ltd, with production at the 400,000 bpd-capacity refinery in northeast China expected to reach optimal levels in late June. About 70 percent of the feedstock for Hengli came from Saudi Arabia.
Meanwhile Russian supplies were 6.12 million tons, or 1.49 million bpd, up from 1.35 million bpd in April last year.
China in April imported 3.24 million tons of crude oil from Iran, or 789,137 bpd, up from March’s 541,100 bpd, as companies ramped up buying before the scrapping of sanctions waivers the US had granted to big buyers of Iranian oil.
China Petrochemical Corp. (Sinopec Group) and China National Petroleum Corp. (CNPC), the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said.
Venezuela shipments stood at 1.9 million tons, or 462,813 bpd in April, up 85 percent versus 249,700 bpd in March, while crude imports from Iraq were 3.31 million tons, or 806,372 bpd, down from 904,500 bpd the previous month.