Shares in major ASX listed oil and gas groups were sold off yesterday after Norway’s huge sovereign wealth fund decided to sell billions of dollars of shares in energy groups.
The trillion-dollar sovereign wealth fund will drop investments in energy explorers and producers, though it will keep shares in integrated oil and gas companies such as BP and Shell, Exxon and Chevron.
The Norwegian fund, the biggest of its kind in the world, derives its income from the country’s own oil and gas industry. It has stakes in hundreds of oil and gas groups of all sizes. In fact, the fund owns (at least) 1.4% of every major listed company in the world.
In Australia, its holdings (through the Norges Bank) includes 1.48% of Beach Energy, Caltex Australia (holds 1.36 percent), Santos Ltd (holds 1.49%), Sundance Energy (0.05%), and Woodside Petroleum (1.45%). Other holdings include Cooper Energy, NZ Oil, and Gas, Australis Oil and Gas. LNG Ltd, and Oil Search.
Shares in Santos, Woodside Petroleum, Caltex, Oil Search, Origin Energy, and Beach Energy were down between 0.2% and 2.4% yesterday after larger falls in the morning that wiped more than $2 billion off their collective market value.
Norwegian Minister of Finance Siv Jensen said Friday in a statement that the move was meant to “reduce the vulnerability of our commonwealth to permanent oil price decline”. Oil and gas accounts for 20% of the country’s economy and the huge wealth fund takes a cut from every barrel of oil and cubic foot of gas and other liquids, plus substantial tax.
The fund’s investments in oil and gas stocks means it is doubly exposed to a long-lasting fall in oil and gas prices.
It is holding onto the shares of diversified oil and gas groups and other companies in the industry, but with investments elsewhere (such as BHP Group) because it wants to see these groups heading deeper into renewables, such as Shell and BP are already doing.