Historical archive

Excludes exploration and production companies from the Government Pension Fund Global

Historical archive

Published under: Solberg's Government

Publisher: Ministry of Finance

The Government is proposing to exclude companies classified as exploration and production companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy.

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

Companies classified as exploration and production companies by the index provider FTSE Russell will be excluded from the GPFG’s benchmark index and investment universe. The proposal will serve to reduce the aggregate concentration risk associated with this type of activities in the Norwegian economy.

Like the advice from Norges Bank, this assessment does not reflect any specific view on the oil price, future profitability or sustainability of the petroleum sector. This assessment is thus independent of the government’s current petroleum policy, which remains unchanged.

– The oil industry will be an important and major industry in Norway for many years to come. The state’s revenues from the continental shelf are, as a general rule, a consequence of the profitability of exploration and production activities. Therefore this measure is about diversification.

Exploration and production companies will be phased out from the Fund gradually over time, and plans will be prepared in consultation with Norges Bank, after the Storting’s deliberation of the white paper, published today.

A permanent reduction in the oil price will have long-term implications for public finances. An exclusion of energy stocks in the GPFG will serve to further reduce the oil price risk, but the effect appears to be limited. We have high capacity to take on such risk, and the oil price risk has been significantly reduced over time, because a large portion of the oil and gas resources has been extracted from the Norwegian continental shelf and converted into a broadly diversified financial wealth abroad.

The energy sector is a broad sector, and comprises integrated companies with businesses throughout the value chain as well as pure play renewable energy companies.

– It is anticipated that almost all of the growth in listed renewable energy over the next decade will be driven by companies that do not have renewable energy as their main business. The Fund should be able to participate in this growth, says the Minister of Finance.

Climate risk is an important financial risk factor for the GPFG, and will over time have an impact on several of the companies in which the GPFG is invested. The Ministry of Finance will ask Norges Bank to review its efforts relating to climate risk in the GPFG, with a view of strengthening efforts in relation to those individual companies accounting for the largest contributions to the climate risk associated with the Fund.

The Government do not plan to sell shares in the State’s Direct Financial Interest (SDFI) or in Equinor in order to reduce the state’s oil price risk.

The decision is based on the advice and assessments of Norges Bank and an expert group, as well as the public consultations of these. The assessments of the Ministry are discussed in the white paper to the Storting Energy Stocks in the Government Pension Fund, published today.


In November 2017, Norges Bank advised the Ministry of Finance to exclude the oil and gas sector from the benchmark index for the GPFG, in order to reduce the oil price risk associated with the state’s wealth.

Against the background of the advice from Norges Bank, the Ministry of Finance appointed an expert group chaired by Professor and Rector of the Norwegian School of Economics, Øystein Thøgersen. Based on an overall assessment, the expert group takes the view that the GPFG should remain invested in energy stocks.

The issue has been circulated for public consultation. Many of the bodies invited to submit consultative comments appear to agree with the assessment of the expert group that the economic impact of Norges Bank’s proposal on oil price risk in the Norwegian economy would be limited, but there are nonetheless diverging opinions as to whether the energy sector should be excluded from the GPFG. Whilst a number of the consultative comments emphasise that it would be a step in the right direction, others note that it may undermine the financial objective of the Fund and encompass companies with major and expanding renewable energy operations.