Norway’s oil fund to cut exposure in Europe

Norway's massive state pension fund will significantly reduce its exposure to crisis-hit European economies and will instead invest more in emerging economies, the Norwegian government said on Friday.

The current 54 percent of Norway's so-called oil fund — one of the biggest sovereign wealth funds in the world — invested in European stocks and bonds will drop to 41 percent, the government said in a report to parliament on the long-term changes in the management of the fund.

"The proportion invested in Europe will be reduced gradually over time," Finance Minister Sigbjørn Johnsen said in a statement.

At the same time, "the fund is growing, so that its (European) investments measured in Norwegian kroner will still increase over time," Johnsen said, adding "the fund shall continue to be a considerable investor in Europe."

The Norwegian oil fund, which contains all state revenues from the country's massive oil and gas sector, is currently valued at around 3,470 billion kroner ($609.2 billion) and is Europe's biggest

Parallel with the relative reduction in European stocks and bonds, the fund will increase its investments in the Americas and in Africa from 35 to about 40 percent of its total portfolio, while its portion of Asian investments will rise from 11 to 19 percent.

"We want a broad diversification of the investments, in accordance with the actual production capacity in different parts of the world," finance ministry state secretary Hilde Singsaas told the Dow Jones Newswires.

The Norwegian fund was created in the beginning of the 1990s to help finance Norway's generous welfare state system once the oil wells run dry, and is invested in equities and bonds, as well as real estate.

The government is not authorised to use more than four percent of its holdings each year to balance its budget.

Without the cash injection from the fund, the budget would be in the red and the current centre-left government has balked at a central bank recommendation to lower the spending ceiling.

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NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

NGOs take Norway to European Court over Arctic oil exploration
Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings¬†

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.