Head of Norway’s sovereign wealth fund steps down

The CEO of Norway's sovereign wealth fund, the world's biggest, stepped down on Wednesday, as the fund reported a return on investment of $25.6 billion for the third quarter.

Head of Norway’s sovereign wealth fund steps down
Departing CEO of Norway's sovereign wealth fund Yngve Slyngstad. Photo: AFP

Yngve Slyngstad announced he would leave the position as head of the world largest sovereign wealth fund, after nearly 12 years at the helm, during a press briefing held in conjunction with fund's release of its third quarter financial report. 

The announced came after the fund reached a market value of over 10 trillion Norwegian kroner (about $1.1 trillion or 975 billion euros) last Friday.

“It is an important milestone that the fund's market value passed 10 trillion kroner 25th October… We have delivered good returns for the best of our nation,” Slyngstad said in a statement.

A successor was not named and the fund's executive board said it would “now start searching for a new CEO.”

The fund — which manages the country's oil revenues in order to finance Norway's generous welfare state when its oil and gas wells run dry — attained a return of 1.6 percent, or 236 billion Norwegian kroner in the third quarter.

In the second quarter the return was three percent.

“Equity returns were positive despite relatively weak data for global industrial activity during the quarter,” the central bank of Norway, which manages the fund, noted in the report.

“Actual and expected monetary easing in the US and the euro area, as well as a substantial drop in long-term interest rates, probably boosted global equity prices. There was also uncertainty about the US-China trade talks and the UK's departure from the EU,” it added.

Equity investments, which account for 69.1 percent of the fund's assets, returned 1.3 percent.

Investments in the US, which make up slightly over 40 percent of the fund's equity holdings, returned 2.9 percent.

European shares only produced a flat return, with UK holdings dragging down results, as uncertainty surrounding Brexit persisted.  

With stakes in over 9,000 companies, the Government Pension Fund, also called the Norwegian oil fund, on average controls 1.4 percent of the world's market capitalisation.

In the third quarter, investments in US tech company Apple, Google's parent company Alphabet and consumer goods company Nestle accounted for the biggest returns.

Fixed-income investments, which make up 28.2 percent of the fund, returned 2.4 percent. Investments in unlisted real estate returned 1.6 percent.

READ ALSO: Why Norway's krone keeps getting weaker


Norway sees oil in its future despite IEA’s warnings

Norway, Western Europe's biggest oil producer, plans to continue its oil exploration and drilling in the coming decades, the government said on Friday, despite warnings from the International Energy Agency (IEA).

Norway sees oil in its future despite IEA's warnings
A North Sea oil rig. Photo by Jan-Rune Smenes Reite from Pexels

In a white book on its energy future, Oslo said it wanted to “extend the current practice with regular concession cycles on the Norwegian continental shelf to give the industry access to new prospecting zones.”

“We will supply energy to the world as long as the demand exists,” Oil and Energy Minister Tina Bru told a press conference.

“The government will therefore maintain an oil policy that facilitates profitable oil and gas production in the framework of the Norwegian climatepolicy and our climate goals,” she said.

The Scandinavian country aims to reduce its greenhouse gas emissions by between 50 and 55 percent by 2030, and to almost nothing by 2050.

But it is regularly criticised for the CO2 emissions generated abroad by the oil it exports.

READ MORE: Norway taps oil wealth to cushion Covid impact

This week, Norway launched a call for applications for a new licensing round in new offshore zones.

The Norwegian position contrasts sharply with that of the IEA, which recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

International observers have criticised the Norwegian position.

“The Norwegian government and industry cannot ignore science,” said Sandrine Dixson-Decleve, co-president of international think tank The Club of Rome.

“We look to Norway for leadership and ambition on the energy transition – not complacency and backtracking,” she said in a statement.

Meanwhile, the head of climate and energy issues at the WWF, Manuel Pulgar-Vidal, said that “by standing on the side of fossil fuel interests, Norway risks having stranded assets.”

“Norway’s position will increase the risk of the world reaching fragile climate tipping points, which in turn will cause devastating impacts on the natural world on which we depend,” he said.

In 2018, Norway was the world’s 14th biggest producer of oil and 8th biggest producer of natural gas, according to the latest figures from the US Energy Information Administration.