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Norwegian fund’s 'green drive' may impact Indian energy sector

Norway's sovereign wealth fund’s decision comes amid climate change concerns and uncertainty in global oil markets, resulting in many countries shifting their focus to renewable energy 

Norwegian fund’s 'green drive' may impact Indian energy sector
Norwegian fund’s 'green drive' may impact Indian energy sector

New Delhi: The recent decision of Norway’s Government Pension Fund Global (GPFG) to divest stocks in oil and gas explorers around the world might possibly impact Indian companies like Oil and Natural Gas Corp (ONGC), Reliance Industries Ltd (RIL), Indian Oil Corp (IOC) and Oil India Ltd (OIL), where investments have been made by the US$ 1 trillion fund. Norway's sovereign wealth fund’s decision comes amid climate change concerns and uncertainty in global oil markets, resulting in many countries shifting their focus to renewable energy.

GPFG made 253 investments in Indian equities

The world’s largest sovereign fund, which previously stopped investing in coal projects, has made 253 investments in Indian equities amounting US$ 7.39 billion. GPFG has invested US$ 658 million in RIL (US$ 485.19 million), ONGC (US$ 108.74 million), IOC (US$ 61.6 million) and OIL (US$ 2.03 million). GPFG owns stakes of less than 1 percent in each of the four firms. “The government is proposing to exclude companies classified as exploration and production (E&P) companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy," the Norwegian government said in a statement.
“The government is proposing to exclude companies classified as exploration and production (E&P) companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy,"
GPFG said those categorised as E&P companies by the index provider FTSE Russell as belonging to its so-called subsector “0533 Exploration & Production" in the sector “0001 Oil & Gas" “will be excluded from the GPFG’s benchmark index and investment universe".

Exploration, production companies to be phased out gradually

“The proposal will serve to reduce the aggregate concentration risk associated with this type of activities in the Norwegian economy," it said, adding that investments in “exploration and production companies will be phased out from the Fund gradually over the period of time."