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Norway sovereign wealth fund to divest 54B kroner in oil stocks

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Norway sovereign wealth fund to divest 54B kroner in oil stocks

Norway's sovereign wealth fund will divest its stake in some 95 crude producers, while keeping its holdings in oil refining and other downstream companies, the country's Ministry of Finance said.

The decision is the latest in a nearly two-year process that sought to minimize the Government Pension Fund Global's financial exposure to oil price movements. In November 2017, the Norges Bank recommended cutting oil and gas stocks from the fund's benchmark index. Earlier this year, the Norwegian parliament endorsed the removal of upstream oil and gas firms from the fund and its investment universe, prompting a review of its classification rules.

In a decision published Oct. 1, the ministry said the companies that will be divested will be those that fall under index provider FTSE Russell's new sub-sector for companies engaged in the exploration for and drilling, production, and supply of crude oil on land.

As of mid-September, a total of 95 companies held by the GPFG belonged to that sub-sector,accounting for 0.8% of the fund's benchmark for equities, or 54 billion Norwegian kroner. The value of the planned disposals will be smaller than the 70 billion kroner that the government had estimated in March, Bloomberg News said.

Meanwhile, companies that are classified as "Oil Refining and Marketing"on the FTSE Russell will be spared.

The fund will continue to implement a decision to keep its investments in major integrated oil companies such as Royal Dutch Shell PLC and Exxon Mobil Corp., Reuters reported.

The divestments will be gradually implemented over time, the ministry said.

As of Oct. 1, US$1 was equivalent to 9.12 Norwegian kroner.