Page 5 - EurOil Week 35

EurOil COMMENTARY EurOil

Nicolai Tangen will
serve as CEO of Norges
Bank Investment
Management.

AKO stake to a charitable foundation, estimat- Norway’s fund is also under mounting pres-
ing the value of the forfeit at some NOK10bn sure from environmentalists to cut all ties with
($1.14bn). He also pledged to sell off some pri- fossil fuels, even though they have traditionally
vate investments, leaving him some NOK7bn in offered some of the best returns on investment.
the bank. By moving back in Norway from the In May, the fund blacklisted four Canadian oil
UK, Tangen will also have to pay considerably and gas companies from its investment portfo-
more in annual wealth tax, up to NOK70mn, or lio for producing “unacceptable” greenhouse
ten times the salary he is set to receive. gas (GHG) emissions. The decision marks the
“I want to be CEO of the oil fund, and have fund’s first use of emissions as a reason to black-
only one objective: creating wealth for future list firms, though they became a criterion for
generations,” Tangen said last week. exclusion four years ago.
Tangen has taken the fund’s reins in tumul- The companies in question were the four
tuous times. Global financial markets have seen leading oil sands producers – Imperial Oil,
unprecedented volatility and high levels of bor- Canadian Natural Resources, Cenovus Energy
rowing, creating considerable risks. and Suncor Energy.
“This job is about standing like a rock when The fund pledged last year to steadily with-
it’s stormy around you, whether it be the media draw from fossil fuels and focus more on renew-
or volatility in capital markets,” he said earlier ables and other clean energy technologies.
this year. “In the future, it’s about trying to be a Pressure will only build on its management to
rock in the storm, on behalf of the Norwegian fast-track these efforts. Other key European
people.” lenders, including the European Investment
The fund reported negative returns in the first Bank (EIB), have taken similar steps.
half as a result of “major fluctuations” in equity As of last month, the fund had 69.6% of its
markets. It lost some NOK188bn, or $21.3bn. value invested in equities, 27.6% in fixed income
“There were major fluctuations in the equity and 2.8% in unlisted real estate. Negative returns
market in this period. The year started with were seen in most markets across the world, and
optimism, but the outlook of the equity market oil and gas stocks were the worst performers for
quickly turned when the coronavirus started the first half of the year, generating a return of
to spread globally,” NBIM’s deputy CEO Trond -33.1%. This is somewhat unsurprising given the
Grande said in a statement last month. “How- steep fall in oil price in March and April.
ever, the sharp stock market decline of the first But this also means that the fund will have
quarter was limited by a massive monetary and added incentive to divest some of its poor-
financial policy response.” est-performing oil stocks. Though at the same
The fund will need to sell more assets before time, it is likely to realise a lot less from their sale
the coronavirus crisis over. Tangen’s job will be to than it would have done a year ago, when market
help decide which ones and at what price. conditions were very different. ™

Week 35 03•September•2020 www. NEWSBASE .com P5