BUKIT LANJAN: What will happen to those who can’t think out of the box, can’t change or can’t evolve?
|An oil drilling platform operated by Statoil ASA in the North Sea near Bergen, Norway. The country is Europe’s dominant producer of oil. CreditKristian Helgesen/Bloomberg, via Getty Images|
Norway’s Wealth Fund Considers Divesting From Oil Shares
By CLIFFORD KRAUSSNOV. 16, 2017
Norway’s $1 trillion sovereign wealth fund is considering a divestment of holdings in international petroleum companies, a sign that even Europe’s dominant producer does not have full confidence in oil’s future. The recommendation on Thursday by the Norwegian Central Bank, which manages the fund, is potentially the biggest advance yet for a global fossil-fuel divestment campaign that has been promoted on college campuses and by environmental activists. It could also be a setback for the proposed initial public offering of the Saudi national oil company, known as Aramco, since the Norwegian sovereign wealth fund, the world’s largest, would be a potentially large investor. The public offering depends on high oil prices, while the move by the Norwegian bank suggested uncertainty about the future demand for oil … for more, go to https://www.nytimes.com/2017/11/16/business/energy-environment/norway-fund-oil.html
BUKIT LANJAN: What will happen to those who can’t think out of the box, can’t change or can’t evolve?
World’s Biggest Wealth Fund Wants Out of Oil and Gas - Bloomberg
World’s biggest sovereign wealth fund proposes ditching oil and gas holdings - Guardian
What do you think of the above two news headlines? Aren’t they earth shattering?
“It certainly is earth shattering for the global oil and gas industry. It’s perhaps the beginning of a global game changer,” Gerakan Deputy Speaker Syed Abdul Razak Alsagoff said.
“In fact the signs were there for all to see. The Norwegians had started to think out of the box to free themselves from dependency on oil revenue.
“They had invested their wealth wisely overseas and have also started encouraging and giving incentives to those who use electric vehicles (EV),” he added.
Read these two previous blog posts for context: https://bukitlanjan.blogspot.my/2017/09/bukit-lanjan-oil-rich-norway-encourages.html (BUKIT LANJAN: Oil-rich Norway encourages and promotes use of EVs, can Malaysia do the same?)
https://bukitlanjan.blogspot.my/2017/08/bukit-lanjan-malaysia-needs-to-learn.html (BUKIT LANJAN: Malaysia needs to learn a thing or two about managing SWFs from Norway)
“Do you think the Malaysian federal government and Petronas are giving any thought to the global oil and gas industry game changer? I think not!
“If they did, they would not continue to invest in oil and gas, Petronas would embark on an aggressive business diversification.
“It will be business as usual for them until it is simply a disaster and then… blame it on God,” he added.
|Norway's state fund 'needs to drop oil and gas investments'|
16 November 2017
Norway's government has been told its state-run fund should drop its investments in oil and gas stocks.
Norges Bank manages Norway's $1 trillion (£758bn) sovereign wealth fund on behalf of the government. It said the step would make the country "less vulnerable to a permanent drop in oil and gas prices", and its advice was not based on a price forecast or the sector's sustainability. Around 6% of the fund, worth £28bn, is invested in oil and gas stocks … for more, go to http://www.bbc.com/news/business-42011995
Syed Razak, who is Gerakan’s nominee to contest N.37 Bukit Lanjan in the coming 14th General Election (GE14), said businesses and investors had been trying to bring e-bikes and EVs into the Malaysian market.
“All attempts have been rejected or disapproved. Why is that?” he asked.
Syed Razak said the federal government and Petronas “are just unable to think out of the box and prepare for the future, just like what the Norwegians are doing now to change and evolve”.
“What is the result for those who are unable to change and evolve in this world?” he asked.
Read the following to find out what the Norwegians think of the future for oil and gas:
"World’s Biggest Wealth Fund Wants Out of Oil and Gas
By Sveinung Sleire
November 16, 2017, 9:00 PM GMT+8 Updated on November 17, 2017, 12:15 AM GMT+8
· Fund wants to protect Norway’s economy from oil price risk
· Government says will conclude assessment in ‘fall of 2018’
Norway's Wealth Fund Proposes Oil, Gas Stock Exit
The $1 trillion fund that Norway has amassed pumping oil and gas over the past two decades wants out of petroleum stocks.
Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday. The divestment would mark the second major step in scrubbing the world’s biggest wealth fund of climate risk, after it sold most of its coal stocks.
“Our perspective here is to spread the risks for the state’s wealth,” Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo. “We can do that better by not adding oil-price risk.”
The plan would entail the fund, which controls about 1.5 percent of global stocks, dumping as much as $40 billion of shares in international giants such as Exxon Mobil Corp. and Royal Dutch Shell Plc. The Finance Ministry said it will study the proposal and decide what to do in “fall of 2018” at the earliest.
Big Oil is under pressure, read more here
While the fund says the plan isn’t based on any particular view about the future of oil prices or the industry as a whole, it will likely add to pressure on producers already struggling with the growth of renewable energy supplies. The Stoxx Europe 600 Oil and Gas index reversed gains after the announcement, sliding 0.3 percent as of 3:47 p.m. in London.
The fund has doubled in value over the past five years and was just given the go-ahead to boost its stock holdings to 70 percent of its portfolio from 60 percent to help drive returns. The government, which also controls Statoil ASA and offshore oil and gas fields, was forced to withdrew cash from the fund for the first time last year to meet spending commitments after oil prices dropped.
Matsen said “now is a good time” for the proposal because otherwise the new 70 percent threshold will result in the fund buying even more oil and gas shares because it tracks indexes that include such stocks. The fund has a small amount of leeway to make individual investments and wants to keep oil and gas in its “investment universe,” he said.
The fund said it doesn’t expect returns or market risk to be affected “appreciably” by its proposal, emphasizing that cutting exposure to the energy industry would allow it to crank up investments in other sectors. Finance Minister Siv Jensen said the government will give the plan careful thought.
“This must be thoroughly assessed, I am not prepared to conclude in advance,” said Nikolai Astrup, leader of the finance committee representing the ruling Conservatives. “It’s important that the fund is managed in a way that’s predictable and long-term.”
But environmental groups praised the plan. “The world is changing fast, and it’s very risky to put too many eggs in the same basket,” said Marius Holm, the leader of the Zero Emission Resource Organisation. Sony Kapoor, a former adviser to Norway’s government, said the plan is “a belated victory for common sense over the powerful oil and gas lobby in Norway,” calling on the fund to now boosts its “green” investments at least tenfold.
The recommendation also received backing from the Conservative-led government’s support parties, the Christian Democrats and Liberals. The Labor Party, the biggest opposition group, said it would like to study the proposal before making a decision.
“The government is responsible for the Norwegian economy as a whole and must take a broad and comprehensive approach to this issue,” Jensen said in a statement. - Bloomberg
World’s biggest sovereign wealth fund proposes ditching oil and gas holdings
Energy industry jolted by advice to Norwegian government from its central bank, which runs $1tn fund
|A Statoil gas platform near Bergen. Norges Bank has advised Oslo to divest from the gas and oil industry or risk its sovereign wealth fund falling in value. Photograph: Bloomberg/Bloomberg via Getty Images|
Thursday 16 November 2017 17.52 GMTFirst published on Thursday 16 November 2017 15.47 GMT
The Norwegian central bank, which runs the country’s sovereign wealth fund – the world’s biggest – has told its government it should dump its shares in oil and gas companies, in a move that could have significant consequences for the sector.
Norges Bank, which manages Norway’s $1tn fund, said ministers should take the step to avoid the fund’s value being hit by a permanent fall in the oil price.
The fund was built on the back of Norway’s hydrocarbon wealth, and around 300bn krone (£27.73bn), or 6%, is invested in oil and gas companies.
The recommendation by Norway’s central bank pushed down shares in European oil companies. Europe’s index of oil and gas shares hit its lowest level since mid-October on the news and was trading down 0.39% by late afternoon.
“The return on oil and gas stocks has been significantly lower than in the broad equity market in periods of falling oil prices,” the bank explained in a statement.
“Therefore, it is the bank’s assessment that the government’s wealth can be made less vulnerable to a permanent drop in oil prices if the GPFG [sovereign wealth fund] is not invested in oil and gas stocks.”
The Norwegian government said it would consider the proposal, but a decision should not be expected until next year and a “thorough assessment” was required.
“The issues raised by Norges Bank are complex and multifaceted,” the finance ministry said.
The bank did not set a deadline for when the fund should drop its oil and gas holdings. However, it made clear that its recommendation involved divesting from existing oil and gas shares as well as ruling out future investments.
The fund’s biggest oil and gas holding at the end of 2016 was $5.36bn in Anglo Dutch firm Shell, followed by $3.06bn in ExxonMobil, $2.04bn in fellow US oil firm Chevron, $2.02bn in the UK’s BP, and $2.01bn in France’s Total. It also has shares worth more than $1bn in oil services firm Schlumberger and Italy’s Eni.
The central bank’s move was welcomed by Paul Fisher, former deputy head of the Bank of England’s Prudential Regulation Authority and senior associate at the Cambridge Institute for Sustainability Leadership.
“It is not surprising that we see the world’s largest sovereign wealth fund managers no longer prepared to take the increasing risk associated with oil and gas assets, which do not have a long-term future,” he said.
Greenpeace Norway welcomed the central bank’s intervention, but said Norway must now also cease exploring for oil in the Arctic.
“Norway is already heavily invested in oil and gas resources, so selling off the oil fund’s fossil stocks will clearly help reduce our financial carbon risk,” said Truls Gulowsen, head of the group.
Norway’s largest private pension by value said that if the fund did ditch oil and gas stocks, the action could influence other investors.
Jan Erik Saugestad, chief executive of Storebrand Asset Management, said: “From a financial point of view this makes perfect sense, and we have been arguing for this for many years. This is a rational move given the overall exposure the Norwegian economy has towards oil.”
Bill McKibben, co-founder of climate group 350.org, said the move was “as astonishing as the moment when the Rockefellers divested the world’s oldest oil fortune”.
McKibben was referring to the Rockefeller Brothers Fund’s decision to divest from fossil fuels in 2014.
The oil price fell below $30 a barrel in January 2016 during a two-year slump, but has since recovered to just over $60 in recent weeks on geopolitical uncertainty and expectations that major oil-producers will extend production curbs.
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N.37 LET BUKIT LANJAN SOAR WITH SYED ABDUL RAZAK ALSAGOFF