Oil Divestment List for Norway's $1 Trillion Fund Isn't Final

(Bloomberg) -- Figuring out exactly which oil companies Norway is targeting for divestment wasn’t easy last week when the government made its historic announcement. It turns out no one knows precisely yet.

After revealing it would allow its $1 trillion wealth fund to sell out of $7.5 billion in upstream oil and gas companies, the government disseminated two separate lists of potential targets: one with 134 companies and one with 150 companies.

The lists also included many refiners and petrochemical groups and would be at odds with the decision to only exclude “upstream” companies. The government now concedes that the actual work to single out divestments remains to be done.

“This list isn’t necessarily a list of the upstream companies that will be sold,” Finance Ministry spokeswoman Therese Riiser Walen said in an email. She declined to comment on which companies could be taken out or added.

The contradiction between the list and the government’s desire to sell only upstream companies results from Norway basing its divestments on the “Exploration & Production” category in FTSE Russell’s classification system. That category also includes companies involved in refining and oil supply, according to the definitions on the index provider’s website.

Just among the fund’s top 10 holdings in that category, three companies stand out as anything but pure upstream companies: refiners Reliance Industries Ltd. and Valero Energy Corp, and integrated energy and petrochemical group PTT PCL.

Classification Change

To complicate matters further, FTSE Russell is changing its classifications on July 1 and will do away with the “Exploration & Production” category. The companies it now includes will be transferred to either “Crude Producers” or “Oil Refining and Marketing.”

The proposal is now moving on to Parliament, where it’s expected to be approved. After that, the ministry and the fund will work out how to implement it.

“That will take time,” Riiser Walen said. It’s too early to say whether or how the change in FTSE Russell’s classification system will affect the divestment list, she said.

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