Norway’s US$1 trillion fund Is defended after `propaganda’ attack

An oil drilling platform sits on board the world’s largest construction vessel, the Pioneering Spirit, in the Bomla fjord near Leirvik, ahead of its transportation to the Johan Sverdrup oil field, Norway. (Bloomberg pic)

OSLO: The world’s biggest sovereign wealth fund was recently accused by a number of high-profile economists of having misled people in an effort to persuade skeptics it should be allowed to exit oil and gas stocks.

The attack – one prominent critic referred to parts of a presentation made by the fund’s chief executive officer, Yngve Slyngstad, as “ propaganda” – has added friction to one of the most momentous proposals the US$1 trillion (RM4.16 trilion) investor has ever put forward.

About US$40 billion in shares of companies including ExxonMobil Corp and Royal Dutch Shell Plc are at stake, with their potential divestment marking a watershed moment for the entire fossil fuel industry.

Now, lawmakers on Norway’s parliament finance committee say they don’t understand the economists’ criticism of Slyngstad.

They, together with the rest of parliament, will decide in the spring what the fund will do with its oil and gas stocks.

“I don’t think he should be criticised for presenting data like these to the committee,” said Helge Andre Njastad of the Progress Party, which is the junior member of Norway’s minority government.

Opposition lawmakers agreed. The Socialist Left Party’s Kari Elisabeth Kaski said Slyngstad’s figures were “completely unproblematic.” Bjornar Moxnes, who runs the Red Party, said the fund’s analysis was “useful and relevant.”

“I don’t believe the finance committee feels misled by what we were presented, like the critics claim.

“Regardless of the issue of returns and risk for the fund from owning oil and gas stocks, we believe the fund should divest, out of climate considerations,” he said.

The controversy started after Slyngstad last month told lawmakers his fund would have made billions of dollars in additional returns if it had dumped oil and gas stocks earlier. That rubbed a lot of people the wrong way.

The economists countered that the hypothetical divestment in the fund’s analysis was set at dates where the oil price was historically high, making the return figures misleadingly attractive.

The fund made its arguments a month after a government-commissioned expert panel said there was little to gain from the divestment plan.

Knut Anton Mork, an economics professor who agreed with the initial divestment proposal, characterized the figures used in the fund’s presentation as “dangerously populist.”

The wealth fund’s initial case had focused on limiting Norway’s exposure to a drop in oil prices, given its status as western Europe’s biggest petroleum producer.

When the proposal was first made last year, it rocked markets, and drew responses from a number of major investors.

A majority in Norway’s parliament is leaning toward supporting the fund’s proposal, but the expert commission’s recommendation against the plan made the final outcome less clear.

The minority government, led by the Conservative Party, has traditionally been reluctant to make big changes to the fund’s management. It will announce its view on the divestment issue next year after a public consultation on the expert report.

The Finance Ministry and a Conservative lawmaker, Mudassar Kapur, both declined to comment on the criticism of Slyngstad’s presentation.

Norges Bank Investment Management, which manages the wealth fund, also declined to comment, beyond noting that its presentation wasn’t intended as a “contribution to any debate.”

Njastad of the Progress Party said lawmakers are unlikely to be swayed by the hyperbole.

“If there’s one thing we’re used to, it’s partisan comments and people who have an opinion,” he said. “So we can easily live with this.”