The Petroleum Fund of Norway is a government controlled fund owned by the people of Norway. Also called The Petroleum Fund.

The purpose of the fund is to invest parts of the large surplus generated by the Norwegian petroleum sector (mainly taxes of companies, but also payment for license to explore). It is predicted that revenues from the petroleum sector have reached their peak and will decline significantly over the next couple of decades. The Petroleum Fund was established in 1990 after a decision by the Norwegian Parliament to counter the effects of the forthcoming decline in income and to smooth out the disrupting effects of highly fluctuating oil prices.

The fund is administred by the Norwegian Central Bank. It reached a portfolio value of NOK 1 trillion ($165 billion) early December 2004.

Since 1998 the fund was allowed to invest up to 50% of its portfolio in the international stock market.

Debate

Due to the relatively large size of the fund relative to the low number of people living in Norway (4,5 million people), the Petroleum Fund has become a hot political issue. The three major themes of discussion are:

1. If one should use more of the current oil revenues to solve current problems instead of putting the wealth into financial "gambling" through The Petroleum fund.
2. If the investment policy of The Petroleum Fund is ethical.
3. If the high exposure (around 40% in 2003) to the highly fluctuating stock market is financially safe.

Part of the investment policy debate are related to the discovery of several cases of investment by The Petroleum Fund in highly controversial companies, involved in businesses such as arms production and tobacco. The Petroleum Fund’s Advisory Council on Ethics was established 19th November 2004 by Royal Decree. Accordingly, the Ministry of Finance issued a new regulation on the management of the Government Petroleum Fund which also includes ethical guidelines.

See also

• Economy of Norway
• Energy Resources of Norway

External link

• Official site