Norwegian sovereign wealth fund energy move hits ASX

Australian energy companies belted after Norway’s sovereign fund rethinks its involvement with fossil fuels.

Beach Energy’s operations in the Victoria’s Otway basin. Picture: Supplied.

Moves by Norway’s huge sovereign wealth fund to start limiting its exposure to fossil fuels reverberated through the ASX on Monday, with major energy stocks taking a belting.

The energy sector accounted for nearly a quarter the day’s losses on Monday, taking 5.5 points off the index as the ASX 200 lost 23.562 points to 6180.199, after Norway’s sovereign wealth fund announced at the weekend that it would move to reduce its exposure to energy explores and producers.

Norway’s sovereign fund is the largest in the world with $US1 trillion ($1.42tn) in investments.

On Sunday, it held more that $870 million worth of shares in Australian oil and gas players – including in Beach Energy, Oil Search, Santos, Woodside Petroleum and Caltex – all of which had plunged by midday on Monday.

The fund announced on the weekend that it would seek to help the oil dependent country avoid overreliance on lower oil prices, calling out climate change as a financial risk factor. It said the move did not reflect a position on oil prices or sustainability of the sector.

Still, the announcement comes amid falling oil prices, after the price of Brent last peaked in early October but has weakened steadily since then due to a range of factors.

The oil price ended last week lower on demand concerns following the release of weak economic data out of China and the US.

Norwegian Minister of Finance Siv Jensen. Norway’s $US1 trillion wealth fund, the biggest of its kind in the world, will begin dumping shares in oil and gas companies, but stopped short of expelling major producers like ExxonMobil and Chevron. Picture: AP

Santos dropped 2.2 per cent to $6.80 while Oil Search slipped 2 per cent to $7.90. Woodside Petroleum stepped back 1.7 per cent to $34.70 while Origin Energy shed 0.8 per cent to $7.30.

Shares in Beach Energy closed 2 per cent lower at $2.00.

Some of the smaller energy players the fund had shares in fared slightly better, with Horizon Oil unchanged at 12 cents, while Senex Energy added 4.6 per cent to 34c.

Sundance Energy made 2.8 per cent to 37c while Cooper Energy put on 1 per cent to 49c.

Liquefied Natural Gas was down 3 per cent to 48c while Australis Oil & Gas was dropped 2.1 per cent at 23c. Karoon Energy lost 2.9 per cent to $1.02.

with Ben Wilmot