Norway records sharp drop in oil revenue

Norway records sharp drop in oil revenue

The Norwegian oil fund, a long-term state investment policy funded by oil revenues experienced sharply negative returns in 2022, a year described by the central bank as “challenging’’.

The fund returned minus 14.1 per cent in 2022, equivalent to a loss of 1.637 billion kroner (162.5 million dollars), Norges Bank announced in a statement on Tuesday.

This was the biggest loss since the 2008 financial crisis, making the year the second weakest in the history of the fund, officially called the Pension Fund Global.

“It was a tough year all around the world,’’ the head of the fund, Nicolai Tangen, said at a press conference in Oslo.

The market was affected by the war in Europe, high inflation and rising interest rates, he noted.

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He added that this had affected both the equity and bond markets, which was very unusual.

“All sectors of the equity market had negative returns, with the exception of the energy sector”, Tangen said.

Nonetheless, the total value of the state fund rose slightly to around 12.43 billion kroner by the end of 2022, because the Norwegian krone lost value against several major currencies.

In addition to currency effects, this was also related to cash inflows.

The fund has gained massively in long-term value over the years, reaching the 10-billion-krona mark for the first time in 2019.

On Tuesday morning, it stood at just over 13.4 billion kroner.

The Pension Fund Global was considered a long-term insurance fund for future generations in Norway when oil can no longer be drilled.

It was funded with revenues from Norwegian oil and gas production.

The fund was managed by the central bank on behalf of the Finance Ministry and has invested in more than 9,300 companies worldwide, including corporations such as Apple, Nestlé and Microsoft. (dpa/NAN)

Norway records sharp drop in oil revenue