A Review of the Nigerian Energy Industry

Norway fund set to cut Equatorial Guinea oil link

A Shell worker brandishing a machete during an oil spill clean up24 April 2014, London – Norway’s sovereign wealth fund is considering selling off shares in oil companies that work in Equatorial Guinea.

The move is prompted by alleged misuse of oil funds in the African country and the fact that oil revenue does nothing to relieve abject poverty, the fund’s ethics council said.

“We are looking into the oil companies in which we hold shares and which are active in Equatorial Guinea,” Ola Mestad, the head of the fund’s ethics council, said on Wednesday, according to Reuters.

“The production of the country’s dominant natural resource appears to enrich only the country’s elite while the living conditions of the population are amongst the worst in the world,” the council said in its annual report.

That list of companies includes US supermajor ExxonMobil, Marathon Oil and Hess.

The Norwegian Pension Fund Global was ExxonMobil’s tenth-largest shareholder at end-2012 with some 16 billion crowns ($2.7 billion) worth of shares, good for a 0.81% stake, Reuters reported.

The fund, whose investments totalled $725 billion as of Wednesday, invests Norway’s revenues from oil and gas production for future generations. ExxonMobil was its tenth-largest equity holding at end-2012, according to the fund’s annual report.

The fund has frequently excluded companies for what it deems to be unethical behaviour based on the recommendations of its ethics council.

Mestad declined to name the specific companies being considered in the case of Equatorial Guinea or say how long the process could take.

ExxonMobil said it was “firmly committed to honest and ethical behaviour”.

“We maintain the highest ethical standards, obey all applicable laws and regulations, and respect local cultures wherever we operate in the world,” said Charlie Engelmann, a spokesman for ExxonMobil.

He declined to comment on the fund’s possible decision to disinvest.

US energy companies Marathon Oil and Hess also operate fields in Equatorial Guinea. The oil fund owned 0.76% of Marathon and 0.69% of Hess at the end of 2012, according to Reuters data.

Officials at both Marathon and Hess could not immediately be reached for comment, Reuters said.

Equatorial Guinea is nominally one of Africa’s richest countries with a GDP per capita of more than $27,000 per year, according to the World Bank, putting it ahead of Portugal and just below Spain. Even so, much of the 720,000 population lives in deep poverty.

The country was ranked among “the worst of the worst” civil liberty abusers in a 2012 survey by democracy group Freedom House.

President Teodor Obiang Nguema has been in power in the tiny central African state for more than three decades, and his son is wanted in both the US and France on corruption charges.

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