Mumbai, March 11 (IANS) The recent decision by Norway's sovereign wealth fund to divest $7.5 billion stocks across oil companies globally, including Indian firms, is unlikely to have any immediate impact on the country's energy sector, according to analysts.
On Friday, Norway's sovereign wealth fund, the world's biggest, said "it plans to divest about $7.5 billion worth of stocks from companies involved in oil and gas exploration and production", adding it is an economic decision based on careful analysis of market situations.
Indian Oil, Maharashtra Natural Gas Ltd (MNGL), Oil and Natural Gas Corporation (ONGC), Oil India and Reliance Industries Ltd (RIL) are among the 134 companies in which the sovereign fund would cut its investment.
Although experts don't see any immediate impact on the energy sector in India, they described it as a reversal in global trends. This has been witnessed in the coal-based projects that are seeing fund squeeze from both wealth funds and private equity players.
"The industry will not see an impact immediately. In fact, this is not the first occasion that funding has been curtailed, it is a trend you see. Three years back the World Bank had cut funding for such organisations," said Deepak Mahurkar of the PwC.
Another expert said if oil exploration gets negative rating from overseas funds, like the one being witnessed for coal projects, it could in the long-run push explorers towards alternate sources of energy.
According to Norway's Finance Minister Siv Jensen, it is anticipated that almost all of the growth in listed renewable energy sector over the next decade will be driven by companies that don't have renewable energy as their main business.
"The fund should be able to participate in this growth," he said.
Despite such curtailment of funds, the quantum of fossil fuel-based energy sources is increasing and the dependence on oil and gas is also growing, experts said.
Moreover, for oil guzzling countries like India, oil and gas are also a massive sources of revenue for the government. This is one of the reasons that the government wants the industry to flourish even at the little cost of ecology.
Another expert said this was a signal from global funds that energy companies need to change. But the analyst added there would not be any immediate affect on the industry.
But if more such development comes up, it will be difficult to maintain oil investment and output at this level. This is especially true for countries, like India that imports 80 per cent of its oil requirements.
"The oil industry will be an important industry in Norway for many years to come. The country's revenue from the continental shelf is, as a general rule, a consequence of the profitability of exploration and production activities. Therefore, this measure is about diversification," read a statement by the sovereign wealth fund.
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
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