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article imageNorwegian fund sells its stocks in Canadian oilsands companies

By Karen Graham     Oct 8, 2019 in Business
The largest pension fund in Norway has removed four Canadian energy names and one Russian name from its investment list and says it will no longer put money in companies that derive more than five percent of their revenue from the oil sands.
Kommunal Landspensjonskasse or KLP is Norway's largest pension fund with assets of about $94 billion, according to CBC Canada.
In a press release, the KLP said its "full exit from oil sands is great news for its customers as we continue to reduce our exposure to companies involved in an activity that is not aligned with a two-Degree Celsius temperature target."
"By going coal and oil sands free, we are sending a strong message on the urgency of shifting from fossil to renewable energy," said KLP CEO Sverre Thornes in the statement.
BNN Bloomberg is reporting that Calgary-based Cenovus Energy Inc., Suncor Energy Inc., Imperial Oil Ltd., and Husky Energy Inc., along with Russia-based Tatneft PAO, are now to be excluded from investment consideration, the fund said.
Oil sands  Fort McMurray  Alberta  Canada
Oil sands, Fort McMurray, Alberta, Canada
eryn.rickard (CC BY 2.0)
In evaluating the oilsands, KLP came to the conclusion that oilsands production was akin to coal production. The fund pointed out that "together, these industries represent highly risky and environmentally damaging operations which can now be replaced by clean energy alternatives."
Further, the fund says, "As with the coal threshold, we have gone from removing companies with 30 percent of their business coming from oil sands to 5 percent. This may well set a new investor standard.
Five oilsand companies
Shares in all four Canadian oilsand companies have dropped since a year ago because oilsands production has outstripped pipeline capacity. This has led to steep price discounts for Canadian crude and caused production curtailments in Alberta.
Cenovus shares have fallen by nearly 10 percent since last October. On Monday, the company announced that it has lowered its guidance for the 2019 capital budget and raised its fourth-quarter 2019 dividend payout, adding that it will be able to reach its target of reducing long-term net debt to $5 billion over the next 12 to 18 months. After opening at $8.43 this morning on the NYSE, Cenovus Energy shares had dropped to $8.31
Suncor and Imperial are both down more than 20 percent and Husky has dropped by more than 55 percent. Husky Energy Inc. shares are continuing to nosedive, dropping to $6.71 a share, a loss of 2.31 percent today.
The Athabasca Oil Sands  Alberta Canada.
The Athabasca Oil Sands, Alberta Canada.
"Institutional investors are abandoning high-carbon investments because they can see where the puck is heading," said Keith Stewart, senior energy strategist with Greenpeace Canada, in an email.
Tim McMillan, the president and CEO of the Canadian Association of Petroleum Producers is optomistic that even with further restrictions in oilsands production, companies will still pull through.
McMillan said Canadian oil and natural gas producers "operate under one of the most stringent regulatory systems in the world," adding that the International Energy Agency forecasts that natural gas and oil will remain the major sources of global energy in 2040."
"Canada can make the world a better place by providing reliable, affordable and responsibly produced energy that will help raise standards of living around the world," McMillan wrote in an email. "We can do this while reducing net global greenhouse gas emissions, and developing world-leading environmental technology and expertise."
Tatneft is a Russian vertically integrated oil and gas company with headquarters in the city of Almetyevsk. It is the sixth largest oil company in Russia. Created in 1950 through a merger of several smaller companies, Tatneft is listed on the MICEX-RTS, and its ADRs are traded on the Frankfurt and London stock exchanges.
More about Canada oilsands, Norwegian fund, KLP Group, russian oilsands company, Renewables
 
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