Norway’s government pension fund global now worth £370bn ($612) has become the world’s largest Sovereign Wealth Fund (SWF) overtaking Abu Dhabi Investment Authority (ADIA) after posting growth of 10.4 percent in the last year alone, according to Institutional Investor’s 2012 ranking of the world’s largest sovereign funds.
The success of the fund will be pointed to by the SNP government as evidence of what Scotland could achieve with the economic powers of independence. In stark contrast to Norway’s healthy economic state, the wealth of Scots is dwindling as the UK economic crisis and the Westminster deficit causes family budgets to be squeezed and salaries cut through austerity measures.
Owning over 1 percent of the world’s total assets Norway, with a smaller population than Scotland, the Norwegian national pension fund Statens Pensjonsfond worth $612bn in assets at the end of March compared to $554.5bn a year earlier. It is managed by Norges Bank Investment Management (NBIM), a branch of Norway’s central bank.
“We could see the emergence of as many as 20 sovereign wealth funds in the next five years” said Sven Behrendt, managing director and founder of GeoEconomica, a political risk consulting firm.
Norway has apparently secured the future stability of its people by diversifying income from and investing in its own natural resources.
Institutional Investor outlined the merits of Sovereign
Wealth Funds (SWF):
“From China to Tanzania, an unprecedented number of governments are creating SWFs in an effort to insulate their countries from macroeconomic instability and preserve natural-resource-based wealth for future generations.”
News of Norway’s growing financial security comes at the same time as Aberdeen-based Faroe Petroleum has announced an increase in oil production over the past year.
According to a report, the oil and gas firm produced 8,581 barrels of oil equivalent per day (boepd) in the first half of 2012, compared to 1,263 boepd in the first half of 2011. This increase in production boosted company revenues from £40.1mn in 2011 to £90.6mn in 2012.
According to the SNP, it has been estimated that there are the equivalent of 24 billion barrels of oil remaining in the North Sea which would achieve a higher value than the combined total of what has already been extracted to date.
Commenting, SNP MSP Maureen Watt, a former oil and gas industry worker, said:
“The increase in production that has been achieved by Faroe Petroleum is the latest positive indicator we have seen from the oil & gas industry in recent months.
“It is fair to say that the strong performance of the sector is one of the brightest spots in Scotland’s economy and is key to Aberdeen’s prosperity.
“The oil & gas industry will continue to be a major employer and economic success story for many years to come, but it is important that these resources are managed well for the long-term.”