World's largest fund excludes Israeli oil company over Western Sahara

The Norwegian government pension fund has announced that it has excluded Delek Group from its portfolio due to its petroleum exploration offshore occupied Western Sahara. 

19 December 2023

The Norwegian government’s $1,5 trillion sovereign wealth fund announced on 18 December 2023 that it has kicked out Delek Group from its portfolio, by selling its approximately 57 million dollar investment. The reason stated is that the Israeli company’s subsidiary, NewMed Energy, in December 2022 announced a contract for petroleum exploration offshore the occupied territory, signed with the Moroccan oil and mining authorities.

Western Sahara Resource Watch reported in February 2023 that the Norwegian fund – at the time controlling 3 percent of the shares - was the second biggest known investor of Delek Group. 

On 18 December 2023, a 15-page analysis was published by the fund's Council on Ethics explaining the rationale behind the new decision. It underlines that Morocco “does not have legal, sovereign rights” over the resources of Western Sahara. Morocco has since 2001 been exploring for oil and gas offshore the territory that it holds under foreign occupation. 

«The Council has considered Delek Group’s exploration activities offshore Western Sahara to be a serious violation of fundamental ethical norms as per the Fund’s ethical guidelines, as the activity is not conducted in accordance with the wishes and interests of the people of Western Sahara, and because it contributes to maintain an unresolved situation for the area», the Council wrote.

The document also discusses under which legal regime one must interpret such an operation in Western Sahara – whether it would be assessed in the framework of law applicable to non-self governing territories or under international humanitarian law. 

«The situation in Western Sahara is unique in the sense that it is the only non-self governing territory without a recognised Administering Power. There are no clear rules on the exploitation of natural resources in such an area. Under the framework of international law, the administering powers of non-self-governing territories are under an obligation to manage the territories in accordance with the wishes and interests of the people of the area. Since the UN does not recognise Morocco as the lawful administering power for Western Sahara, it could be argued that the rules established for non-self governing territories do not apply in this situation. The legal opinion issued by the UN legal advisor in 2002 is based on an analogy with the obligations of administering powers of non-self-governing territories. An alternative approach could be an assessment based on international humanitarian law. This would probably impose even stricter limitations on companies’ operations in the area, as the legal opinion from the African Union’s legal advisor (2015) concludes», the Council notes. 

The exclusion is a direct follow-up of an already established practice by the Norwegian investment giant. In 2016, the fund excluded US company Kosmos Energy and its UK partner Cairn Energy for carrying out the exact same operation at the exact same location – the Boujdour block – offshore Western Sahara. In 2005, the fund made its first ethical exclusion ever by kicking out US company Kerr-McGee from the portfolios over the same operation. As such, Delek is Group the fourth company to be kicked out of the fund for the same exploration project on the same offshore area over the course of the last two decades. 

The fund has also a practice of excluding the long-term clients of Western Sahara phosphate rock, exported by the Moroccan state-owned phosphate company OCP operating in the territory.

WSRW calls on other investors of Delek Group to act in the same way as the Norwegian government fund. As of February 2023, other investors included Deutsche Bank, Vanguard Group and BlackRock. 

«We welcome the well-founded decision of the Norwegian government's sovereign wealth fund. Its conclusion goes straight into the core of the double problem: Morocco has no right to issue such licences, and the Saharawis have not expressed its consent to them. We hope that the other investors in Delek will take note of this decision and follow suit,» Erik Hagen, board member of Western Sahara Resource Watch stated.  

«We find Delek Group's operations in the territory deeply problematic. The Israeli company should respect the Saharawi people's right to manage their own resources and end its relationship with the occupying power of the territory», Hagen said.  

The exact value of the sold shares is not known. As of 31 December 2022, the exact value was 600,4 million Norwegian kroners, or - at the time - 60,950,992 USD. The Norwegian government's investment in the company had increased dramatically over the last years prior to the exclusion. 
Illustration from the website of Norges Bank Investment Management. 

Only two companies currently have exploration licences for oil and gas in Western Sahara - and both happen to be Israeli. The other is Ratio Petroleum with a licence further south, off Dakhla.

The document of the fund’s Council on Ethics is dated 30 May 2023. As part of normal practice of the fund, conclusions of the Council are forwarded to and enacted upon by the Norges Bank Investment Management, which manages fund, and published once the eventual sales of all shares has been completed. That is what happened on 18 December 2023. The original Norwegian language version of the recommendation is found here.

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