As Norway's Oil Production Peaks, What Next For Huge Investment Fund? NYT

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Quietly and with characteristic modesty, Norway has turned the income from 3.3 million barrels a day of offshore oil production into a government-owned investment fund that recently, for the first time, topped one trillion kroner, or about $165 billion. That makes it one of the world's richest funds, in the same league as the $180 billion fund of the California Public Employees' Retirement System, the biggest public pension system in the United States, and only slightly smaller than ABP, the Dutch pension fund, which has more than $200 billion in assets.

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While the fund is growing rapidly, its cash stream elevated by oil income and high oil prices, Norway is discovering that even its oil gusher cannot forever stave off the retirement financing crunch. Already, Norway's economists worry that politicians are taking too big a slice of the fund's earnings to cover continuing budget gaps. Some politicians worry that rivals will turn the fund into a financing source for pork-barrel favoritism. And certain businessmen, led by Fred Olsen, a shipping and oil rig magnate, want the government to use the fund more aggressively to promote Norwegian entrepreneurship around the world.

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Next year, just as its oil production is expected to begin its decline, Norway plans to rename the Petroleum Fund the Pension Fund, Mr. Foss said in an interview here. The idea is to signal that the fund should be more of a cash reserve for the future than a source of immediate income. "It is only a symbol," Mr. Foss said. "It will not be managed as a pension fund." He said he wanted to "keep in people's minds that this money is to be used for pensions in the years to come." (Emphasis added)

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http://www.nytimes.com/2005/01/01/business/worldbusiness/01norway.html?pagewanted=all