The Norwegian sovereign wealth fund has divested two companies due to their involvement with oil extraction in Western Sahara.

Norges Bank Investment Management (NBIM), responsible for the Government Pension Fund Global, said it heeded a recommendation by the Council of Ethics to sell its stakes in Cairn Energy and Kosmos Energy, worth a combined NOK475m (€49.6m) at the end of 2015.

Referring to the Council’s recommendation, NBIM cited the risk of “particularly serious violations of fundamental ethical norms”, the reason given in the past when the NOK7.1trn fund sold its stakes in companies active in Western Sahara.

Cairn, based in London, and Kosmos, based in Bermuda, are both either actively involved in the exploration of oil and gas reserves off the coast of Western Sahara, or of the belief that the question of self-governance for the region does not have to be settled before such exploration begins.

NBIM previously divested its stakes in Innophos Holdings over its phosphate mining activities in the region, with the Council of Ethics in early 2015 also citing concerns over the unresolved legal status of the land used for the mining.

In its recommendation, the Council said: “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 utilisation of natural resources in such areas.”

In a statement, Kosmos said it “fundamentally disagreed” with th divestment decision. 

”The Council’s decision is disappointing coming as it does after several years of engagement between Kosmos and the Council,” it contunied.

”It was our understanding that the Council would continue to observe our activities and maintain an open dialogue. The Council’s assertion that our activities represent a ‘serious violation of fundamental ethical norms’ is totally at odds with our activities there and remains unexplained even after we requested clarification.”

However, the statement did not address the Council’s argument that extraction and exploration should not be conducted in territories without self-governance. 

Fellow Norwegian investor KLP divested French oil company Total in 2013 over its activities in Western Sahara. 

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