While oil and gas contractors and companies are reeling under slumping oil and gas prices and oil fields and rigs are reducing output, a UK pension fund continues to be optimistic about the future of fossil fuel.
West Yorkshire Pension Fund, which is managed by Bradford Council, has announced that it does not have any intention of divesting its fossil fuel investments in the near future. It is still optimistic about the future of fossil fuel but will closely monitor the progress of this sector and continuously assess risks. At the same time, the pension fund will also be investing in green and sustainable energy technologies.
West Yorkshire Pension Fund Director Rodney Barton has submitted a report about the fund’s investments to a scrutiny and overview committee that is overseen by Bradford Council. The report stated that while oil and gas prices had witnessed a slump, the sector has since improved, and major oil and gas companies such as Shell and BP were paying dividends to shareholders.
The report added that the performance of the oil and gas shares held by West Yorkshire Pension Fund has been consistent and strong in the long term and it is better if the fund continues retaining these shares, which have yielded about £4 million per annum over the last three decades.
If the fund decides to sell its shareholdings, it would cause the share prices to nosedive. At the moment, the fund owns about 38 million shares in BP. If the share price falls, so will the dividends. Barton’s report revealed that in the 2015/16 financial year, dividends from UK-based oil and gas companies amounted to £33 million.
West Yorkshire Pension Fund is managing assets worth £11 billion of approximately 270,000 members. Its investments are overseen by the Investment Advisory Panel, which has members from five district councils of West Yorkshire. The Panel is responsible for ensuring that the investment portfolio managed by the fund is balanced and does not invest in volatile and risky investments.