NORWAY – The head of the Norwegian central bank says the return on the Petroleum Fund is likely to exceed the cash from the country’s petroleum activities in around 15 years.

“The return on the Petroleum Fund will to some extent make up for the fall in petroleum revenues in the period ahead,” said Norges Bank governor Svein Gjedrem. “In about 15 years, the return on the Fund may exceed the cash flow from petroleum activities.”

According to bank’s website, the government’s latest forecast for the size of the fund is 955 billion crowns (125.3 billion euros) at the end of 2003. For the most recent period for which figures are available, the third quarter of 2002, the fund posted a –5.1% decline to 603.6 billion crowns (79.2 billion euros). This figure includes 37.6 billion crowns (4.9 billion euros) in capital inflows.

Gjedrem told the Supervisory Council of the bank in his annual address that Norway’s position as international investor may eventually overshadow its position as an oil and gas producer.

Gjedrem said Norway is in a phase where petroleum wealth is being invested at home and abroad – to safeguard its petroleum wealth and maintain a broad-based business sector.

“This will also be the case if we should decide to reform our pension system in the future, with a larger component of public or private fund-based schemes,” he said.

He said the Petroleum Fund’s strategy is to buy a relatively large volume of equities when prices are low, and buying a smaller volume – or selling – when prices are high.

The Petroleum Fund is set to release its annual report on March 3.

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