United Kingdom launches two billion pound Energy Wealth Fund

Chancellor John Healey announced the creation of an Energy Wealth Fund on Wednesday, according to the BBC. The government is seeding the new vehicle with two billion pounds diverted from the existing National Wealth Fund. The announcement was made alongside the approval of the Jackdaw gas project. [1]

The project marks the first time that the United Kingdom treasury has formally calculated potential returns from investing historical North Sea proceeds, the BBC reported. Other energy exporting nations have built multi-trillion dollar reserves using similar oil and gas revenues over recent decades. Norway has amassed a 2.4 trillion dollar fund from its own North Sea resources. [1]

A sovereign wealth fund is a state owned investment fund that buys financial assets, real estate, stocks, and bonds globally, according to Wikipedia. These funds are typically financed by central bank reserves or commodity export profits. As FTMQ Business reported earlier, Chancellor Healey is also facing international pressure regarding budget balancing decisions ahead of his upcoming financial statement. [2][3]

The new British initiative addresses a long standing debate in domestic economic policy regarding the management of natural resource revenues, the BBC reported. The treasury has not yet detailed how additional future oil and gas revenues will be directed into the new fund. [1]