The world’s largest sovereign wealth fund, which manages $1tn (£770bn) of Norway’s assets, is to dump investments in firms that explore for oil and gas, but will still hold stakes in firms such as BP and Shell that have renewable energy divisions.

The Government Pension Fund Global (GPFG), whose assets exceed those of rival sovereign wealth funds such as China’s, said it would phase out oil exploration from its “investment universe”.

The strategy shift, on the back of advice from the country’s central Norges Bank, will affect 1.2% of its equity holdings, worth about 66bn Norwegian krone (£5.7bn).

GPFG said the decision was motivated by a desire to protect the Norwegian economy by reducing exposure to oil price falls, rather than climate concerns.

It will retain stakes in fossil fuel companies as long as they have some involvement in renewable energy. Its stakes in large firms with renewable units include 2.4% of Shell and 2.3% of BP, because it believes they will play a major role in developing green energy.

It will sell stakes in 134 companies, including UK-listed firms Tullow Oil, Premier Oil, Soco International, Ophir Energy and Nostrum Oil & Gas, all of which experienced a fall in share price after the announcement, knocking £130m off their combined stock market value.

“The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline,” said Norway’s finance minister, Siv Jensen. “Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector.”

Greenpeace UK’s oil campaigner, Charlie Kronick, said: “This partial divestment from oil and gas is welcome, but not enough to mitigate Norway’s exposure to both global oil and gas prices and the wider financial ramifications of climate change.

“However, it does send a clear signal that companies betting on the expansion of their oil and gas businesses present an unacceptable risk, not only to the climate but also to investors.

“While BP and Shell are excluded from the current divestment proposal, they must now recognise that if they continue to spend billions chasing new fossil fuels, they are doomed.”

The GPFG has amassed about $1tn of wealth, according to its website, by investing the proceeds from Norway’s supplies of North Sea oil. The government insisted oil would be an “important and major industry in Norway for many years to come”.

“The state’s revenues from the continental shelf are, as a general rule, a consequence of the profitability of exploration and production activities,” it said.

In a sign that Norway could step up its policy against oil investment, Norges Bank will be asked to perform a review of climate risk in the GPFG.

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Tom Sanzillo, director of finance for the Institute for Energy Economics and Financial Analysis, said: “These are very important statements from a big fund. They’re doing it because fossil fuel stocks are not producing the value that they have historically.

“It’s also a warning to the integrated oil companies that investors are looking at them to move the economy forward to renewable energy.”

He said GPFG’s investment strategy also “underscores that the fracking business model is unsustainable”.