In order to limit the state's exposure in the event of a steep drop in oil prices - as was the case in 2014 - the idea would be to no longer allow the fund to invest in oil stocks and sell its existing holdings. Norway's own oil company, Equinor ASA, is also increasing renewable energy investments, and even recently changed its name from Statoil.
Companies involved in downstream operations, such as distribution and refining, and, more importantly, integrated companies which do both down- and upstream - such as giants ExxonMobil, Shell, BP and Total - will not be affected.
"Exploration and production companies will be phased out from the fund gradually over time", the government proposal said, without giving a timeline for the divestment.
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In fact, the proposed divestment is limited to only include companies exclusively involved in oil and gas exploration, not integrated majors like BP, Exxon and Equinor, Norway's state-owned oil giant. The proposal would see a selloff of about $7.5 billion.
The fund had holdings worth around $37 billion - 5.9 percent of its total equity investments - in the oil sector at the end of previous year.
While Norway has a strong environmental movement, its economy is heavily dependent on the oil and gas industry, which contributed about 21 per cent of government revenues previous year.
Talking point: The significance of this move is in its motivation: not necessarily one of climate activism, but a clear indication that there is financial advantage in a transition away from fossil fuels. "These are the companies making the big investments now in renewables and so on".
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The former attorney general said she faced attempts at interference and "veiled threats" when she refused to budge. But the prime minister made no apologies as he discussed the issue at a nationally televised news conference.
The proposal was first revealed two years ago when Norges Bank, the country's central bank which manages the fund, advised the Government to exclude the oil and gas sector from the benchmark index for the fund. Also Swedish oil company Lundin is on the list.
However, environmental organizations in the country want the Finance Ministry to proceed and take new steps that ultimately will result in a full exit from companies engaged in oil and gas.
The government recommendation must still be approved by the country's parliament before going ahead. It has significant stakes in several oil companies, with some $6 billion tied up in Royal Dutch Shell alone.
Greenpeace campaigner Martin Norman said the government's decision "does not address Norway's exposure to oil and we are not showing the world the way forward".
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Symptoms typically appear about seven to 12 days after initial exposure, but could stay dormant for up to 21 days. New Zealand's Ministry of Health warned travelers to make sure they are immunized after outbreaks overseas.