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Shell’s payments for upstream were $22.4 billion 

All in, including upstream, LNG activities and refining operations, in 2017 Shell (ticker: RDS.A) said it paid in total more than $59.1 billion to governments.

“We paid $6.3 billion in income taxes and $3.7 billion in government royalties, and collected $49.1 billion in excise duties, sales taxes and similar levies on our fuel and other products on behalf of governments,” Shell’s Chief financial Officer Jessica Uhl said in a statement on the company’s sustainability page.

Payments related to upstream activity

The 2017 Payments to Governments Report is focused just on the upstream sector of Shell’s business. It shows payments in 29 countries where Shell has upstream operations.

“Payments made by Shell to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals, oil and natural gas deposits or other materials (extractive activities) are disclosed in this Report,” Shell said.

Refining, liquefaction are excluded

The report excludes payments related to refining, natural gas liquefaction or gas-to-liquids activities. For a fully integrated project, which does not have an interim contractual cut off point where a value can be attached or ascribed separately to the extractive activities and to other processing activities, payments to governments will not be artificially split but disclosed in full. The report is prepared in accordance with the UK’s Reports on Payments to Governments Regulations 2014, as amended in December 2015, the company said.

In the report, Shell outlines types of payments as:

  • Production entitlements (Shell defines these as the host government’s share of production in the reporting period derived from projects operated by Shell. This includes the government’s share as a sovereign entity or through its participation as an equity or interest holder in projects within its sovereign jurisdiction – home country.)
  • Taxes
  • Royalties (Shell defines these as payments for the rights to extract oil and gas resources, typically at set percentage of revenue less any deductions that may be taken.)
  • Dividends (Shell said that for the year ended December 31, 2017, there were no reportable dividend payments to a government.)
  • Bonuses (According to Shell, these are usually paid upon signing an agreement or a contract, or when a commercial discovery is declared, or production has commenced or reached a milestone.)
  • License fees, rental fees, entry fees and other considerations for licenses and/or concessions (According to Shell, these are fees and other sums paid as consideration for acquiring a license for gaining access to an area where extractive activities are performed.)
  • Infrastructure improvements (According to Shell, these are payments which relate to the construction of infrastructure (road, bridge or rail) not substantially dedicated for the use of extractive activities. Payments which are of a social investment in nature, for example building of a school or hospital, are excluded.)

Shell said that payments below £86,000 for each type are excluded from the report. Shell defines each payment type in further detail in the report.

Who got the most?

Counting only upstream related payments, the countries whose governments received the highest payments from Shell for 2017 were:

NIGERIA – $4,322,742,582 (largest category was production entitlements at $3.2 billion)

MALAYSIA – $4,153,062,216 (largest category was production entitlements at $3.2 billion)

NORWAY –  $3,425,577,190 (largest category was production entitlements at ($2.6 billion)

IRAQ – $3,390,644,228 (largest category was production entitlements at $3.3 billion)

OMAN – $1,618,577,938 (largest category was taxes at $1.6 billion)

BRAZIL – $1,569,519,784 (largest category was royalties at $1.5 billion)

Bonuses, infrastructure improvement 

In its report for 2017 for payments to governments related to upstream operations, Shell reported that bonuses were paid to only three countries:

  • Brazil: $102.5 million
  • Egypt: $18 million
  • India: $7.5 million

The only recipients of infrastructure improvements payments in 2017 were:

  • Gabon ($7.4 million)
  • Australia ($5.8 million)
  • Ireland ($2.5 million)

North America

The U.S. government received upstream related payments of $$481,705,100 in 2017, with $478 million of that in the form of royalty payments.

The government of Canada received $142,063,232 from Shell in 2017, the biggest category being royalties at $131 million.

Shell’s complete breakdown by country follows in the table below.

Shell's government payments for upstream were $22.4 billion 

Shell’s government payments for upstream were $22.4 billion

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