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Nick Goodway: Why do we pay Shell to extract our oil assets?

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By Nick Goodway: 19 April 2016

My eye was caught yesterday by a document from Royal Dutch Shell snappily entitled Report on Payments to Governments for 2015. (I know, I don’t lead a very exciting life.) This is one of the myriad new reports that corporates are forced to release each year in the interests of greater transparency and good governance.

But for once, alongside the hundreds of such reports I have binned, there was some interesting stuff here. In short, the report details how much Shell paid to each government in the countries in which it operates in terms of their share of production, royalties, taxes and fees.

The five countries that collected the most from Shell last year were Nigeria ($4.95 billion, or £3.5 billion), Malaysia ($4.41 billion), Norway ($4.16 billion), Oman ($2.11 billion) and Iraq ($1.36 billion). Those are not insubstantial sums to several of those countries, and the payment to Norway helps to explain why it now runs the largest sovereign wealth fund in the world.

Running further down the list of 24 countries enjoying Shell’s beneficence there is Qatar on $990 million, Denmark on $576 million and even China on $459 million.

So how did the UK fare in this handout last year? Somewhat bizarrely, the answer is that we, the British taxpayer, actually handed Shell a net $123 million. That was made up of a $128 million tax rebate less $5.46 million paid in licence fees.

In fact, the amount the taxman returned to Shell for its Brent and Northern North Sea properties was £154 million. That is despite the fact that Shell currently operates other fields including Curlew, Gannet, Nelson and Clipper in the North Sea, all of which are producing oilfields. I have always been party to the view that the Thatcher government sold our North Sea oil inheritance too early and too cheaply. That is highlighted by how well other nations seem to have cashed in on their natural resources. I hadn’t realised that one day we would be paying the oil majors for the privilege of them extracting our oil and gas.

SOURCE

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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