Royal Dutch Shell Plc has said it paid $4.32 billion to the Nigerian Government as taxes and royalties in 2017, representing an increase of 19 per cent from the $3.64 billion the oil giant paid in 2016.
The Shell’s Sustainability Report 2017, which was released this week, showed that the $4.32 billion paid to Nigeria was the highest paid by the oil giant to any government in the 29 countries covered by the report.
By the report, government includes any national, regional or local authorities of a country, and includes a department, agency or entity that is a subsidiary of a government such as a national oil company.
Shell said it prepared the report in accordance with The Reports on Payments to Governments Regulations 2014 as enacted in the UK in December 2014 and as amended in December 2015.
The oil giant said the report includes payments to governments made by Royal Dutch Shell plc and its subsidiary undertakings.
The company, however, added that payments made by entities over which Shell has joint control are excluded from this report.
According to the company, payments made 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.
The report, however, excludes payments related to refining, natural gas liquefaction or gas-to -liquids activities.
The multinational oil firm said in the yearly sustainability report that out of the $4.32 billion paid in 2017, $3.197 billion was paid to the Nigerian National Petroleum Corporation (NNPC) for production entitlement.
The payments include production entitlements, which are the host government’s share of production in the reporting period derived from projects operated by Shell.
Production entitlements also include 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).
The payments also include taxes paid by Shell on its income, profits or production, which include resource severance tax, and petroleum resource rent tax, including those settled by a government on behalf of Shell under a tax-paid concession.
The report also showed that crude oil theft from pipelines of Shell Petroleum Development Company (SPDC) increased by 50 per cent, to roughly 9,000 barrels per day (bpd) in 2017 from 6,000 bpd in 2016.
While sabotage-related oil spill incidents rose to 62, from 48 in 2016, the report however indicates that the volume of crude oil spilled fell to 1,400 tones, from 3,900 tonnes in 2016
Also, Shell’s operational spills in Nigeria rose by one to nine in 2017, but the volume of oil spilled fell to 100 tones from 300 tones in 2016, according to the report.
The report further revealed that theft and sabotage account for 90 per cent of the oil spills in the Niger Delta.
However, the report added that the shutdown of the Forcados export terminal for much of 2016 “reduced opportunities for third-party interference”
It added that SPDC also “made $10 million available” in 2017 to help set up the Hydrocarbon Pollution and Remediation Project (HYPREP), a government-led body to clean up contaminated sites
Shell said it had also developed with the International Union for Conservation of Nature (IUCN) a new framework for remediation of soil and groundwater that it will begin testing in 2018