Shell receives £ 76million refund under UK government tax scheme

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Shell received a refund from the UK government of around $ 100 million in 2020, new figures show.

In its report on payments to governments, released on Wednesday, the energy giant revealed that the rebate was largely due to its decommissioning of the Brent field.

It’s been consecutive years of refunds for Shell, which received $ 116.5million (£ 94.5million) from HM Revenue and Custom (HMRC) in 2019.

Under that of Westminster tax system, UK operators can offset losses from withdrawing oil and gas assets against taxes already paid on them, backdated to 2002.

The process aims to encourage future investments.

The UK government recently broadened the scope of what could be considered decommissioning to include certain costs incurred prior to the approval of an abandonment program.

Shells last report, which is a legally required document outlining contributions made to the governments of the 24 countries in which it has upstream operations, shows that, rather than paying taxes in the UK last year, the company received a rebate of $ 106million (£ 76million) from HMRC.

The majority of that reimbursement ($ 72million / £ 52million) relates to dismantling costs incurred on Brent, which is currently in liquidation.

The iconic North Sea field has contributed more than £ 20 billion in tax revenue to the UK government coffers.

An ‘entity-level payment’ of $ 18million (£ 13million) has been made to the oil and gas giant, while other discounts, including $ 11million (£ 8million) for UK offshore projects have also been registered.

Last year, Shell paid the industry regulator, the Oil and Gas Authority $ 7million (£ 5million), although details of the related costs were not disclosed.

An additional $ 299,420 (£ 216,586) was donated to Crown Estate Scotland.

Elsewhere, the Norwegian state has received $ 1.8bn (£ 1.3bn) from Shell, largely thanks to its significant production right from the Ormen Lange gas field.

Globally, the Anglo-Dutch supermajor has paid governments a total of $ 13 billion (£ 9 billion), with Nigeria becoming the largest recipient.

The company paid Nigeria $ 3.24 billion in 2020, up from $ 5.63 billion in 2019.

Shell paid the largest amount via a production right to Nigerian National Petroleum Corp. (NNPC), by $ 2.28 billion, up from $ 3.98 billion in 2019.

Some NGOs criticized the company for failing to provide specific details about payments to Nigeria. Shell breaks it down into four units, two PSC zones and “west” and “center-east” assets.

Payments on the latter two assets amounted to $ 929 million and $ 1.24 billion. In footnotes, Shell explained that these figures included in-kind payments, showing prices of $ 40.6 per boe and $ 15.9 per boe for the west and east-central units.

Meanwhile, Shell also released its 2020 sustainability report and industry association climate review.

The documents combine to demonstrate the company’s efforts to stay at the forefront of the movement for greater corporate transparency, especially around activities that are important to investors, governments and society at large. .

The 24th edition of Shell Sustainability Report outlines Shell’s strategy to become a net zero emissions energy company by 2050, including its social, safety and environmental performance in 2020.

In his introduction to the report, Shell CEO Ben van Beurden said: “In 2020, the COVID-19 pandemic has changed the world and people’s lives in ways we never could have imagined. It was a difficult year for everyone. It has been a difficult year for Shell, but also a year in which we have clearly paved the way for our future.

“We updated our business strategy and, when we announced it in February 2021, we called it Powering Progress. Powering Progress sets our goals to power lives and livelihoods, and respect nature while protecting the environment. He explains how we believe Shell can and should play a role as the world accelerates towards a zero, low carbon energy future. “

Updated at 1:54 PM with more details on Nigeria.

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