Shell confirms paying $4.5bn into Nigerian govt account for tax, royalties

Shell Companies operating in Nigeria have disclosed that they paid the Nigerian government a total of $4.5 billion in 2022, as production entitlements, taxes, royalties, and fees.

The information was contained in a report highlighting payments made by Shell in 25 countries with Upstream operations.

The report revealed that production entitlements, which represent the host government’s share of production from projects operated by Shell, accounted for over $3 billion of the payments.

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.

The report also disclosed that certain contractual arrangements, such as a production sharing contract, allowed a government to contribute capital and operating expenditure funding to projects, from which it derives production entitlement to cover such funding (cost recovery). The cost recovery production entitlement is included in the payments.

In addition, Shell paid over $700 million in taxes on its income, profits, or production, including resource severance tax, and petroleum resource rent tax, while the total royalties paid in 2022 to the Nigerian government amounted to over $691 million.

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These royalties are payments for the rights to extract oil and gas resources, typically at a set percentage of revenue less any deductions that may be taken.

The report further stated that since 2016, Shell has made mandatory disclosures under the UK’s Reports on Payments to Governments Regulations 2014 (amended December 2015), and has voluntarily published the revenues generated by its operations through taxes and royalties since 2012.

Overall, Shell paid $68.2 billion to governments in 2022, including $13.4 billion in corporate income taxes, $8.2 billion in government royalties, and $46.6 billion in excise duties, sales taxes, and similar levies on its fuel and other products on behalf of governments.

The report noted that Shell believes being open about its tax payments helps people to understand how much the company pays and why.

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