Shell pays Nigerian govt. $4.5bn for production entitlements, taxes, royalty in 2022
By Onome Amuge
Shell Companies operating in Nigeria paid a total of $4.5 billion as production entitlements, taxes, royalties, and fees to the Nigerian government in 2022.
The multinational oil and gas company disclosed the information in its 2022 sustainability report seen by Business A.M, highlighting payments made in 25 countries with upstream operations.
The report on payments to governments for the year 2022,disclosed that Nigeria’s production entitlements, which represent the host government’s share of production from projects operated by Shell, accounted for $3.035 billion of the payments, the third highest after Norway and Malaysia,accounting for $5.5 billion and $3.2 billion,respectively.
The payment,according to the report, 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.
Shell also disclosed that certain contractual arrangements, such as a production sharing contract, enabled a government to contribute capital and operating expenditure funding to projects, from which it derives production entitlement to cover such funding, also known as cost recovery which is included in the production entitlements payments.
In addition, Shell paid the Nigerian government $711.85 million in taxes on its income, profits, or production, which includes resource severance tax, and petroleum resource rent tax, while the total royalties paid in 2022 to Nigeria amounted to $691.6 million.
The report noted that the 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.
In the period under review, Shell paid $68.2 billion to governments, including $13.4 billion in corporate income taxes, and $8.2 billion in government royalties. In addition, it collected $46.6 billion in excise duties, sales taxes, and similar levies on its fuel and other products on behalf of governments.