Notwithstanding the challenges of crude theft and pipeline vandalisation, the Federal Government, last year, earned $4.48billion from Shell companies in Nigeria in royalties, taxes and other payments.
This was published in Shell’s 2021 Sustainability Report, last Wednesday, and made available to The Tide in Port Harcourt.
In his introduction to the report, Shell’s Chief Executive Officer, Ben van Beurden, writes: “Our Powering Progress strategy, which we launched in 2021, sets out how Shell can play a leading role in helping the world to reduce its carbon emissions.
“At the heart of our strategy lies our own target to become a net-zero emissions energy business by 2050, in step with society’s progress in achieving the Paris climate goals. In this, our 25th Sustainability Report, we share how we are working towards our Powering Progress goals.”
Shell also published its 2022 Industry Associations Climate Review Update.
It provides a progress update on actions that Shell has taken over the past year to address differences in climate-related positions with industry associations where the company identified misalignment.
It also provides a summary of how much Shell paid to 36 associations in 2021.
In addition, Shell published its 2021 Payments to Governments Report covering countries where it has exploration and production activities.
This report details payments in 25 countries and was prepared in accordance with the UK’s The Reports on Payments to Governments Regulations 2014 (as amended in December 2015).
It indicated that Nigeria’s crude production recorded sub-optimal performance, last year, owing to theft and asset vandalism despite improved quota allocation from the Organisation of the Petroleum Exporting Countries (OPEC).
The Shell companies, including the Shell Petroleum Development Company of Nigeria Limited (SPDC), Shell Nigeria Exploration and Production Company Limited (SNEPCo), and Shell Nigeria Gas (SNG) paid a combined $6billion in direct taxes between 2015 and 2020 to the government, according to the Federal Inland Revenue Service (FIRS).
Shell’s largest payment in Nigeria, last year, was to Nigerian National Petroleum Company (NNPC) Limited with $2.89billion in production entitlement.
The amount included a payment of $2.61billion.
The company also paid $573.4million in royalties and $511.27million in taxes.
On an asset basis, Shell paid out $1.55billion for its OPL 212/OML 118 and OPL 219/OML 135 package, covering the Bonga field.
Of the payments to Nigeria, $458.59million came from Shell Petroleum Development Company (SPDC).
This Shell unit works via a joint venture with NNPC in Nigeria’s onshore acreage.
However, the company is working to reduce its onshore footprint.
Shell paid $20.86billion in taxes in 2021.
Payments to Nigeria accounted for 21.5per cent of 2021’s total, the lowest since 2017.
Nigeria also accounted for all the sabotage and theft incidents that caused spills for Shell in 2021.
The company reported the number of spills fell to 106, from 122.
Also, the volume increased from 1,500 tonnes in 2020 to 3,300 tonnes in 2021.
In an attempt to prevent theft, SPDC installed steel cages on wellheads in Nigeria.
By the end of last year, it had installed 283 cages, including 62 with CCTV.
SPDC has 360 oil producing wells in Nigeria and 60 producing gas wells.
It also controls around 4,000km of pipelines and flowlines.
The SPDC joint venture reported gross production of 503,000 barrels of oil equivalent per day in 2020, in which Shell has a 30per cent stake.
Shell reported SPDC was continuing to review its onshore oil portfolio in Nigeria.
“In the last decade, SPDC has reduced its licences in this area by half,” the report said.
In recognising Shell’s contributions to Nigeria, the FIRS, last week, named Shell as a “leading tax compliant organisation in Nigeria for 2021”.
The Executive Chairman of the FIRS, Muhammad Mamman Nami, noted that Shell companies demonstrated commitment to paying all government taxes hence the two awards.
In his remarks, Managing Director, SPDC and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, said he was happy that government partners and stakeholders recognised Shell’s significant contributions to the revenue of Nigeria by which the government can grow the economy and bring about developments to every part of the country.
He said: “Nigeria is an important heartland for Shell, and will remain so. We will continue to invest in the country to help meet its energy needs, with a focus on growing our deep-water and gas positions.”
Okunbor, who was represented at the event by a Director of the SPDC and General Manager, Business Government Relationship, Bashir Bello, said Shell companies would remain committed to expanding their gas portfolio for domestic and export markets while also increasing access to energy for Nigerians.”
Shell Plc said itpaid the Federal Government a total of $1,594, 974, 771 as taxes, royalties and fees in the year 2021.
The company said that the sum of $511, 270, 685 was specifically paid as taxes for 2021.
The report said that industry associations and payment to governments puts Nigeria’s production entitlement for the period at $2, 885,571,789.
Shell also paid $573,430,812 as royalties to the Nigerian government, and $510, 274, 274 as fees.
According to Shell, the 2021 Shell Sustainability Report outlines the progress towards many of its Powering Progress strategic ambitions, and shares related social, safety and environmental performance data.

By: Nelson Chukwudi