Royal Dutch Shell paid a total of $4,322,742,582 (about N1.5 trillion) to the Nigerian government in 2017, according to its annual payments report seen by TheCable Petrobarometer.
The amount is broken down as $3,197,530,557 for production entitlement, $765,526,389 in taxes, $245,769,306 in royalties and $113,916,331 in fees.
By comparison, Nigeria earned a total revenue of N10.6 trillion in 2017 from both oil and non-oil sources — meaning Shell alone contributed about 15 percent to the country’s income.
The total paid to Nigeria by Shell is the highest to any country where the international oil company operates.
The closest country to Nigeria is Malaysia, which received $4,153,062,216, followed by Norway with $3,425,577,190, Iraq with $$3,390,644,228 and Brazil with $1,569,519,784.
A further breakdown shows that Shell paid $3,197,530,557 to the Nigerian National Petroleum Corporation (NNPC), $79,675,241 to Niger Delta Development Commission (NDDC), $280,010,396 to Department Of Petroleum Resources (DPR) and $765,526,389 to the Federal Inland Revenue Service (FIRS).
The publication, tagged “Report on Payments to Governments for The Year 2017”, provides a consolidated overview of the payments to governments made by Royal Dutch Shell plc and its subsidiary undertakings as required under the UK laws.
WHAT THE PAYMENT SUBHEADS MEAN
In the documents, Shell defined the terms it used in reporting the payments.
“Production entitlements” are the host government’s share of production derived from projects operated by Shell.
In certain contractual arrangement, typically a production sharing contract, a government through its participation interest may contribute funding of capital and operating expenditure to projects, from which it derives production entitlement to cover such funding (cost recovery).
“Taxes” are 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. Payments are reported net of refunds.
“Royalties” are payments for the rights to extract oil and gas resources, typically at set percentage of revenue less any deductions that may be taken.
“Fees” are licence fees, rental fees, entry fees and other considerations for licenses and/or concessions.