Payments to governments

In 2008, Shell collected over $94 billion in excise duties and sales taxes on behalf of governments on the fuel and other products we transported or sold. We paid another $26 billion in corporate taxes, and $2.3 billion in royalties on the oil and gas we extracted.

In developing countries, oil and natural gas revenues can bring widespread benefits. Managed well, the money can fund services such as schools and hospitals and diversify the economy. Managed poorly, the money can stimulate corruption, social inequality and conflict. While the responsibility for turning these funds into social benefits lies with governments, we can help. We encourage and support governments’ efforts to use energy revenues wisely.

We believe that getting government to manage their oil and gas revenues better starts with openness: from companies like us about how much we pay to governments; and from governments, about how those funds have been spent. Wherever possible, such disclosures ought to be made in the interests of transparency and good governance.

Supporting the Extractive Industries Transparency Initiative

We are a leading corporate supporter of the Extractive Industries Transparency Initiative (EITI), an effort first launched by the UK Government in 2002 and now supported by a wide range of governments, multilateral agencies and companies in the oil, gas and minerals businesses. In 2003, with the permission of the Nigerian government, we became the first company to publish the royalties, taxes and other payments made to that government.
 
The EITI aims to make the revenues that host governments receive from all oil and mineral activities more transparent. The idea is that knowing how much money governments receive is a useful first step in helping them be more open and responsible in how those funds get spent. The revenues covered include payments made by private companies like us (e.g. signature bonuses, taxes and royalties, etc.), and profits from state-owned companies. We fully support this approach. The drive to increase transparency needs to apply to all companies, private and state-owned.
We sit on the board of the EITI and support national programmes in Azerbaijan, Cameroon, Gabon, Kazakhstan and Nigeria. In 2008, we again reported payments to the Nigerian government.

Should only aggregated company payments be disclosed?

Some have argued that, in order to fulfil the EITI's mandate of increasing the transparency of oil and mineral revenues received by host governments, it is unnecessary to disclose annual payments made by individual companies. Instead, these amounts could be aggregated by an independent aggregator - and the total amount published for comparison against government receipts. Supporters of this approach argue that, amongst other things, commercial confidentiality is kept this way.

Our view is that it is for host governments to decide whether individual or aggregated company payments should be disclosed.

But having said that, we start from a position that individual company payments should be disclosed in each country that is implementing EITI - unless there are good and defensible reasons not to do so.

Visit the EITI website - opens in new window