Shell Discloses Payments to Governments as Part of Transparency Initiative

With investors digesting Shell's offer to buy BG, the Anglo-Dutch major is continuing its attempt to demonstrate its commitment to transparency. As part of this transparency plan, Royal Dutch Shell said on Friday that it paid $14.3 billion in corporate taxes and $3.9 billion in royalties in 2014 to the governments in countries where it operates. Shell has voluntarily revealed the taxes it pays in 14 countries for the last four years. In 2014, the highest tax payment -- $2.3 billion -- went to the Nigerian government, followed by Norway at $2.05 billion, while the US received the largest amount in royalties at $985 million, followed by Nigeria at $727 million. However, campaigners for more transparency say Shell's payment disclosure to governments does not reveal enough information. While Shell is indeed making these disclosures voluntarily and is revealing more than some of its peers such as BP and Exxon, the company's report pales in comparison to what Statoil put out recently under a new Norwegian transparency law, said Joseph Williams, Senior Advocacy Officer at the Natural Resource Governance Institute. Statoil last month revealed a detailed report of its payments. The report was broken down by each of its oil extraction projects worldwide, a move that was welcomed by transparency campaigners (IOD Mar.20'15). "The major difference is that Shell's report does not include any project-by-project information. For us and for investors, too, having detailed project level information is critical to local accountability and for investors to manage risk in companies," said Williams. Campaigners have also questioned the fact that Shell is revealing payments in only 15 of the 39 countries where it is involved in upstream activity. Countries such as Russia, China and Egypt are not included in the report. Shell says that certain countries prohibit the disclosure of payment information. However, starting in 2016, under new UK and EU regulations, energy companies such as Shell will have to disclose every payment over €100,000 ($86,000) made to every single government where they operate. Shell said in a statement that the new disclosure regulations may put companies like itself in a difficult situation by breaking laws in certain host countries when it complies with the UK law, or breaking the law in the UK by not reporting on the host countries. "We continue to have issues with some of the ways in which all of this will work, but there is guidance being drawn up at the moment which hopefully will help to resolve some of those issues," a Shell spokesperson told International Oil Daily. According to the Natural Resource Governance Institute's Williams, however, Shell is working very hard to circumvent the UK rules that are already in place. Shell is "trying to influence industry guidance, which advocates an approach to joint venture reporting and project-level reporting that would reduce the quality and the quantity of information that's disclosed," he said. He added that BP and Exxon have also been at the forefront of trying to undermine the UK legislation on payments to governments. Shell stressed that it will comply in full with the regulations. Shani Alexander, London