International oil major, Royal Dutch Shell, and its subsidiaries paid the Federal Government of Nigeria over $5.6 billion which, at the exchange rate of N307/$1, comes to N1.7 trillion, the company disclosed in its sustainability report for 2019.
This amount, which represents about 20 percent of the 2019 budget, comprises payments for fees, royalties, production entitlements and taxes. It is also the highest payment to any government in the 28 countries Shell disclosed.
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According to the disclosure, the Niger Delta Development Commission (NDDC) received $136.6 million as fees and the Nigerian National Petroleum Corporation (NNPC) received $3.9 billion as production entitlement.
Production entitlement is the host government’s share of production derived from projects operated by Shell.
“This 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,” the company said.
The oil company also paid $1.062 billion as taxes to the Federal Inland Revenue Service (FIRS) and $446.3 million as royalties to the Department of Petroleum Resources (DPR), the upstream oil and gas regulator. It further paid the DPR another $239,175 as fees.
In 2019, Shell paid and collected more than $61.3 billion to governments.
“We paid $7.8 billion in income taxes and $5.9 billion in government royalties. In addition, we collected $47.6 billion in excise duties, sales taxes and similar levies on our fuel and other products on behalf of governments,” the company said in a release.
Payment to the Nigerian government represents about 9 percent of the global payments the company made to 28 governments last year.
Shell has been active in Nigeria for over 50 years. The Shell Petroleum Development Company of Nigeria Limited (SPDC) is the largest Shell company in Nigeria and produced the country’s first commercial oil exports in 1958.
SPDC is the operator of a joint venture (the SPDC JV) between the government-owned NNPC (55 percent share), SPDC (30 percent), Total E&P Nigeria Ltd (10 percent) and the ENI subsidiary Agip Oil Company Limited (5 percent).
It is focused on onshore and shallow water oil and gas production in the Niger Delta.
Shell Nigeria Exploration and Production Company (SNEPCO) operates the Bonga field, Nigeria’s first deepwater oil discovery. The Bonga facility has the capacity to produce more than 200,000 barrels per day of oil and 150 MM standard cubic feet of gas per day.
Shell Nigeria Gas (SNG) is the only international oil and gas company to set up a gas distribution company in Nigeria to supply industry customers.
Nigeria LNG (NLNG) is a joint venture incorporated in 1989 to produce LNG and natural gas liquids for export. It is Nigeria’s first LNG project. Shell holds a 25.6 percent share, together with NNPC (49 percent), Total (15 percent) and ENI (10.4 percent).
ISAAC ANYAOGU