SHELL got $121 million (£90m) net tax rebates from the UK Government last year when the group benefitted from the surge in oil and gas prices, which has fuelled a cost of living crisis.
Details of the rebates are included in the latest report on payments made to governments by Shell, which shows the company received refunds worth $131m in 2021. The value of these was much greater than the $10m fees Shell paid to UK Government bodies.
The report covers a year in which Shell group increased annual profits to $19.3 billion, from $4.8bn in 2020 and stoked controversy by proposing to develop the giant Cambo oil field off Shetland.
READ MORE: North Sea firms to make huge payouts to investors following surge in oil and gas prices
Chief executive Ben van Beurden saw the total value of his pay package rise to €7.4m (£6.3m) last year from €5.8m in the preceding year.
The company was a big beneficiary of the sharp rises in oil and gas prices seen last year amid the recovery from the pandemic. Prices rose further following Russia’s assault on Ukraine.
The revelation of the size of the rebates may stoke renewed calls for a windfall tax to be imposed on firms operating in the North Sea. Labour has said the proceeds could be used to fund cuts in energy bills.
Rishi Sunak ignored calls for him to increase the tax burden on oil and gas firms when he made his Spring Statement last month.
The Government appears keen to encourage firms to boost North Sea production in order to reduce the UK’s reliance on imports amid the fallout from the war in Ukraine.
The rebates received by Shell last year underline the value of the tax reliefs that have been put in place to encourage investment in the North Sea.
They relate mainly to the costs incurred by Shell in respect of decommissioning work on fields that have reached the ends of their lives, including Brent.
Previous reports on payments to governments show Shell received refunds totalling $510m in the UK from 2015 to 2020 net of the taxes it paid on profits generated in the country.
Shell has retrenched in the North Sea in recent years as it has looked to focus investment on the most profitable assets in its global portfolio. The company sold off North Sea assets it deemed non-core and shed hundreds of jobs.
However, Shell indicated last year that it is prepared to invest heavily in favoured areas such as West of Shetland, where it has completed big developments with BP in recent years.
The company provoked fierce opposition from environmentalists after it proposed to develop the Cambo field West of Shetland with Siccar Point Energy.
While Mr van Beurden mounted a vigorous defence of the plans in October, Shell announced weeks later that they had been shelved. The company cited economic factors and the potential for delays.
READ MORE: Shell boss says giant is eyeing North Sea gas developments after Cambo U-turn
The increase in oil and gas prices seen this year may have helped improve the economics of the project.
Shell indicated last month that it still sees potential in Cambo. After the regulator extended the licences covering the field for two years, Shell said the extension would allow time to evaluate all potential future options for the project.
A Shell spokesperson said yesterday that since 2002 the company had paid over £7bn in tax to the UK exchequer from its upstream business. Since 2014 the company has invested more than £6bn in the upstream business to secure future production. It is planning to invest between £20bn and £25bn in the UK energy system over the next 10 years with around 75% of that to be spent on low and zero carbon projects and services.
Shell paid a total of $20.8bn to governments around the world in 2021. The biggest net payment went to the government of Norway which received $4.52bn. The second biggest went to the government of Nigeria, which was paid $4.48bn.
The $10m fees Shell paid in the UK include $0.3m in respect of West of Shetland.
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