Shell again paid no taxes on its oil and gas production in Britain’s North Sea last year, even as a global energy crisis drove fuel prices to record highs.
Tax rebates linked to the decommissioning of old oil platforms led to Europe’s largest oil company paying 121 million euros in 2021.
The annual reports, which Shell is required to publish under UK law, show that Shell has not paid UK taxes on its oil and gas production in the North Sea for the fourth consecutive year.
The UK-headquartered energy giant paid $95 million in taxes and other charges in 2017 but has since received annual payments of between $99 million and $141 million from the UK Treasury in refunds that offset any taxes owed.
In contrast, Shell paid $4.5 billion in taxes, production entitlements and fees in Norway in 2021, the report shows, mostly due to the Ormen Lange gas field that Shell operates in partnership with the Norwegian state.
Dustin Benton, policy director at think tank Green Alliance, said the disclosures would contribute to calls for a windfall tax for oil and gas producers to fund investment in greener technologies and support households struggling with soaring energy bills.
“Taking some of the money from these supernormal profits that are being made now and putting them into clean energy technologies is just a really obvious thing to do,” he said.
Many oil and gas companies reported record profits last year as gas prices hit record levels and oil hit a seven-year high, but Chancellor Rishi Sunak defied calls for a windfall tax last month as Britain urged companies to step up investment.
The current oil and gas tax regime dates back to 2016, when then-Chancellor George Osborne cut taxes and expanded the industry’s ability to offset the cost of plugging old wells and removing equipment.
The changes were aimed at boosting investment on the UK continental shelf at a time when the fall in oil prices had raised questions about the future of the sector.
Shell’s largest decommissioning project is the Brent oil and gas field, which consists of four oil platforms. The first platform was decommissioned in 2017, the second in 2019 and began dismantling the third in 2020. Production continues via the fourth platform, Brent Charlie.
The decommissioning process is scheduled to be completed in 2024. According to Shell, since production began in 1976, the UK government has paid more than £20bn in taxes.
Shell was the sixth largest gas producer in the North Sea last year, producing 1.7 billion cubic meters, according to consultancy Wood Mackenzie.
The company announced this month that it plans to invest £20 billion to £25 billion in the UK’s energy system over the next decade and has earmarked more than 75 per cent for low-carbon and zero-carbon projects, including offshore wind, hydrogen and solar electric vehicle infrastructure.
https://www.ft.com/content/38068628-f1a7-4219-abca-ef421de4d237 Shell unveils another tax-free year in the UK North Sea