Royal Dutch Shell Plc – Report On Payments To Government For The Year 2020

07.04.2021  |  GlobeNewswire

Basis for Preparation - Report on Payments to Governments for the year 2020

This Report provides a consolidated overview of the payments to governments made by Royal Dutch Shell plc and its subsidiary undertakings (hereinafter referred to as "Shell") for the year 2020 as required under the UK's Report on Payments to Governments Regulations 2014 (as amended in December 2015). These UK Regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013)) and apply to large UK incorporated companies like Royal Dutch Shell plc that are involved in the exploration, prospection, discovery, development and extraction of minerals, oil, natural gas deposits or other materials. This Report is also filed with the National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism) intended to satisfy the requirements of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in the United Kingdom. Following the UK's exit from the EU and the end of the transition period on 31 December 2020, this Report is also published pursuant to article 5:25e of the Dutch FMSA (Wft).

This Report is available for download from www.shell.com/payments.

Legislation
This Report is prepared in accordance with The Reports on Payments to Governments Regulations 2014 as enacted in the UK in December 2014 and as amended in December 2015.

Reporting entities
This Report includes payments to governments made by Royal Dutch Shell plc and its subsidiary undertakings (Shell). Payments made by entities where Shell has joint control are excluded from this Report.

Activities
Payments made by Shell to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals, oil and natural gas deposits or other materials (extractive activities) are disclosed in this Report. It excludes payments related to refining, natural gas liquefaction or gas-to-liquids activities. For a fully integrated project, which does not have an interim contractual cut-off point where a value can be attached or ascribed separately to the extractive activities and to other processing activities, payments to governments will not be artificially split but are disclosed in full.

Government
Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a subsidiary of a government, including a national oil company.

Project
Payments are reported at project level except that payments that are not attributable to a specific project are reported at entity level. Project is defined as operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project.

"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government giving rise to payment liabilities. Such agreements can be governed by a single contract, joint venture, production sharing agreement, or other overarching legal agreement. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management.

Payment
The information is reported under the following payment types.

Production entitlements
These are the host government's share of production in the reporting period 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 (home country). Production entitlements arising from activities or interests outside of its home country are excluded.

In certain contractual arrangements, typically a production sharing contract, a government through its participation interest may contribute funding of capital and operating expenditure to projects, from which it derives production entitlement to cover such funding (cost recovery).
Such cost recovery production entitlement is included.

In situations where a government settles Shell's income tax obligation on behalf of Shell by utilising its share of production entitlements (typically under a tax-paid concession), such amount will be deducted from the reported production entitlement.

Taxes
These are taxes paid by Shell on its income, profits or production (which include resource severance tax, and petroleum resource rent tax), including those settled by a government on behalf of Shell under a tax-paid concession. Payments are reported net of refunds. Consumption
taxes, personal income taxes, sales taxes, property and environmental taxes are excluded.

Royalties
These are payments for the rights to extract oil and gas resources, typically at a set percentage of revenue less any deductions that may be taken.

Dividends
These are dividend payments other than dividends paid to a government as an ordinary shareholder of an entity unless paid in lieu of production entitlements or royalties. For the year ended December 31, 2020, there were no reportable dividend payments to a government.

Bonuses
These are payments for bonuses. These are usually paid upon signing an agreement or a contract, or when a commercial discovery is declared, or production has commenced, or production has reached a milestone.

License fees, rental fees, entry fees and other considerations for licenses and/or concessions
These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. Also excluded are payments made in return for services provided by a government.

Infrastructure improvements
These are payments which relate to the construction of infrastructure (road, bridge or rail) not substantially dedicated for the use of extractive activities. Payments which are a social investment in nature, for example building of a school or hospital, are excluded.

OTHER
Operatorship
When Shell makes a payment directly to a government arising from a project, regardless of whether Shell is the operator, the full amount paid is disclosed even where Shell as the operator is proportionally reimbursed by its non-operating venture partners through a partner billing process (cash-call).

When a national oil company is the operator of a project to whom Shell makes a reportable payment, which is distinguishable in the cash-call, it is included in this Report.

Cash and in-kind payments
Payments are reported on cash basis. In-kind payments are converted to an equivalent cash value based on the most appropriate and relevant valuation method for each payment, which can be at cost or market value or such value as stated in the contract. In-kind payments are reported in both volumes and the equivalent cash value.

Materiality Level
For each payment type, total payments below ?86,000 to a government are excluded from this Report.

Exchange Rate
Payments made in currencies other than US Dollars are translated for this Report based on the foreign exchange rate at the relevant quarterly average rate.

[1] This report is not corrected for rounding.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $785,580,079 for 27,839 KBOE valuated at market price.
[B] Includes payment in kind of $545,722,467 for 19,339 KBOE valuated at market price.
[C] Includes payment in kind of $1,331,302,546 for 47,178 KBOE valuated at market price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $6,087,616 for 199 KBOE valuated at government selling price.
[B] Includes payment in kind of $985,661 for 32 KBOE valuated at government selling price.
[C] Includes payment in kind of $6,087,616 for 199 KBOE valuated at government selling price.
[D] Includes payment in kind of $985,661 for 32 KBOE valuated at government selling price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[2] We are the joint operator of the onshore Karachaganak oil and condensate field (Shell interest 29.25%), where we have a license to the end of 2037. In December 2020, we successfully settled a long-running contractual dispute with the Republic about the profit share between the parties. Shell's share of the settlement amount is $424 million.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $363,377,839 for 29,999 KBOE valuated at fixed price and $623,287,566 for 12,864 KBOE valuated at market price.
[B] Includes payment in kind of $385,143,488 for 31,749 KBOE valuated at fixed price and $467,656,569 for 9,876 KBOE valuated at market price.
[C] Includes payment in kind of $128,869,361 for 10,633 KBOE valuated at fixed price and $262,359,128 for 5,463 KBOE valuated at market price.
[D] Includes payment in kind of $73,524 for 17 KBOE valuated at fixed price and $813,106,926 for 16,423 KBOE valuated at market price.
[E] Includes payment in kind of -$6,556 for -2 KBOE valuated at fixed price and $218,757,014 for 4,466 KBOE valuated at market price.
[F] Includes payment in kind of $748,447,803 for 61,731 KBOE valuated at fixed price and $277,837,209 for 6,318 KBOE valuated at market price.
[G] Includes payment in kind of $128,875,917 for 10,634 KBOE valuated at fixed price and $43,602,114 for 997 KBOE valuated at market price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $2,277,898,173 for 102,926 KBOE valuated at market price.
[B] Includes payment in kind of $212,267,787 for 5,176 KBOE valuated at market price.
[C] Includes payment in kind of $282,122,219 for 5,615 KBOE valuated at market price.
[D] Includes payment in kind of $107,694,184 for 2,361 KBOE valuated at market price.
[E] Includes payment in kind of $175,101,894 for 3,522 KBOE valuated at market price.
[F] Includes payment in kind of $212,267,787 for 5,176 KBOE valuated at market price.
[G] Includes payment in kind of $107,020,325 for 2,093 KBOE valuated at market price.
[H] Includes payment in kind of $929,096,440 for 22,863 KBOE valuated at market price.
[I] Includes payment in kind of $1,241,107,549 for 77,702 KBOE valuated at market price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $2,582,264 for 74 KBOE valuated at market price.
[B] Includes payment in kind of $1,449,620 for 44 KBOE valuated at market price.
[C] Includes payment in kind of $1,132,644 for 30 KBOE valuated at market price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.
[A] Includes payment in kind of $12,138,272 for 317 KBOE valuated at market price.
[B] Includes payment in kind of $12,138,272 for 317 KBOE valuated at market price.

[1] For the definitions of any terms used in this chart (e.g. activities and payment types), please refer to pages 1-2 of the Report.

CAUTIONARY NOTE
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this Report "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries ", "Shell subsidiaries", and "Shell companies" as used in this Report refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as "joint ventures" and "joint operations" respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as "associates".
The term "Shell interest" is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.