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Shell UK tax payments fall as North Sea output declines

Wed, 09th Apr 2014 15:33

LONDON, April 9 (Reuters) - Royal Dutch Shell saidits tax payments in the UK fell steeply last year because ofdeclining output in the North Sea and rising spending on maturefield decommissioning.

The figures, published in the oil major's annual revenuetransparency report, will help inform an intense debate overwhether Scotland would see a rise or fall in jobs and investmentshould it vote for independence later this year.

Shell said its income tax payments fell to $93 million in2013 from $815 million, upstream taxes declined to $3.48 billionfrom $3.90 billion and downstream and corporate taxes fell to$11.8 billion from $13.82 billion a year earlier.

Shell and another major, BP, have urged Scotland tostay in the United Kingdom.

While most North Sea oil production could end up withScotland should it become independent, the bulk of Shell's UKdownstream activities are situated outside Scotland.

"This is significantly lower than the amounts we have paidin recent years as a result of lower North Sea oil and gasproduction, and difficult conditions in the UK downstreamsector," a Shell spokeswoman said.

"We are making significant investments in new and existingNorth Sea oil and gas projects, and are incurring costs todecommission ageing production facilities. UK tax law enables usto deduct this expenditure for tax purposes," she added.

The total of $15.28 billion that Shell paid in taxes in theUK last year represents over 14 percent of its global taxpayments and comes only second to Germany, where it paid over$21.6 billion on the back of large downstream operations.

However, UK upstream tax payments alone came behind similarpayments in Nigeria. UK income tax payments lagged mostcountries where the major is active - including Nigeria, Norway,Australia, Malaysia, Italy and Canada.

"This (UK) situation is by no means unique amongst operatorsin the UK North Sea - but what is unique is that we choosevoluntarily to disclose how much tax we pay in key countries,including the UK," Shell said.

"We expect our recent investments of some $2 billion a yearto ensure we continue to produce safely from existing assetswhile investing in new production," the spokeswoman added. (Reporting by Dmitry Zhdannikov; Editing by Tom Pfeiffer)

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