RDSA.L Regulatory News (RDSA)

ROYAL DUTCH SHELL PLC - RDS PLC Report on Payments to Governments - 2017

PR Newswire

London, April 9

REPORT ON PAYMENTS TO GOVERNMENTS FOR THE YEAR 2017

INTRODUCTION

This Report provides a consolidated overview of the payments to governments made by Royal Dutch Shell plc and its subsidiary undertakings (hereinafter refer to as "Shell") for the year 2017 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 Shell 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 (http://www.morningstar.co.uk/uk/nsm) intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the United Kingdom

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

BASIS FOR PREPARATION – REPORT ON PAYMENTS TO GOVERNMENTS FOR THE YEAR 2017

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 over which 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 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, which includes 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 arrangement, 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 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, 2017, 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 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 of 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.

REPORT ON PAYMENTS TO GOVERNMENT 2017 [1]

[A] Includes payment in kind of $ 989,272,947 for 26,652 KBOE valued at market price.

[B] Includes payment in kind of $ 1,656,733,207 for 42,620 KBOE valued at market price.

[C] Includes payment in kind of $ 2,646,006,154 for 69,272 KBOE valued at market price

[A] Includes payment in kind of $ 2,559,383 for 87 KBOE valued at government selling price.

[B] Includes payment in kind of $ 2,029,385 for 67 KBOE valued at government selling price.

[C] Includes payment in kind of $ 529,999 for 20 KBOE valued at government selling price

[A] Includes payment in kind of $ 257,714,625 for 6,187 KBOE valued at market price.

[B] Includes payment in kind of $ 257,714,625 for 6,187 KBOE valued at market price.

[A] Includes payment in kind of $ 3,360,492,884 for 68,430 KBOE valued at market price.

[B] Includes payment in kind of $ 30,151,344 for 665 KBOE valued at market price.

[C] Includes payment in kind of $ 3,360,492,884 for 68,430 KBOE valued at market price.

[D] Includes payment in kind of $ 17,178,899 for 364 KBOE valued at market price.

[E] Includes payment in kind of $ 12,972,445 for 302 KBOE valued at market price.

[A] Includes payment in kind of $ 927,582,239 for 59,574 KBOE valued at fixed price and $ 981,501,173 for 17,278 KBOE valued at market price.

[B] Includes payment in kind of $ 230,436,829 for 14,819 KBOE valued at fixed price and $ 419,440,905 for 7,227 KBOE valued at market price.

[C] Includes payment in kind of $ 546,542,142 for 34,824 KBOE valued at fixed price and $ 776,655,342 for 13,295 KBOE valued at market price.

[A] Includes payment in kind of $ 1,353,884,905 for 23,033 KBOE valued at market price.

[B] Includes payment in kind of $ 357,983,526 for 6,083 KBOE valued at market price.

[C] Includes payment in kind of $ 1,474,124,381 for 94,398 KBOE valued at fixed price and $ 404,271,609 for 7,540 KBOE valued at market price.

[D] Includes payment in kind of $ 230,436,829 for 14,819 KBOE valued at fixed price and $ 61,457,379 for 1,144 KBOE valued at market price.

[A] Includes payment in kind of $ 22,562,499 for 470 KBOE valued at government selling price.

[B] Includes payment in kind of $ 22,562,499 for 470 KBOE valued at government selling price.

A] Includes payment in kind of $ 149,189,889 for 2,914 KBOE valued at market price.

[B] Includes payment in kind of $ 95,444,008 for 1,866 KBOE valued at market price.

[C] Includes payment in kind of $ 53,411,166 for 1,042 KBOE valued at market price.

[D] Includes payment in kind of $ 334,715 for 7 KBOE valued at market price.

[A] Includes payment in kind of $ 3,197,530,557 for 111,155 KBOE valued at market price.

[B] Includes payment in kind of $ 34,847,300 for 627 KBOE valued at market price.

[C] Includes payment in kind of $ 605,889,970 for 11,055 KBOE valued at market price.

[A] Includes payment in kind of $ 273,747,172 for 5,129 KBOE valued at market price.

[B] Includes payment in kind of $ 577,527,685 for 10,541 KBOE valued at market price.

[C] Includes payment in kind of $ 1,413,062,569 for 78,815 KBOE valued at market price.

[D] Includes payment in kind of $ 933,193,130 for 16,670 KBOE valued at market price.

[E] Includes payment in kind of $ 415,978,890 for 7,590 KBOE valued at market price.

[F] Includes payment in kind of $ 34,847,300 for 627 KBOE valued at market price.

[G] Includes payment in kind of $ 189,911,080 for 3,464 KBOE valued at market price.

[A] Includes payment in kind of $ 7,428,428 for 200 KBOE valued at market price.

[B] Includes payment in kind of $ 5,353,995 for 142 KBOE valued at market price.

[C] Includes payment in kind of $ 2,074,433 for 58 KBOE valued at market price.

[A] Includes payments in kind of $ 646,465 for 12 KBOE valued at Market price.

[B] Includes payments in kind of $ 646,465 for 12 KBOE valued at Market price.

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.

LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70

Classification: Payments to governments