Shell has announced that it will pay approximately $2bn (PS1.7bn), in UK and EU windfall taxes during the last quarter 2022. This is the first time Shell has paid UK tax in five years.
In October, the oil company caused anger when it claimed it hadn’t paid any UK windfall taxes due to its heavy North Sea investment.
It announced that it would pay nearly $2bn in windfall tax payments on Friday, making the total in both the UK and EU to $2.4bn. These levies are intended to capture the excess earnings that have been raked in due to high commodity prices and Russia’s invasion.
Shell has not paid UK North Sea tax since 2017, as it has received reimbursements for investments and decommissioning expenses in the region.
The government announced in May a windfall tax on oil and gas company profits. Jeremy Hunt, the chancellor, announced that this would increase from 25% to 35%.
Shell was able to take advantage of an 80% investment allowance tied to the UK windfall taxes in the third quarter. The autumn budget also reduced this allowance.
Shell stated that it expects to have paid between $4.3bn-$4.7bn in taxes around the globe over the fourth quarter.
Wael Sawan is the new Shell chief executive. He was previously head of the integrated gas and renewables section.
Industry watchers were shocked when Van Beurden suggested that governments might need to tax energy companies in order to finance efforts to save the “poorest” from skyrocketing bills.
At a London energy conference, he stated that government intervention was necessary in one way or another. To protect the poorest, it may be necessary for governments to tax those in the room to pay for it.
Russ Mould is an investment director at AJ Bell. He said that Shell shouldn’t be too upset about the new levies because Ben van Beurden, who recently departed, claimed they were ‘inevitable.’
“Sawan has a difficult task ahead of him as he tries to guide Shell through the next phase in the energy transition, despite the competing goals of energy security and lower carbon emissions.
As the price of wholesale natural gas soared, Shell saw record earnings through 2022. Shell posted profits of $9.5bn for the third quarter, which is double its earnings from the previous year but less than the three prior months.
The oil company also announced Friday that trading in its chemicals business was expected to be significantly lower in the final quarter 2022 than the previous quarter.
The company also stated that the quarter’s liquefied natural gases production was negatively affected by outages at two Australian plants.