Shell, Partners Pay $1.86bn Tax
By Mike Oduniyi
Shell Petroleum Develop-ment Company of Nigeria (SPDC) said at the weekend that, along with its joint venture partners, it paid about $1.86 billion as tax to the Federal Government last year.
Stating that the disclosure on the tax payment was in line with the Extractive Industry Transparent Initiative (EITI), which the Nigerian goverment has embraced, Shell said the amount included the payment of $1.2 billion paid as Petroleum Profit Tax (PPT) and $600 million paid as royalty.
Shell is the operator of the joint venture with the Nigerian National Petroleum Corporation (NNPC), Total and the Nigerian Agip Oil Company (NAOC).
Although, it did not state the tax payments for 2002, the company, however, said 2003 payments were higher than figures for the preceding year due to increase in oil production and crude prices.
Presenting the 2003 People and Environment report in Lagos at the weekend, Shell's External relations Director, Mr. Precious Omuku, said the joint venture oil production averaged 910,000 barrels per day (bpd) last year, representing a 27 percent increase over the production level in 2002.
Omuku said the company has capacity to produce over one million barrels per day.
He added that in the area of gas business, the company sold about 1.171 million standard cubic feet of gas last year.
"As was the case in 2002, SPDC operated under very tight budgetary conditions. The company proposed a full oil and gas growth programme budget for the joint venture of $2.7bn (about N351bn) for the year," he added.
Omuku said the allocation that was made available from the government was $2.3bn (about N299bn) thereby recording a shortfall of about $.4bn or (N52bn).
According to him, as a result of this development, some oil and gas projects were deferred and that the budget also led to reduction in community development budget for last year. The company spent about $30 million (about N3.9bn) in the year under consideration.
Omuku said civil and intra-tribal unrest in the Niger Delta area also led to dislocation of production, increased vandalisation of equipment, crude oil theft and project delays.
"Despite the above challenges, oil production increased during the year to an average of $910.00 barrels per day. This represents an increase of 27 per cent over last year (2002)," he said.
The development, he explained, further reflects the increase in production capacity that has resulted from investments made over the last few years in the development of new fields. Shell's production reached a 20 year high from October, averaging about one million barrels per day.
Omuku said for the second year running, the company fared well in the gas sector with the coming on stream of Train 3 in November last year and this, he said, increased gas supply to the Nigeria LNG in Bonny, Rivers State.
"This helped SPDC to achieve total sales averaging 1.171 mmscf/day of gas thereby supassing the target of 1,1000mmscf/day for the year and the 812mmscf/day achieve in 2002," he said.
He added that the good performance in oil and gas production was recorded on high level of dangerous operating environment in the Niger Delta which bothers on high level of criminality, inter-tribal conflicts and community disturbance of operation.
Omuku pointed out that the organised theft of crude oil continues to top the list of criminal activities and possibly provides the funds and arms for some of the inter-communal crises in the region.
He said there was a reduction in communal disturbances including shut down of flowstations, blockade of rigs, stoppage of construction work, from a high of 282 in 2002 to 160 last year.
Omuku added that the company was working hard and ready to join other stakeholders in bringing development to the Niger Delta region, seen as key to checking youth restiveness in the region.
The company spent $30 million on community development in 2003, a figure Omuku said, would be higher given the work done by company's contractors in the communities.
"We are working closely with the Niger Delta Development Commission. They are working towards developing a master plan. A master plan has a logic behind it, a logic for development and we want to be able to pass into that logic in whatever we are going to do as part of the development of the Niger Delta," he said.
He added that the oil industry has its eyes firmly on achieving the zero gas flare by 2008. The deadline, according to him, was set by the oil companies as against the initial target by the Federal Government for 2010.
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