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Shell: What’s the Scam?

by Michael West | May 9, 2021 | What's the scam?

Shell paid more to consultants of its massive oil and gas business in Australia over the past two years than in paid in tax. What’s the scam? 

“Debt-loading” and tax losses; that’s the scam. The gas cartel got the LNG export boom horribly wrong. They made Australia the biggest gas exporter in the world, but in the process they overspent, drove up domestic gas prices and took massive asset write-offs which will see them paying next to no tax for years to come.

The latest accounts for Shell Exploration Holdings Australia Ltd have recorded in $8bn in further write-downs. 

It’s time to follow the US and others where tax losses can’t be stored up indefinitely (to deduct endlessly against profits) because it allows the likes of Shell, its peers Exxon and Chevron, and many others to pay tax once every six years or so.

Debt-loading is a key scam for the oil majors, that is, loans from overseas Shell associates to Shell in Australia. The 2020 financial statements show a lift in related party loans to $US10.4bn. This debt-loading saw them rake out $US671m over the past two years in finance charges to other Shell companies overseas.

And the oil and gas majors also have a penchant for scamming the “thin capitalisation” rules (which are designed to stop them carrying too much debt for tax purposes) by issuing extra equity, as Shell did again this time around.

They paid more to consultants over the past two years – $US34m – than they paid in tax at $US29m, and that little bit of tax was quite possibly paid elsewhere in the region. Overall, revenue rose from $US3.5bn to $4.2bn.

They recorded a $US1.8bn tax benefit for last year.

The ATO transparency data for 2017 showed Shell paying zero tax on $A4.5 billion. 

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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