Basis for Preparation - Report on Payments to Governments for the year 2025
This Report provides a consolidated overview of the payments to governments made by Shell plc and its subsidiary undertakings (hereinafter
referred to as "Shell") for the year 2025 as required under the UK's Reports 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 (https://data.fca.org.uk/#/
nsm/nationalstoragemechanism) intended to satisfy the requirements of the Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority in the United Kingdom. This report is also published pursuant to article 5:25e of the Dutch FMSA (Wft) and is furnished with the US
Securities and Exchange Commission ("SEC") according to Section 13(q) under the US Securities Exchange Act of 1934.
This Report is available for download from www.shell.com/payments.
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 Shell plc and its subsidiary undertakings (Shell). Payments made by entities where 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 are not
artificially split but are 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, including a national oil company.
Project
Payments are reported at a project level except those payments that are not attributable to a specific project which 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 arrangements, 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 a 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, 2025, 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 production has reached a milestone.
