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UK only country to give BP tax refund in 2019

The Clair Ridge bridge-linked platforms.
The Clair Ridge bridge-linked platforms.

The UK was the only country to give energy giant BP a tax rebate in 2019, a new document shows.

BP received a £16.4 million ($20.5m) tax refund from HM Revenue and Customs last year, of which £10.2m was related to decommissioning, according to the firm’s Payments to Governments report.

Overall, London-headquartered BP paid £16.7 billion to the governments of countries in which it operates. The biggest recipient was Azerbaijan, raking in £8.5bn.

To help stimulate investment in the UK oil industry, operators can deduct decommissioning costs from their taxable profits and potentially claim back some taxes that they have previously paid.

HMRC has estimated decommissioning tax reliefs will cost the UK Government about £24bn.

BP did pay £5.9m to the Oil and Gas Authority and £240,000 to the Crown Estate, meaning the final balance was £10.2m in BP’s favour.

The report covers BP’s upstream activities, including the exploration, development and extraction of oil and gas.

Payments made to governments that relate to trading, export, refining and processing activities are not included.

BP said it made a “broader socio-economic contribution” to countries in which it operates on top of the payments contained in the report.

The document said: “As well as government payments, BP contributes to the economies of the countries in which we operate by providing jobs for employees and contractors, purchasing materials from local suppliers and undertaking social investment activities.”

Recent UK offshore projects operated by BP include Clair Ridge, which came on stream in late 2018 following total investment of about £5bn.

Shell received a £94.5m refund from HMRC in 2019, mainly related to decommissioning.

Africa

Beyond the UK, BP’s payments to Angola continued to slide, falling to $1.65bn in 2019, down from $3.01bn in 2017. This mirrored a fall in the super-major’s production in the state, which fell from 192,000 barrels per day in 2017 to 115,000 bpd in 2019.

The company’s outlays in the West African state were largely driven by Block 31, which accounted for $948.3mn. Production entitlements dominated payments in Angola, at $1.21bn, while taxes were $443.8mn.

Taxes to Egypt continued to increase in 2019 from the previous years, reaching $461.3mn. The two biggest drivers of this were the Gulf of Suez and North Damietta, contributing $176mn and $136.8mn respectively.

The company confirmed it had paid a signature bonus of $10.1mn for Block A1 in The Gambia. It also paid a $5mn bonus in Mauritania for the C-13 block.

Updated with African tax figures at 8:48 pm. 

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