Shell in Tanzania

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In April 2015, Royal Dutch Shell and BG Group announced the Royal Dutch Shell’s proposed takeover of the BG Group. After the agreement of shareholders in early 2016 the takeover became effective from Monday 15th February 2016. [1] Thereby Royal Dutch Shell is also taking over BG Groups 60 per cent stakes in block 1 and block 4. [2] In April 2017, it was announced that the Minister of Energy in Tanzania awarded Shell with an extension of Block 1 for further three and a half years to complete pre-FEED and FEED ahead of investment approval.[3] In early 2018, news media reported that Shell was seeking an extension for its block 4 license. [4] Shell reaffirmed its commitment to invest in the liquefied natural gas plant in Lindi in November 2018. According to the Country Chairman of Shell Tanzania, Alex Knospe the global LNG market is growing, and the company needs to start a new LNG project, such as the one in Tanzania, every couple of years. According to Mr. Knospe, discussions on the Host-Government Agreement are ongoing but will still take a considerable amount of time. The Host-Government Agreement is needed to establish the commercial, fiscal and regulatory framework of the project.[5]

Capital gains tax dispute

In 2016 the Government of Tanzania ordered Shell to pay USD 520 million in capital gains tax after its takeover of BG Groups stakes in block 1 and 4 in southern Tanzania. The blocks contain 16 TCF of natural gas. Shell filed an appeal to the Tanzanian tax tribunal to bar the Tanzania Revenue Authority (TRA) from demanding the dues. Shell argues that it allocated 1.8 percent (the equivalent of USD 850 million) of the total price paid for the purchase of the stake while BG Groups Tanzania subsidiary had already spent about USD 1.5 billion which would indicate a loss and not a gain. In contrast TRA says its assessment of the tax liabilities are based on the market value of the assets that represents the volumes valued at global natural gas prices and Shell’s acquisition costs. [6] A prolonged tax dispute between the Government of Tanzania and Shell could delay the development of the liquefied natural gas (LNG) facility that Shell and other partners are planning to construct. [7] In May 2018, it was reported that a Member of Tanzanian Parliament requested the formation of a special committee to investigate the transaction between Shell and BG and ensure that Shell will pay the full capital gains tax.[8]

Corporate Social Responsibility

Shell Tanzania is engaging in different Corporate Social Responsibility (CSR) activities Tanzania, for example:[9]

  • Shell conducts training sessions for reporters to inform them on the oil and gas sector in the country
  • Shell supports environmental activities in the country such as the environment day


  1. "Royal Dutch Shell takeover of BG Group”, “meteor”, retrieved 1 December 2016.
  2. "Shell appeals to Tanzania tax tribunal over 520m in capital gains tax claim”, “The Exchange”, retrieved 23 November 2018.
  3. "Shell Gets 42 month extension in Block 1, Tanzania”, “Oil News Kenya”, retrieved 23 November 2018.
  4. "Shell seeks extension for Block 4 in Tanzania”, “Upstream”, retrieved 23 November 2018.
  5. "Royal Dutch Shell chief sure on LNG investment as global market demand”, “IPP Media”, retrieved 23 November 2018.
  6. "Shell appeals to Tanzania tax tribunal over 520m in capital gains tax claim”, “The Exchange”, retrieved 23 November 2018.
  7. "Shell appeals to Tanzania tax tribunal over 520m in capital gains tax claim”, “The Exchange”, retrieved 23 November 2018.
  8. "Tanzanian MP Wants Shell-BG U.S.$500 Million Transaction Investigated”, “The Citizen”, retrieved 23 November 2018.
  9. "Latest news and events”, “Shell Tanzania”, retrieved 23 November 2018.