Shell faces tax cut charges thanks to ‘Singapore Sling’

Gas giant Shell faces charges of trading excess LNG with its marketing center in Singapore to avoid paying taxes in Australia.

Deputy Competition Minister Dr Andrew Leigh said it was crucial to keep a close watch on marketing hubs, to make sure they weren’t tax avoidance schemes.

Highlighted: Andrew Leigh, Deputy Minister for Competition
Professor Rob Bruenig, ANU Crawford School of Public Policy
Dr. Mark Zirnsak, Tax Justice Network Australia


Sarah Dingle


What justification can Shell provide for selling LNG to its Singaporean marketing center at prices on average 30 GJ below contemporary JKM prices from Q3?

In accordance with Heads of Agreement (HoA) requirements, QGC is offering all excess volumes of uncontracted gas to customers in Australia on reasonable notice on competitive terms, having already executed approximately 70 PJ of gas for delivery to the domestic market at first half of 2022.

The actual price received when the LNG cargo is sold days, weeks or months later may sometimes differ from the reference price due to market fluctuations. LNG prices were broadly equivalent to JKM’s domestic benchmark price until late 2020, when JKM began to exceed the equivalent domestic net forward price free on board.

Since the period reviewed by the ACCC, QCLNG has had no excess shipments. During the most recent gas price crisis, QCG reduced its LNG production to almost 20% of its normal capacity, sending those volumes to the domestic market.

We will work constructively with the government in its review process of the HoA and ADGSM and will continue to engage with the ACCC in its ongoing work with the gas industry.

– How does Shell respond to accusations that this is a tax avoidance scheme, given that Singapore’s corporate tax rate is much lower than Australia’s?

We are committed to complying with the tax laws of the countries in which we operate, including Australia, and to paying the right amount of tax at the right time. This commitment includes a cooperative relationship with the Australian Taxation Office.

– Why has Shell paid no corporate tax in Australia since 2015?

Shell continues to invest heavily in Australia in natural gas generation, power retailing, domestic generation and trading, solar and wind development, home battery storage and carbon reduction activities .

Despite being in a heavy investment phase and running a net cash deficit, the Shell Australia Group made total direct tax payments of around $5.6 billion in the 10 years to 31 December 2021.

The Shell Australia Group paid approximately A$400 million in taxes, royalties, condensate excise duties, duties and levies to Commonwealth and state governments in 2021.

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