Big US oil companies reveal massive payments to foreign governments

Oct 01, 2024 News

Kaieteur News – (Reuters) – The three largest U.S. energy exploration companies paid more than US$42 billion to foreign governments last year, about eight times more than what they paid in the United States, according to regulatory filings.

The disclosures from Exxon Mobil, Chevron Corp, and ConocoPhillips were required this year for the first time ever under a new Securities and Exchange Commission requirement.

Transparency advocates had been pushing for the rule for more than a decade to shine a light on Big Oil’s foreign financial transactions in its global quest for oil, and provide a sense of whether U.S. taxpayers are getting a fair share of the value of soaring U.S. production. The United States has become the world’s largest oil and gas producer in recent years, thanks mainly to a boom in the massive Permian Basin in Texas and New Mexico.

“The truth is, here in the U.S., we get one of the worst deals for the extraction of our natural resources,” said Michelle Harrison, deputy general counsel for EarthRights International, an environmental advocacy group. About 90% of Exxon’s nearly US$25 billion in global payments went to foreign governments in 2023, even though close to a quarter of Exxon’s global exploration and production earnings come from the United States. ‘Here we have the boiler and from here it goes to a device that takes it into the heater, The Texas-based oil giant paid out US$22.5 billion in taxes, royalties and other items overseas, with the United Arab Emirates ($7.4 billion), Indonesia ($4.6 billion) and Malaysia ($3.2 billion) topping the list, according to the disclosures.

By contrast, Exxon made about US$2.3 billion in U.S.-based payments in 2023, including just $1.2 billion to the U.S. Internal Revenue Service, according to Exxon’s report.

Exxon’s U.S.-based upstream earnings totaled US$4.2 billion, compared to US$17.1 billion in non-U.S. markets, according to Exxon’s 2023 annual report. In the preamble of Exxon’s SEC report, the company complained that comparisons between U.S. and overseas payments were not fair and said U.S. government payments totaled $6.6 billion last year when you include more than $4 billion in state and local taxes omitted by the regulations. Exxon declined to comment further. Chevron, meanwhile, paid US$14.6 billion to foreign governments in 2023, including US$4 billion to Australia alone, according to the filings. The company paid just $2 billion in the U.S., according to the filings. A Chevron spokesperson said the company’s overhead in the U.S. can be much lower than in overseas oil fields. Chevron’s holdings in the Permian Basin, for example, total about 2.2 million acres with about 75% of that land connected to either low or no royalty payments. Chevron executives see that as a huge advantage and one that creates shareholder value, according to presentations by the company. Last year, most of Chevron’s upstream profits were from international markets – at US$17.4 billion compared to US$4.1 billion in the United States – according to Chevron’s 2023 annual report. Chevron did not criticize the disclosure parameters in its filing, and told Reuters it would continue to work with relevant agencies toward transparency and accountability between governments and the industry. For ConocoPhillips, just US$1.3 billion of a total US$6.5 billion in total global payments last year went to the U.S., according to the disclosures. The company declined to comment. Section 1504 of the Dodd-Frank Act opened the door for the new disclosures around overseas activities by energy exploration and production companies. A divided SEC adopted the rules in 2020 in a 3-2 vote, as the burgeoning ESG movement, which focuses on environmental, social and governance matters, demanded more transparency on behalf of millions of U.S. investors. The adoption of the rule, however, came after a pitched years-long battle: A federal court in 2013 vacated the SEC’s first attempt at imposing the mandate, and Congress blocked a second attempt in 2017.

companies, EarthRight, Exploration, transactions, U.S. Internal Revenue Service

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Big US oil companies reveal massive payments to foreign governments

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