Shell Game: How Singapore sells much of Australia’s gas

Australian Gas Giants in the Spotlight

ABC has been investigating the use of Singapore as a tax haven by the global energy giant Shell, with CICTAR’s Jason Ward interviewed and quoted extensively.

This follows Jason’s evidence to the Senate inquiry into gas taxes and the written submission by CICTAR to that same inquiry, laying out a number of case studies outlining tax minimization strategies of fossil fuel corporations.

”we’re losing significant tax revenue on our resources because of this transfer pricing situation,” Mr Ward says. “The vast majority of global trade now is not between companies or between countries.”

“It’s within the same multinational structure. These are artificial structures.”

As the debate in Australia rages over whether the country is receiving sufficient tax from its gas industry, the national broadcaster, ABC, investigates how Shell, the global oil and gas super power and the world’s largest trader of the fuel, uses Singapore to help boost its profits. Profits which remain significantly under-taxed.

Over the eight years to 2024, Shell’s LNG trading and marketing arm in Singapore made billions of dollars in profit. And it did so by buying LNG from producer countries such as Australia before on-selling the gas at a significant mark-up, in a process known as ‘transfer pricing’ which allows companies to use internal trading systems to ensure their profits are declared in places with low effective tax rates. As ABC notes, Shell is not alone in the practice. Over the past decade Singapore has become a vast trading hub for gas.

And the arrangements are similar to the ones previously used by mining giants BHP and Rio Tinto. From the mid-2000s, both companies pushed heavily into Singapore where they set up marketing hubs to buy commodities from Australian subsidiaries before on-selling the resources at much higher prices. Both have since modified their practice after being pursued by — and settling big tax bills with — the Australian Tax Office.

‘Jason Ward, the principal analyst at the Centre for Corporate Tax Accountability and Research, says transfer pricing is “the top tool” used by multinationals to shift profits’.

Singapore is not the only global ‘trading hub’ being used as a tax shelter by global corporations. A recent CICTAR report demonstrated how Starbucks was using Switzerland in a similar way and Taxwatch UK has recently reported on profit shifting into Switzerland by the global mining giant, Glencore, subject of another CICTAR investigation in 2021