Based on the ITF Sydney report Offshore Oil, Offshore Tax, August 2016.
Chevron’s corporate structure in the UK should ring alarm bells about aggressive tax minimisation and may provide an example of how multinationals, particularly other oil companies, defraud the UK public.
The UK should immediately adopt public country by country reporting for all multinationals and launch a parliamentary inquiry into the oil and gas industry’s tax haven ties.
North Sea Oil and Multinational Tax Avoidance
In the mid 1980’s, taxes on North Sea oil production accounted for nearly 9% of all tax receipts.1 While oil production has declined, tax receipts have declined much faster. In addition to lower production, the decline in tax revenues has been driven by recent and successive government tax cuts directly benefitting oil and gas companies.
In the 2016 Budget, the UK Chancellor announced major new tax cuts to benefit North Sea oil producers.2 A Chevron executive is the honorary treasurer of the oil and gas lobby that demanded these cuts.3 On top of further reductions in the overall corporate tax rate, the Petroleum Revenue Tax was entirely eliminated and the supplementary charge for oil companies was cut in half.4
In 2014, despite oil and gas production worth £24.4 billion5, North Sea tax revenues accounted for only 0.7% of total tax receipts.6 Duties paid by consumers on road fuel, excluding VAT, accounted for 4.3% of total tax receipts.7 This suggests that consumers paid six times more tax on petrol, excluding VAT, than the oil and gas industry paid on all taxes on North Sea oil production.
With further declines in oil prices, tax revenues from North Sea oil have continued to drop. The oil and gas industry may now receive more in subsidies than it pays in tax. Although tax revenues from oil are highly volatile due to changes in both price and production, it does seem clear that the industry has been able to dramatically reduce the taxes paid. While advocating and receiving tax concessions is one means of reducing tax, it appears that aggressive tax minimisation may be another.
According to recent investigations, no corporate tax was paid in the UK in 2014 by Shell or BP’s four main British subsidiaries.8
If oil and gas companies can get out of paying a fair share of tax on extracting the UK’s publicly owned natural resources, what is to stop other companies - with more complex business models- from also avoiding paying their fair share?
Despite tough rhetoric on tackling tax avoidance in the UK, the EU, the OECD and elsewhere, much more needs to be done to stop the scourge of multinational tax avoidance. Effectively, workers and small businesses - most of whom do pay their fair share of taxes - are getting less in public services whilst subsidising Chevron and other multinationals who take advantage of tax loopholes. While the UK government continues to push austerity measures and cuts to essential services, it is estimated that nearly £120 billion in potential tax revenue was not collected in 2014.10 This amount was larger than the entire NHS budget.
The UK does not have a spending problem, it has a revenue problem. There is a lack of political will to collect the taxes that should be paid by large corporations to support the general welfare and a brighter future for all UK residents and businesses.
Is Chevron's North Sea Production Rigged?
Chevron, the world’s third largest oil company, has operated in the North Sea for a half century and is one of the UK’s top oil and gas producers.11 Chevron may have a lower profile than BP or Shell, its UK listed rivals, but its corporate structure and tax practices may provide valuable insights into the broader UK oil and gas industry.
In 2014, when oil prices were still relatively high, Chevron produced an estimated £1 billion of North Sea oil and gas.12 Chevron’s 2014 UK filings show tax charges for previous years and tax credits for the current year, but don’t reveal what taxes may have been paid, if any, in the UK. Chevron’s primary UK subsidiary13, Chevron North Sea Ltd., generated a current year £50 million tax credit on reported gross profits of £352 million.14 Chevron’s UK filings do show a tax charge of £169 million, largely made up of deferred tax charges and reduced by current year tax credits.15 However, the tax charge is an accounting term and does not indicate if any income tax was actually paid in the UK in 2014.
While lacking in transparency and raising many questions, the 2014 filings of Chevron subsidiaries connected to North Sea oil production provide a snapshot of how complex corporate structures, weaving in and out of tax havens, may be used to avoid tax obligations in the UK. Chevron’s UK operations connect to a complex web of subsidiaries in the Netherlands, Bermuda, Delaware and elsewhere.
After any tax payments are paid - or not - on oil and gas production in the UK, the remaining profits are transferred by tax-free dividends until they reach Chevron subsidiaries in Delaware with no public reporting of accounts.
At the core of Chevron’s UK operation is the “cash pooling” function of Chevron Treasury BV (CTBV) in the Netherlands. CTBV “is engaged in the efficient utilizations of cash by managing cash pooling for a number of Chevron companies”.16 CTBV has loans back and forth with multiple UK subsidiaries and also shuttles cash back and forth with at least two Chevron subsidiaries in Bermuda.
Chevron UK has at least four active subsidiaries directly owned through Bermuda and the Bahamas.
Exposing Chevron's UK Corporate Structure
Chevron’s corporate structure (see chart on pp.8-9) is complex and ever-changing. The analysis in this report provides a snapshot of how the corporate structure functioned in 2014, the most recent year for which relevant company filings are publicly available.
Company filings were obtained starting with Chevron North Sea Limited, the primary subsidiary responsible for oil and gas production, and the ownership chain was followed as far as possible based on disclosures in the publicly available filings. Most of the information comes directly from the filings of Chevron subsidiaries. Companies that were dormant or not active have largely been excluded.
Company filings were not available for subsidiaries in the tax havens of Bermuda, the Bahamas and Delaware.
This analysis focuses primarily on the taxation of revenue from oil and gas production in the UK, but not revenue from downstream businesses, though they involve many of the same subsidiaries. The UK is the largest source of Chevron’s oil and gas production in Western Europe. In 2014 Chevron reported significant oil and gas production in Denmark, the Netherlands and Norway, but Chevron sold its interests in oil fields in the Netherlands and Norway in 2014.19
From the Ground Up: Chevron's North Sea Oil & Gas Production
Chevron North Sea Ltd. is responsible for all of Chevron’s oil and gas production in the UK and should be the primary tax paying entity. In 2014, Chevron reported that the average sales price in Europe, per barrel of liquids, was $95.05 (£68.09), significantly higher than current prices which have since fallen to record low levels.28 Chevron North Sea Limited madea pre-tax profit of £271 million on reported turnover of £825 million in 2014.29 If the company’s 2014 profits were taxed at 30%, the “UK rate of Corporation Tax applicable to ring fence activities”, without adjustments, it would have paid £81.3 million in tax.30 Remarkably the company booked a current year tax credit of £50 million. The credit was offset by deferred tax charges resulting in a current year tax charge of £169 million.31 However, there is no explanation of these deferred tax charges.
The largest adjustment, resulting in a current year tax credit, was the effect of “Deferred Tax timing differences”, which resulted in a credit of £101 million.32 The UK government’s lowering of applicable tax rates for the oil and gas industry or other government incentives may have helped create current year tax credits.
Table 1 (below) shows the pre-tax profit, turnover and current year tax charges for the nine active wholly-owned Chevron subsidiaries in the UK. On combined turnover of over £4.4 billion and reported profits of nearly £400 million, these nine companies generated total current year tax credits of £49.4 million. Related party transactions, in addition to the loans and cash pooling described below, may have played a significant role in reducing the pre-tax profits recorded in the UK.
In November 2015 (subsequent to the 2014 filings), ownership of Chevron Europe, Eurasia and Middle East Exploration & Production Limited (CEEMEEPL) was transferred to Chevron North Sea Limited.34 Both companies had no employees.35 CEEMEEPL provides “consulting and other management services to Chevron Upstream Europe, a branch of Chevron U.S.A. Incorporated, in connection with the Chevron group’s operations in Europe, Eurasia and Middle East business units.”36
In 2014, CEEMEEPL had a current year tax charge of £10,000 on reported profits of £1.8 million and turnover of £49.5 million.37 The initial amount of tax payable of £672,000 was reduced by £662,000 to only £10,000 through “Adjustments in respect of prior years”.38 The prior year adjustments may indicate the success of tax avoidance arrangements from previous years. The change in the ownership structure would also have tax implications. Total compensation for CEEMEEPL’s four directors was £8.7 million.39 Director compensation of nearly five times the reported profit would also have a major impact on tax liabilities.
Chevron North Sea Limited is 100% owned by Chevron Products UK Ltd. (CPUKL).40 In 2014, Chevron North Sea Ltd. did not pay dividends, but the company did pay dividends of £245 million in 2013 after reporting profit of £218 million.41 CPKUL owns interests in five active joint ventures registered in the UK and is 100% owned by Chevron Energy Ltd.42
It is worth understanding the critical role of Chevron Treasury BV (CTBV) in the Netherlands, which holds “short term surplus cash balances” of up to £185 million, before examining the two immediate parent companies and other related Chevron subsidiaries.43
Chevron's Cash Pools
Cash pooling, or internal lending structures between subsidiaries of the same company, has been a common practice for multinationals for decades; however, it is now coming under increasing scrutiny.44 The publicly stated general purpose of treasury structures and cash pooling for multinationals is to maximise returns on surplus cash, minimise external finance costs and mitigate risks related to interest and exchange rates.45 A leading finance industry newsletter recently wrote that around the world, “tax authorities...are taking a closer look at cash pooling and challenging MNCs on some of the niggling details. It could be that cash pools are already a ticking time bomb and it will only get worse with OECD BEPS [Base Erosion & Profit Shifting].”46
Baker & McKenzie, a major global law firm that advises corporate clients on tax issues has suggested that the Netherlands, along with Switzerland and Singapore, is a preferred location for cash pooling.47 The Netherlands is a good location for cash pooling “due to its extensive tax treaty network, the access to EU tax directives,the possibility to obtain advance pricing arrangements (APAs) and the absence of interest withholding tax....”48
CTBV “is engaged in the efficient utilizations of cash by managing cash pooling for a number of Chevron companies operating both inside and outside Europe. Participants can be split into so-called pool and non-pool participants.”49 CTBV does an exceptional job at shifting, or ‘sweeping’, cash around which may help to avoid tax obligations and make significant profits on currency exchange and interest charges.
The only non-pool participant that is disclosed is the Bermuda-based and incorporated Chevron Finance Holdings Ltd.50 CTBV had an outstanding loan balance of €856 million to this Bermuda entity, but a maximum loan amount of US$2 billion.51
CTBV also has “cash equivalents” of €128.7 million held by another Bermuda entity, Chevron (Bermuda) Investments Ltd., which are “at The Company’s free disposal.”52
CTBV holds €1.12 billion in loans from pool participants.53 The pool participants are not disclosed, but some CTBV relationships are disclosed in other filings. CTBV has no employees and pays a €432,000 service charge to “Chevron Products UK Limited for work performed... [which] relates to tax, accounting and treasury services.”54 CTBV is not registered in the UK.
Back in the UK, Chevron Products UK Limited had 403 employees in 2014 and turnover of £2.64 billion.55 However, the company reported a loss of £11.5 million.56 The reported loss is after paying tax-free dividends of £96 million to parent entity Chevron Energy Limited.57 Chevron Products also had a £202 million loan to related parties.58
The company paid no tax and “had a net deferred tax asset on tax losses carried forward” of £19.3 million “upon which no deferred tax asset has been recognised.”59 This suggests that the company lacks confidence in the ability to use this deferred tax asset in the future.
Chevron Energy Limited is the UK-based parent of Chevron’s UK subsidiaries, except for those mentioned below that are owned through parent companies in Bermuda, the Bahamas and Delaware. Chevron Energy Limited is 20% owned by Chevron Netherlands BV (Netherlands) and 80% by Chevron Captain Company LLC, incorporated in the US state of Delaware.60
The company received tax free dividends of £115 million (US$160 million) from subsidiaries and passed on dividends of £115 million (US$160 million) to its parents.61 The source of the dividends is not broken down, but the majority (83%) is presumably the £96 million in dividends from Chevron Products UK Ltd.
Chevron Energy Limited had current year tax charges in the UK of less than £0.3 million (US$0.4 million). The company also reported deferred tax charges in the current year of £6.2 million (US$8.7 million) due to “Origination and reversal of timing differences”.63
The company had “a $63.4 m (£45.4 million) loan to Chevron Treasury BV which attracts interest payable at the daily effective federal funds rate minus 25 basis points, is unsecured and repayable on demand.”64 Given that the interest rate used never went above 0.13% in 2014, this was a loan with a negative interest rate.65 Is this equity disguised as a loan to help facilitate tax minimisation? The filing showed a separate £86 million (US$120 million) fixed term loan to another unnamed Chevron entity.66
Delaware incorporated Chevron Captain Company LLC had a profit of £76.4 million, almost entirely from income from shares of Chevron Energy Limited, and paid out £76.4 million in tax free dividends.67 The company has no employees and all administrative services are provided by Chevron North Sea Limited and other group companies.68 Chevron Captain Company LLC and the other immediate parent of Chevron Energy Ltd, Chevron Netherlands BV, are both ultimately owned by Chevron Global Energy Inc. in Delaware.69
Chevron Netherlands BV, which owns 20% of Chevron Energy Ltd, has 12 employees and its main activities are the “purchase and sale of finished lubricants in the Netherlands and in Europe.”70 Why does this Dutch company, which buys and sells lubricants from and to other Chevron subsidiaries, own 20% of Chevron’s primary UK operations?
Chevron Netherlands BV reported a loss of €1 million from its main operations, but a gain of €29.6 million on currency exchange, nearly 30 times the loss on its primary operations. The company earned €27.9 million on dividends and income from subsidiaries, presumably mostly from Chevron Energy Ltd, not subject to tax.71
Related party receivables, including “€224 million on Chevron Treasury B.V. (CTBV) as a daily demandable loan of the surplus cash” were 99.2% of total current receivables and related party liabilities were 96.2% of total current liabilities.72 Most “of the surplus cash of The Company is handled via CTBV.”73 Like other multinationals, Chevron’s corporate structure is characterised by high levels of related party transactions, but these exceptionally high levels of related party transactions are extraordinary.
Chevron Netherlands BV also owns 100% of Chevron China BV and in 2014 acquired a 35% stake in Chevron BV. The remainder of Chevron BV is owned by its parent company in Delaware, Chevron Investments (Netherlands) Inc.74 There is no explanation for the purpose of the change in ownership structure, but it would be likely to have tax implications. Chevron BV “is a member of an existing Chevron cash pool” and “has a short loan facility with Chevron Treasury BV” with “a cash pooling balance” of €48.2 million”.75
The Dutch filings of Chevron Investments (Netherlands) Inc. provide some information on this company which operates in the Netherlands and reported a profit of €42 million on revenue of €346 million.76 Revenue included €23 million in tax-free dividends from subsidiaries.77 An operating loss of €20 million was offset by a €39 million gain from exchange rate differences.78 The gain on currency exchange was nearly double the value of the reported loss from the company’s primary operations. Revenue was 36% from the Netherlands and 64% from other EU countries.79
An income tax charge of €1 million is shown in the income statement, resulting in the company reporting an “effective tax rate [of] 2.3%”.80 Meanwhile, the cashflow statement showed a tax refund of €1.75 million and nearly €5 million in taxes was reported as a receivable.81 The income tax charge is an accounting charge. It appears the company did not pay any income tax in 2014, but received a tax refund of €1.75 million and expects to receive future tax refunds of nearly €5 million.
Chevron states: “Related party receivables include a receivable of €326 million on Chevron Treasury B.V. (CTBV) as a daily demandable loan of the surplus cash” and “most of the surplus cash of The Company and its subsidiaries is handled via CTBV.”82
Chevron’s Global History of Tax Schemes
Over the last two decades, Chevron has paid billions to settle tax disputes involving the United States, Indonesia, Saudi Arabia, Japan and many other countries.20
However, through armies of lawyers and a myriad of related party deals, Chevron may have avoided many more billions in global tax payments.
Globally, Chevron reported stashing US$45.4 billion(£32.5 billion) in offshore accounts.22 The US government has not approved Chevron’s tax filings since 2011.23 Other oil producing nations have not approved Chevron’s tax filings for even longer.24 In explaining its global tax situation, Chevron states that given “the number of years that still remain subject to examination and the number of matters being examined in the various tax jurisdictions, the company is unable to estimate the range of possible adjustments....”25
Chevron has registered nearly 280 companies beginning with the name Chevron in Bermuda and over 280 in Delaware. Chevron has hundreds of other subsidiaries in these and other tax havens under other names.26
UK Companies Directly Owned through Tax Haven Subsidiaries
Chevron Global Trading Ltd in the UK is directly owned by Chevron Global Energy Inc. in Delaware.83 The company reported a profit of £237,000 on turnover of £1.93 million; it has no employees and paid no tax.84 The report states that tax payments of £51,000 (21.5%) were eliminated by “Group Relief received for no charge” and “Capital allowances in excess of depreciation”.85
Chevron Global Trading Ltd. received £2,000 in interest payments from Chevron Bermuda Investments Limited which holds a balance of £1.02 million and “earns a return based on a varying basket of investments.”86
On 11 March 2015, after the period covered in the 2014 report, a dividend of £1.85 million ($2.8 million) was paid to Chevron Global Energy Inc. in Delaware.87
Heddington Insurance (UK) Ltd is “one of Chevron Corporation’s captive insurance companies” and made a profit of under $1 million.88 The company had a tax charge for the year of $226,000.89 The immediate parent company “is Heddington Insurance Limited which is incorporated in Bermuda.”90
The principal activity of Chevron Tankers Limited “is to charter vessels to transport crude oil, refined petroleum products and other bulk cargoes.”91 The company reported a profit of $1.2 million on turnover of $400 million, 88% of which was from the UK.92 No tax was paid; all tax obligations were eliminated by “Accelerated capital allowances and other timing differences” and “Utilisation of losses brought forward”.93
The company has two separate loan arrangements with Chevron Treasury BV (CTBV).94 One loan from CTBV of over $11 million “bears interest at the daily effective Federal Fund Rate less 41 basis points”.95 This is another related party loan with a negative interest rate.96 Another small GBP denominated loan to CTBV “bears interest at SONIA Rate plus 29 basis points.”97 These inter-company loan agreements have been extended until 2020.98 The purpose of these loans to and from the same entity is unclear. Chevron Tankers Limited “is a wholly owned subsidiary of Chevron Transport Corporation Limited, which is registered in Bermuda.”99
The principal activity of Chevron International Tankship Limited “is the marine transportation of crude and refined petroleum products.”100 The company reported a loss of $4.7 million and paid no tax.101 The company’s turnover of $26.7 million was roughly split between Brazil (60%) and Norway (40%).102 The “immediate parent company was Chevron Latin America Holdings Ltd. (CLAH), incorporated in Bermuda”.103
Chevron Marine Limited provides “marine transportation of crude oil, refined petroleum products, and other bulk cargoes on behalf of other Chevron companies” and is directly owned by a “Chevron Overseas (Barbados) SRL which is registered in Barbados.”104 It reported a loss of $0.5 million.105 The company has a US$22.13 million inter-company loan to Chevron Treasury BV; “considered by management to be a debtor due within one year because of the daily draw-downs from and transfers into the CTBV pool arising from business needs.”106
Tax Avoidance: Chevron’s Global Business Model
Meanwhile in Australia, which produced more of Chevron’s 2014 global oil and gas production than the UK, Chevron paid no Petroleum Rent Resource Tax (PRRT) and received AUD$6 million in corporate income tax refunds.107
Australia’s federal court recently ruled against Chevron in a landmark transfer pricing case.110 The court found that a AUD$2.5 billion high cost related party loan shifted profits from Australia to Delaware.111 Interest payments reduced tax liability in Australia and made tax-free profits in Delaware.112 A much larger AUD$35 billion tax scheme with a similar structure is currently under audit by the Australian Tax Office.113 Chevron has admitted that this tax scheme, if permitted to continue, could reduce tax liabilities by at least AUD$15 billion.114 However, the actual loss to taxpayers could be more than double.
Despite fanciful promises of hundreds of billions in tax revenues, recent government estimates indicate that it will be two decades or more before Chevron’s massive resource projects in Australia pay any PRRT tax.115 Chevron’s estimated share of revenue on these new projects will be AUD$10 billion per year.116
As in the UK, a large part of the problem is that the oil and gas industry pushed for and received substantial tax incentives from the government.
Chevron claims that the Australian projects will produce huge tax revenues once production begins.117 However, the track record of Chevron’s tax practices in Australia118 and elsewhere suggest that aggressive tax avoidance is a standard part of Chevron’s global business model, regardless of the investment cycle.
UK Government Must Take Action
The evidence suggests that Chevron and others have exploited loopholes to avoid paying UK taxes. The UK government must dramatically improve tax transparency, end tax haven abuse and close national and international loopholes to make sure that multinationals pay their fair share.
In the face of low oil prices, the UK government has succumbed to pressure by Chevron and others to cut tax rates on oil and gas production. When oil prices do recover, the UK will now generate far less in government revenues than it has in the past. However, without closing tax loopholes and requiring greater public disclosure, the UK government will continue to lose out on tax revenue that should be collected from the oil and gas industry in particular and multinationals in general.
In order to address these problems, there needs to be:
- A Parliamentary Inquiry in the UK to examine the revenue impact of possible tax avoidance by Chevron and other North Sea oil and gas operators; and
- Immediate UK implementation of public country by country reporting for all large multinationals.
TACKLE TAX HAVENS - END LOOPHOLES - REQUIRE DISCLOSURE
1. Antony Seely & Matthew Keep, Business & Transport Section Economic Policy & Statistics Section, House of Commons Library, “North Sea oil taxation”, Standard Note SN341, 29 May 2015, p. 3. (http://www.parliament.uk/brie ng- papers/SN00341.pdf)
2. BBC News, “Budget 2016: Chancellor George Osborne cuts North Sea taxes”, 17 March 2016 (http://www.bbc.com/news/ uk-scotland-scotland-politics-35817176)
3. Oil & Gas UK, “Oil & Gas UK Announces New Board O cers and Members”, 5 April 2016. (http://oilandgasuk. co.uk/oil-gas-uk-announces-new-board-o cers-and- members/); Oil & Gas UK, “Tax reform now crucial in salvaging UK oil and gas production from end of decade”, 8 Mar 2016 (http://oilandgasuk.co.uk/tax-reform-now-crucial-in- salvaging-uk-oil-and-gas-production-from-end-of-decade/)
4. BBC News, “Budget 2016: Chancellor George Osborne cuts North Sea taxes”, 17 March 2016
5. Oil & Gas UK, “Activity Survey 2015”, p. 7. (http:// oilandgasuk.co.uk/wp-content/uploads/2015/07/EC044.pdf)
6. Antony Seely & Matthew Keep, Business & Transport Section Economic Policy & Statistics Section, House of Commons Library, “North Sea oil taxation”, Standard Note SN341, 29 May 2015, p. 3.
8. Tim Sculthorpe, “Six out of Britain’s 10 biggest rms pay ZERO corporation tax despite ringing up global pro ts of £30billion”, Daily Mail, 1 Feb 2016 (http://www.dailymail. co.uk/news/article-3425295/Six-Britain-s-10-biggest- rms- pay-ZERO-corporation-tax-despite-ringing-global-pro ts- 30billion.html)
9. Production values are calculated from 2014 production data from the 2015 Annual Reports of all three companies. Tax payments/refunds are from the “UK EITI Report for 2014”, United Kingdom Extractive Industries Transparency Initiative (UK EITI), April 2016 (https://www.gov.uk/government/ uploads/system/uploads/attachment_data/ le/517133/bis- 16-194-uk-eiti-report-2014.pdf). The largest producer was Nexen, which is 100% controlled by CNOOC Limited,
which is controlled by the Chinese government. The UK EITI Report for 2014 contains license fees for Nexen, but no information on the Ring Fence Corporation Tax (RFCT), the Supplementary Charge (SC) or the Petroleum Revenue Tax (PRT) paid or received by Nexen. The combination of RFCT, SC, PRT and license fees for BP, Shell and Total shows they received a combined tax refund of over £304 million.
10. Richard Murphy, FCA, “Tax Evasion in 2014 – and what can be done about it”, Tax Research UK (http://www. taxresearch.org.uk/Documents/PCSTaxGap2014.pdf)
11. FT Global 500 2015 by sector (http://www. .com/ intl/cms/s/2/1fda5794-169f-11e5-b07f-00144feabdc0. html#axzz432BYJc4X); http://www.chevron.com/countries/ unitedkingdom/recordofachievement/ ; Greig Liddell, “Financial Scrutiny Unit Brie ng: Scottish North Sea oil and gas industry”, Scottish Parliament Information Centre, 23 April 2014,p.10, Box 1: Ownership and pro ts (http://www. scottish.parliament.uk/ResearchBrie ngsAndFactsheets/S4/ SB_14-28.pdf)
12. £1 billion in sales is derived from data available in the
Chevron 2014 Annual Report and the Supplement to the Annual Report. Both available here: http://www.chevron. com/annualreport/2014/ The Supplement (p.36) reports average net daily production in the UK of 32,000 barrels of liquids and 88 million cubic feet of natural gas. The Annual Report (p.73), Table IV – Results of Operations for Oil and Gas Producing Activities – Unit Prices and Costs, reportsthat in Europe average sale prices were $95.05 for liquidsper barrel and $9.29 for natural gas, per thousand cubic feet. Based on these gures the value of total sales from UK oil and gas production in 2014 was over $1.4 billion. Converted using exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP.
13. Chevron’s UK Fact Sheet from May 2015 states that oil and gas production is through this subsidiary. http://www.chevron. com/documents/pdf/unitedkingdomfactsheet.pdf
14. Chevron North Sea Limited, 31 December 2014, annual nancial statements (available from Companies House), p. 16, Note 12 Tax on pro t on ordinary activities, p. 8 Pro t and loss account.
15. Ibid, p. 8 Pro t and loss account and p. 16 Note 12 Tax on pro t on ordinary activities
16. Chevron Treasury B.V. Financial Report 2014, led in the Netherlands with Kamer van Koophandel, p. 3 Directors’ report
17. FT Global 500 2015 by sector (http://www. .com/ intl/cms/s/2/1fda5794-169f-11e5-b07f-00144feabdc0. html#axzz432BYJc4X). Market value as of 31 March 2015, converted using exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP.
18. Chevron 2014 Annual Report, Financial Highlights, p. 4; Converted using exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP.
19. Chevron Corporation 2014 Supplement to the Annual Report, p. 39 Net Oil-Equivalent Production; The chart shows (thousands of barrels per day) net oil-equivalent production of 25 in Denmark, 7 in the Netherlands, 1 in Norway and 47 in the UK.
20. Neela Banerjee and David Cay Johnston, “StudySays ChevronTexaco Evaded Taxes in Price Scheme”,The New York Times, 13 Sept. 2002. http://www.nytimes. com/2002/09/13/business/study-says-chevrontexaco-evaded- taxes-in-price-scheme.html;
“Chevron to pay $550 million to settle tax disputes”, The New York Times, 4 August 1994. http://www.nytimes. com/1994/08/04/business/company-news-chevron-to-pay- 550-million-to-settle-tax-disputes.html?pagewanted=1 ;
Chevron Corporation, SEC Form 10K for year ended31 Dec 1999, p.FS-5 http://www.sec.gov/Archives/edgar/ data/93410/0000093410-00-000006.txt ;
“Chevron to pay $9.6 million to Louisiana in severancetax settlement”, Desert News, 15 Feb. 2000. http://www. deseretnews.com/article/743708/Chevron-to-pay-96-million- to-Louisiana-in-severance-tax-settlement.html?pg=all ;
Madjiasra Nako, “Chad Plans to Evict 2 Oil Firms Over Unpaid Taxes”, The Washington Post, 27 Aug. 2006. http://www.washingtonpost.com/wp-dyn/content/ article/2006/08/26/AR2006082600861.html ;
William Mauldin, “Kazakhstan Launches Criminal Probe into Chevron-Led Venture”, The Wall Street Journal, 16 July 2010. http://www.wsj.com/articles/SB10001424052748704682604575368801121741036 ;
Nariman Gizitdinov, “Kazakh Oil Too Rich for Tax to Deter Chevron: Energy Markets”, BloombergBusiness, 22 July 2010. http://www.bloomberg.com/news/articles/2010-07-20/oil-in-kazakhstan-may-be-too-rich-for-tax-to-deter-chevron-energy-markets ;
21. John Vidal, “Why Chevron’s lawyers must be amongthe busiest in the world”, The Guardian, 18 February 2011. http://www.theguardian.com/environment/blog/2011/feb/18/ chevron-lawyers
22. Chevron Corporation, Form 10-K (Annual Report for year ended 31 December 2015), led with the US Securities and Exchange Commission, Note 18 of the Consolidated Financial Statements, pp. FS--47.
24. Ibid. The latest years in which income tax examinations have been nalised in ‘major tax jurisdictions’ were Nigeria– 2000, Angola – 2009, Saudi Arabia – 2012 and Kazakhstan – 2007.
26. https://delecorp.delaware.gov/tin/controller Search conducted 24 July 2015. A search for Chevron identi es 282 matches, but only displays 50 at a time. Separate searches have been conducted to identify the names of 280 of the 282 matches found; https://www.roc.gov.bm/roc/rocweb.nsf/ public+register/c+public+companies (accessed 22 July 2015)
27. Leslie Wayne, “How Delaware Thrives as a CorporateTax Haven”, The New York Times, 30 June 2012. http://www. nytimes.com/2012/07/01/business/how-delaware-thrives-as-a- corporate-tax-haven.html?_r=0
28. Chevron 2014 Annual Report, p.73; Converted using exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP.
29. Chevron North Sea Limited, 31 December 2014, annual nancial statements led with Companies House, p. 8, Pro t and loss account for the year ended 31 December 2014.
30. Ibid, p. 16 Note 12 Tax on pro t of ordinary activities 31. Ibid.32. Ibid.
33. All numbers come from the 2014 annual nancial statements of respective subsidiaries cited elsewhere in the report. As nancial companies Chevron Energy Limited and Heddington Insurance (U.K.) Limited do not report turnover. Figures for Chevron North Sea Limited, Chevron Products UK Limited and Chevron Global Trading Limited are reported in GBP, other companies are reported in USD and have been converted to GBP, using the exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP.
34. The Annual Return of Chevron Europe, Eurasia and Middle Ease Exploration & Production Limited, dated 1 Nov 2015 and led with Companies House, shows that 100% of shares in the company are owned by Chevron North Sea Limited.
35. Chevron Europe, Eurasia and Middle Ease Exploration & Production Limited, 31 December 2014, annual nancial statements led with Companies House, p.2, Directors’ report; Chevron North Sea Limited, 31 December 2014, annual nancial statements led with Companies House, p.4, Directors’ report
36. Ibid, p.1, Strategic report
37. Ibid, p.6, Pro t and loss account, for turnover and pro t numbers, p.12, Note 7 Tax on pro t on ordinary activities, for tax gures
38. Ibid, p. 12, Note 7 Tax on pro t on ordinary activities 39. Ibid, p. 10, Note 5 Directors’ emoluments
40. Chevron North Sea Limited, 31 December 2014, annual nancial statements, p. 26, Note 34 Ultimate parent undertaking.
41. Ibid, p. 2 Strategic report
42. Chevron Products UK Limited, Annual Report forthe year ended 31 December 2014, led with Companies House,p.17 Note 12 Investments, p. 23 Note 23 Ultimate parent company
43. Chevron North Sea Limited, 31 December 2014, annual nancial statements, p.19, Note 17 Debtors; “Amounts owed by group undertakings” are reported as £185.3 million.
44. Vikram Chand, “Transfer Pricing Aspects of Cash Pooling Arrangements in Light of the BEPS Action Plan”, International Transfer Pricing Journal, Jan/Feb 2016 (http://www.bvdinfo. com/BvD/media/Case-studies/Frankfurt%20Events/1.%20 BvD%20Transfer%20Pricing%20Day%20CH/Transfer- Pricing-Aspects-of-Cash-Pooling-Arrangements-in-Light-of- the-BEPS-Action-Plan.pdf)
46. “Does It Still Pay to Fill a Cash Pool?”, iTreasurer, 10 March 2015 (http://www.itreasurer.com/Does-It-Still-Pay-to- Fill-a-Cash-Pool.aspx)
47. Heico Reinoud & Antonio Russo, “Cash Pooling: Tax, transfer pricing and civil law aspects”, Baker & McKenzie, 2011 (http://www.bakermckenzie.com/ les/Uploads/Documents/ Amterdam/Ahead%20of%20Tax/pn_amsterdam_aheado ax_ scaletransferpricingenjuridischeaspectenvancashpooling_ mar10.pdf)
48. Baker & McKenzie (Amsterdam), “Cash Pooling: E cient working capital funding”, 2013 (http://www.bakermckenzie. com/ les/Uploads/Documents/Locations/Amsterdam/br_ amsterdam_cashpooling_mar12.pdf)
49. Chevron Treasury B.V. Financial Report 2014, led in the Netherlands with Kamer van Koophandel, p. 3 Directors’ report
50. Ibid, p. 3 Directors report and p.12 Note 4 Non-current assets; The CTBV Financial Report 2014 does not disclose that Chevron Finance Holdings Limited is incorporatedin Bermuda. Exhibit 21.1 Subsidiaries of ChevronTexaco Corporation to the 2001 10-K (annual report) led with the U.S. S.E.C. lists the company as a subsidiary incorporated in Bermuda (http://www.sec.gov/Archives/edgar/ data/93410/000095014902000568/f80065ex21-1.htm). Additionally, a search of Bermuda’s Register of Companies has the company listed, along with hundreds of other Chevron subsidiaries, (https://www.roc.gov.bm/roc/rocweb. nsf/public+register/c+public+companies)
52. Ibid, p. 13 Note 6 Cash and cash equivalents. The CTBV Financial Report 2014 does not disclose that Chevron (Bermuda) Investments Limited is incorporated in Bermuda. Exhibit 21.1 Subsidiaries of Chevron Corporation to the 2011 10-K (annual report) led with the U.S. S.E.C. lists the company as a subsidiary incorporatedin Bermuda (http://www.sec.gov/Archives/edgar/data/93410/000095012312002976/f60351exv21w1.htm). Additionally, a search of Bermuda’s Register of Companies has the company listed as well (https://www.roc.gov.bm/roc/ rocweb.nsf/public+register/c+public+companies)
53. Ibid, p. 6 Balance Sheet
54. Ibid, p. 11 Note 3 Accounting policies for the income statement, 3.4 General expenses and p.15 Note 12 General expenses
55. Chevron Products UK Limited, Annual Report for the year ended 31 December 2014, led with Companies House, p.12 Note 5 Employee Information and p.7 Pro t and loss account
56. Ibid.57. Ibid, p. 14 Note 9 Dividends
58. Ibid, p. 19 Note 14 Debtors: amounts falling due within one year
59. Ibid, p. 15 Note 10 Tax on pro t on ordinary activities
60. Chevron Energy Limited, Annual Report for the Year Ended 31 December 2014 as led with Companies House, p.21 Note 21 Ultimate parent company. Percentages owned are reported as 80.07% and 19.93% and have been rounded to the nearest percentage.
61. Ibid, p.8 Pro t and Loss Account shows “income from shares in group undertakings” of $160 million and p. 2 Strategic Report states that a dividend “amounting to $160.0m was paid on 21 May 2014”. Note 7 Tax on pro t on ordinary activities (p.14) shows $34.4m in non-taxable items which
is equal to the tax rate of 21.5% applied to the $160m in dividends received. Converted here and below using current exchange rate (as of 25 Feb. 16) of 1 USD = 0.716357 GBP
62. Ibid, p. 8 Pro t and Loss Account and p.14 Note 7 Tax on pro t on ordinary activities.
63. Ibid, p. 14 Note 7 Tax on pro t on ordinary activities
64. Ibid, p. 16 Note 11 Debtors: Amounts falling due within one year
65. The daily e ective federal funds rate in 2014 can be found here: https://research.stlouisfed.org/fred2/series/DFF
66. Chevron Energy Limited, Annual Report for the Year Ended 31 December 2014, p. 17 Note 12 Debtors: Amounts falling due a er more than one year
67. Chevron Captain Company LLC Annual report and nancial statements 31 December 2014 as led with Companies House, p. 2 Pro t and Loss Account and Note5 Income from shares in group undertakings; p. 5 Note 8 Taxation on pro t on ordinary activities, “Items not subject to tax”.
68. Ibid, p. 5 Note 6 Employee Information
69. Ibid, p. 8 Note 17 Ultimate parent undertaking and Chevron Investments (Netherlands) Inc. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 10 Note 1 General notes, 1.2 Group structure and p. 32 Note 25 Financial xed assets, List of subsidiaries
70. Chevron Netherlands B.V. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 15 Note 6 Financial xed assets, Not majority owned shareholdings, p. 21 Note 21 Average number of employees and Directors’ remuneration, and p.2 Directors’ report
71. Ibid, p. 6 Income Statement; p. 21 Note 22 Income tax expense
72. Ibid, p. 15 Note 7 Current receivables (Related party receivables were €258m of total current receivables of €260m); p. 18 Note 14 Current liabilities (Related party liabilities were €48m of total current liabilities of €50m)
73. Ibid, p. 21 Note 20 Related parties
74. Ibid, p. 15 Note 6 Financial xed assets, Majority owned shareholdings and p. 3 Directors’ report
75. Chevron B.V. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 12 Note 4 Financial instruments and risk management, 4.3 Liquidity risk and p. 12 Note 6 Receivables; Chevron Netherlands BV owns Chevron China BV which invests “funds that have become available in 2006 when The Company made a significant one o result.” (Chevron China B.V. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 2 Note 1 General information, 1.1 Operations); Chevron BV had 6 sta and its primary operations were “storage and trading of unfinished gasoline fuels and finished distillates products.” Revenues of €325 million were 59% from other EU countries, 33% from Netherlands and 6% from Switzerland. The company had an after tax loss of €13 million and received a tax refundof €12,000. Chevron Products UK Ltd “controls the risksand monitors trading deals” for Chevron BV. (Chevron B.V. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 1 Directors’ report and p. 7 Note 1 General information, 1,1 Operations, p. 16 Note 15 Revenue, p. 6 Income statement and p. 17 Note 19 Income tax, p. 2 Directors’ report)
76. Chevron Investments (Netherlands) Inc. Financial report 2014 as led with Kamer van Koophandel in the Netherlands, p. 32 Note 25 Financial fixed assets, List of subsidiaries; The company had 20 employees, including 16 in Netherlands.
(p. 27 Note 21 Average number of employees and Directors’ remuneration), p. 7 Consolidated income statement
77. Ibid, p. 7 Consolidated income statement, result from participations and p.22 Note 22 Income tax expense, income from subsidiaries and received dividends is subtracted from taxable income
78. Ibid, p. 7 Consolidated income statement 79. Ibid, p. 25 Note 15 Revenue
80. Ibid, p. 7 Consolidated income statement and p. 28 Note 22 Income tax expense
81. Ibid, p. 8 Consolidated cash ow statement and p. 22 Note 8 Receivables, Taxes and social security contributions
82. Ibid, p. 21 Note 8 Receivables and p. 27 Note 20 Related parties
83. Chevron Global Trading Limited Annual Report for the Year Ended 31 December 2014 as led with Companies House, p. 1 Strategic report
84. Ibid and p. 9 Note 6 Employee information and Note 8 Tax on pro t on ordinary activities
85. Ibid, p. 10 Note 8 Tax on pro t on ordinary activities (continued)
86. Ibid, p. 9 Note 7 Interest receivable and similar income and p. 10 Note 9 Debtors
87. Ibid, p. 1 Strategic report, Post Balance Sheet Event
88. Heddington Insurance (U.K.) Limited Directors’ Report and Financial Statements for the year ended 31 December 2014 as led with Companies House, p. 2 Strategic report
89. Ibid, p. 25 Note 11 Taxation on loss on ordinary activities 90. Ibid, p. 19 Note 2 Ultimate parent company
110. Nassim Khadem, Sarah Danckert, “Chevron loses long- running battle with ATO, faces multimillion-dollar tax bill”, Sydney Morning Herald, 23 Oct 2015 (http://www.smh.com. au/business/the-economy/chevron-loses-longrunning-battle- with-ato-faces-multimilliondollar-tax-bill-20151023-gkgk6y. html)
112. Neil Chenoweth, “ATO eyes Chevron’s $1.7b Gorgon pro t”, Australian Financial Review, 9 Nov 2015 (http://www. afr.com/business/energy/gas/round-2-how-tough-will-tax- office-play-after-its-269m-court-win-over-chevron-20151108- gktum3)
113. Neil Chenoweth, “Chevron says $1.7b Gorgon pro t not taxable”, Australian Financial Review, 18 Nov 2015 (http:// www.afr.com/news/policy/tax/chevron-says-17b-gorgon-profit-not-taxable-20151118-gl1x8a)
114. Mr Roy Krzywosinski, Managing Director, Chevron Australia, responding to questions of the Senate Inquiry into Corporate Tax Avoidance, Sydney, Australia, 18 Nov. 2015, p.39-40 of the official transcript. (http://parlinfo.aph.gov.au/parlInfo/download/committees/commsen/b56c040c-ca7a-4787-9db9-c07c9d5f5f6e/toc_pdf/Economics%20 References%20Committee_2015_11_18_4008_Official.pdf)
115. Heath Aston, “WA gas boom ‘will not boost national wealth for decades’”, The Sydney Morning Herald, 12 April 2016. (http://www.smh.com.au/federal-politics/political-news/wa-gas-boom-will-not-boost-national-wealth-for-decades- 20160412-go4kay.html
116. In 2018 Chevron is forecasted to produce 16 million tonnes of LNG (Matt McKenzie, Business News, 12 October 2015, “Gas bonanza despite tough climate”. https://www. businessnews.com.au/article/Gas-bonanza-despite-tough- climate) Using current valuations from the Australian Department of Industry, the value of Chevron’s LNG production is forecast to be $10.1 billion per year. Calculation based on nominal value of LNG exports in 2018/19 of $48 billion divided by 76 million tonnes resulting in a price of $632 per million tonnes. Data from Department of Industry, Innovation and Science, September 2015 Commodity data. http://www.industry.gov.au/Office-of-the-Chief-Economist/ Publications/Pages/Resources-and-energy-quarterly.aspx#
117. Neil Chenoweth, “Chevron claimed Gorgon bonanza would pay for tax cuts for everyone”, Australian Financial Review, 17 Nov 2015 (http://www.afr.com/business/energy/ gas/chevron-claimed-gorgon-bonanza-would-pay-for-tax-for-cuts-for-everyone-20151116-gl0jo1); More recently Chevron Australia commissioned a report which suggested that its Australian projects would contribute $338 billion to Federal Government revenues from 2009 to 2040 (http://www. chevronaustralia.com/news/media-statements/2015/11/17/ economic-impact)
118. There has been widespread coverage of Chevron’s tax avoidance in Australia including a federal court ruling and a Senate Inquiry into Corporate Tax Avoidance. Two additional examples are here: Hayden Cooper, “Explained: How oil and gas multinational Chevron pays tax”, ABC News 7:30 Report, 18 Nov 2015 (http://www.abc.net.au/7.30/content/2015/ s4354971.htm) ; Neil Chenoweth, “Chevron paid only $248 tax on $1.7b profit, Senate tax inquiry told”, Australian Financial Review, 9 Nov 2015 (http://www.afr.com/business/energy/gas/ chevron-gorgon-company-paid-only-248-tax-on-17-bn-profit-senate-tax-inquiry-told-20151108-gktu7s)