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December 25, 2009

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Chevron agrees to settle gas royalties

CHEVRON Corp is to pay US$45.5 million to resolve claims it underpaid natural gas royalties to the government and Native Americans, the Justice Department has announced.

Most of the money will be distributed to federal, state and American Indian accounts affected by the underpayments. More than US$12.3 million will go to the heirs of Harrold Wright, the man who filed the lawsuit in Texas.

Each month, companies are required to report to the Interior Department the value of the natural gas produced from their federal and Indian leases. A percentage of the reported value is paid as royalties.

The settlement includes Chevron companies Texaco Inc, Unocal Corp and other affiliates.

The government said the companies made improper deductions from royalty values and violated the False Claims Act by underpaying royalties.

"This settlement successfully ends long-standing litigation and ensures that taxpayers receive their fair share of royalty revenues from energy production on federal and American Indian lands," Interior Secretary Ken Salazar said.

Chevron said: "The agreement states that Chevron makes no admission of any kind concerning improper or fraudulent actions or omissions on its part, and Chevron reasserts that it did not engage in such activities. Chevron has settled this case simply to bring an end to a long and expensive legal proceeding."

Wright's suit alleged a number of companies underpaid royalties.

The Justice Department previously settled with Burlington Resources Inc for US$105.3 million, Shell Oil Co for US$56 million and Dominion Exploration and Production Co for US$2 million.


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