From Wikipedia, the free encyclopedia
Royal Dutch Shell plc (
LSE:
RDSA,
RDSB), commonly known as
Shell, is a British-Dutch
oil and
gas company headquartered in the
Netherlands and incorporated in the
United Kingdom. It is one of the six oil and gas "
supermajors" and the
sixth-largest company in the world measured by 2016 revenues (and the largest based in Europe). Shell was first in the 2013
Fortune Global 500 list of the world's largest companies; in that year its revenues were equivalent to 84% of the Dutch national $556 billion GDP.
Shell is
vertically integrated and is active in every area of the oil and gas industry, including
exploration and
production,
refining,
transport,
distribution and marketing,
petrochemicals,
power generation and
trading. It also has
renewable energy activities, including in
biofuels,
wind, and hydrogen. Shell has operations in over 70 countries, produces around 3.7 million
barrels of oil equivalent per day and has 44,000 service stations worldwide. As of 31 December 2014, Shell had total proved reserves of 13.7 billion barrels (2.18
×10
9 m
3) of oil equivalent.
Shell Oil Company, its principal subsidiary in the United States, is one of its largest businesses. Shell holds 50% of
Raízen, a joint venture with
Cosan, which is the third-largest Brazil-based energy company by revenues and a major producer of
ethanol.
Shell was formed in 1907 through the amalgamation of the Royal
Dutch Petroleum Company of the Netherlands and the "Shell" Transport and
Trading Company of the United Kingdom. Until its unification in 2005
the firm operated as a dual-listed company, whereby the British and
Dutch companies maintained their legal existence but operated as a
single-unit partnership for business purposes. Shell first entered the
chemicals industry in 1929. In 1970 Shell acquired the mining company
Billiton, which it subsequently sold in 1994 and now forms part of
BHP Billiton. In recent decades gas exploration and production has become an increasingly important part of Shell's business. Shell acquired
BG Group in 2016, making it the world's largest producer of
liquefied natural gas (LNG).
Shell has a primary listing on the
London Stock Exchange and is a constituent of the
FTSE 100 Index. It had a
market capitalisation
of £185 billion at the close of trading on 30 December 2016, by far the
largest of any company listed on the London Stock Exchange and
among the highest of any company in the world. It has secondary listings on
Euronext Amsterdam and the
New York Stock Exchange. As of January 2013, Shell's largest shareholder was
Capital Research Global Investors with 9.85% ahead of
BlackRock in second with 6.89%.
History
Origins
The Royal Dutch Shell Group was created in April 1907 through the
amalgamation of two rival companies: the Royal Dutch Petroleum Company (
Dutch:
Koninklijke Nederlandse Petroleum Maatschappij) of the
Netherlands and the Shell Transport and Trading Company Limited of the
United Kingdom. It was a move largely driven by the need to compete globally with
Standard Oil. The Royal Dutch Petroleum Company was a Dutch company founded in 1890 to develop an oilfield in
Pangkalan Brandan,
North Sumatra, and initially led by
August Kessler, Hugo Loudon, and
Henri Deterding. The "Shell" Transport and Trading Company (the quotation marks were part of the legal name) was a
British company, founded in 1897 by
Marcus Samuel, 1st Viscount Bearsted, and his brother
Samuel Samuel. Their father had owned an antique company in
Houndsditch, London, which expanded in 1833 to import and sell seashells, after which the company "Shell" took its name.
For various reasons, the new firm operated as a
dual-listed company,
whereby the merging companies maintained their legal existence, but
operated as a single-unit partnership for business purposes. The terms
of the merger gave 60 percent ownership of the new group to the Dutch
arm and 40 percent to the British.
National patriotic sensibilities would not permit a full-scale merger or takeover of either of the two companies. The Dutch company,
Koninklijke Nederlandsche Petroleum Maatschappij at
The Hague, was in charge of production and manufacture. The British
Anglo-Saxon Petroleum Company was based in London, to direct the transport and storage of the products.
20th century
Shell benzine for Sir Ernest Henry Shackleton, Antarctic Expedition 1915.
Vintage petrol pump (1952)
During the First World War, Shell was the main supplier of fuel to the
British Expeditionary Force. It was also the sole supplier of aviation fuel and supplied 80 percent of the British Army's
TNT. It also volunteered all of its shipping to the British
Admiralty.
The German invasion of Romania in 1916 saw 17% of the group's worldwide production destroyed.
In 1919, Shell took control of the
Mexican Eagle Petroleum Company
and in 1921 formed Shell-Mex Limited which marketed products under the
"Shell" and "Eagle" brands in the United Kingdom. In 1929,
Shell Chemicals was founded. By the end of the 1920s, Shell was the world's leading oil company, producing 11 percent of the world's
crude oil supply and owning 10 percent of its tanker tonnage.
Shell Mex House was completed in 1931, and was the head office for Shell's marketing activity worldwide.
In 1932, partly in response to the difficult economic conditions of the
times, Shell-Mex merged its UK marketing operations with those of
British Petroleum to create
Shell-Mex and BP,
a company that traded until the brands separated in 1975. Royal Dutch
Company ranked 79th among United States corporations in the value of
World War II military production contracts.
The 1930s saw Shell's Mexican assets seized by the local government. After the invasion of the Netherlands by Germany in 1940, the head office of the Dutch companies was moved to
Curacao. In 1945 Shell's Danish headquarters in
Copenhagen, at the time being used by the
Gestapo, was bombed by Royal Air Force
Mosquitoes in
Operation Carthage.
Around 1952, Shell was the first company to purchase and use a computer in the Netherlands. The computer, a
Ferranti Mark 1*,
was assembled and used at the Shell laboratory in Amsterdam. In 1970
Shell acquired the mining company Billiton, which it subsequently sold
in 1994 and now forms part of
BHP Billiton.
21st century
In November 2004, following a period of turmoil caused by the revelation that Shell had been overstating its
oil reserves,
it was announced that the Shell Group would move to a single capital
structure, creating a new parent company to be named Royal Dutch Shell
plc, with its primary listing on the
London Stock Exchange, a secondary listing on the
Amsterdam Stock Exchange, its headquarters and tax residency in
The Hague,
Netherlands and its registered office in London. The unification was
completed on 20 July 2005 and the original owners delisted their
companies from the respective exchanges. On 20 July 2005, the Shell
Transport & Trading Company plc was delisted from the
LSE, where as, Royal Dutch Petroleum Company from
NYSE on 18 November 2005.
The shares of the company were issued at a 60/40 advantage for the
shareholders of Royal Dutch in line with the original ownership of the
Shell Group.
During the
2009 Iraqi oil services contracts tender, a consortium led by Shell (45%) and which included
Petronas
(30%) was awarded a production contract for the "Majnoon field" in the
south of Iraq, which contains an estimated 12.6 billion barrels (2.00
×10
9 m
3) of oil. The "West Qurna 1 field" production contract was awarded to a consortium led by
ExxonMobil (60%) and included Shell (15%).
In February 2010 Shell and
Cosan formed a 50:50 joint-venture,
Raízen,
comprising all of Cosan's Brazilian ethanol, energy generation, fuel
distribution and sugar activities, and all of Shell's Brazilian retail
fuel and aviation distribution businesses.
In March 2010, Shell announced the sale of some of its assets,
including its liquefied petroleum gas (LPG) business, to meet the cost
of a planned $28bn capital spending program. Shell invited buyers to
submit indicative bids, due by 22 March, with a plan to raise $2–3bn
from the sale.
In June 2010, Royal Dutch Shell agreed to acquire all the business of
East Resources for a cash consideration of $4.7 billion. The transaction
included East Resources' tight gas fields.
Over the course of 2013, the corporation began the sale of its US
shale gas assets and cancelled a US$20 billion gas project that was to
be constructed in the US state of
Louisiana.
A new CEO Ben van Beurden was appointed in January 2014, prior to the
announcement that the corporation's overall performance in 2013 was 38
per cent lower than 2012—the value of Shell's shares fell by 3 per cent
as a result.
Following the sale of the majority of its Australian assets in February
2014, the corporation plans to sell a further US$15 billion worth of
assets in the period leading up to 2015, with deals announced in
Australia, Brazil and Italy.
Royal Dutch Shell announced on 8 April 2015 it had agreed to buy
BG Group for £47 billion (US$70 billion), subject to shareholder and regulatory approval. The acquisition was completed in February 2016, resulting in Shell surpassing
Chevron Corporation and becoming the world's second largest non-state oil company.
In January 2017, Royal Dutch Shell agreed to sell £2.46bn worth of
North Sea assets to oil exploration firm
Chrysaor. In 2017, Shell sold its
oil sands assets to
Canadian Natural Resources
in exchange of approximately 8.8% stake in that company. In May 2017,
it was reported that Shell plans to sell its shares in Canadian Natural
Resources fully exiting the oil sands business.
Environmental record
The presence of companies like Shell in the
Niger-Delta has led to extreme
environmental issues in the Niger Delta.
Many pipelines in the Niger-Delta owned by Shell are old and corroded.
Shell has acknowledged its responsibility for keeping the pipelines new
but has also denied responsibility for environmental causes. This has led to mass protests from the Niger-Delta inhabitants,
Amnesty International, and
Friends of the Earth Netherlands against Shell. It has also led to action plans to boycott Shell by environmental groups, and human rights groups.
In January 2013, a Dutch court rejected four out of five allegations
brought against the firm over oil pollution in the Niger Delta but found
a subsidiary guilty of one case of pollution, ordering compensation to
be paid to a Nigerian farmer.
On 15 January 1999, off the Argentinian town of
Magdalena, Buenos Aires, the Shell tanker Estrella Pampeana collided with a German
freighter,
emptying its contents into the lake, polluting the environment,
drinkable water, plants and animals. Over a decade after the spill, a
referendum held in Magdalena determined the acceptance of a US$9.5
million compensatory payout from Shell. Shell denied responsibility for the spill, but an Argentine court ruled in 2002 that the corporation was responsible.
Shell joined the
Global Climate Coalition
of businesses opposed to greenhouse gas emission regulation. In 1989,
Shell redesigned a $3-billion North Sea natural gas platform in the
North Sea, raising its height one to two meters, to accommodate an anticipated sea level rise due to global warming. In 2013, Royal Dutch Shell PLC reported CO2 emissions of 81 million metric tonnes.
Shell is known to be processing oil from the Amazon region of
South America, a large concern for environmentalists trying to protect
the area. In the United States, the Martinez refinery (CA) and the Puget
Sound Refinery (WA) carry Amazonian oil. In 2015, 14% of the Martinez
refinery's gross, at 19,570 barrels per day, came from the Amazon.
Climate change
In
2017, a public information film unseen for years resurfaced and showed
Shell had clear grasp of global warming 26 years earlier but has not
acted accordingly since, said critics.
Corporate affairs
Finances
For
the fiscal year 2017, Royal Dutch Shell reported earnings of US$13
billion, with an annual revenue of US$305 billion, an increase of 30.6%
over the previous fiscal cycle.
| Year
|
Revenue
in bn. US$
|
Net income
in bn. US$
|
Total Assets
in bn. US$
|
Employees
|
| 2013
|
451.235
|
16.371
|
357.512
|
92,000
|
| 2014
|
421.105
|
14.874
|
353.116
|
94,000
|
| 2015
|
264.960
|
1.939
|
340.157
|
90,000
|
| 2016
|
233.591
|
4.575
|
411.275
|
89,000
|
| 2017
|
305.179
|
12.977
|
407.097
|
84,000
|
Management
On 4 August 2005, the board of directors announced the appointment of
Jorma Ollila, chairman and CEO of
Nokia
at the time, to succeed Aad Jacobs as the company's non-executive
chairman on 1 June 2006. Ollila is the first Shell chairman to be
neither Dutch nor British. Other non-executive directors include
Maarten van den Bergh,
Wim Kok, Nina Henderson,
Lord Kerr,
Adelbert van Roxe, and Christine Morin-Postel.
Following a career at the corporation, in locations such as
Australia and Africa, Ann Pickard was appointed as the executive vice
president of the Arctic at Royal Dutch Shell, a role that was publicized
in an interview with
McKinsey & Company in June 2014.
Name and logo
The name Shell is linked to The "Shell" Transport and Trading Company. In 1833, the founder's father, Marcus Samuel Sr., founded an import business to sell
seashells to London collectors. When collecting seashell
specimens in the
Caspian Sea area in 1892, the younger Samuel realized there was potential in exporting
lamp oil from the region and commissioned the world's first purpose-built
oil tanker, the
Murex (Latin for a type of
snail shell), to enter this market; by 1907 the company had a fleet. Although for several decades the company had a refinery at
Shell Haven on the Thames, there is no evidence of this having provided the name.
The Shell logo is one of the most familiar commercial symbols in the world. This logo is known as the "
pecten" after the sea shell
Pecten maximus (the giant
scallop), on which its design is based. The yellow and red colours used are thought to relate to the colors of the
flag of Spain, as Shell built early service stations in
California, previously a
Spanish colony. The current revision of the logo was designed by
Raymond Loewy in 1971.
The slash was removed from the name "Royal Dutch/Shell" in 2005,
concurrent with moves to merge the two legally separate companies (Royal
Dutch and Shell) to the single legal entity which exists today.
Logo evolution
Operations
Business groupings
Upstream activities currently generate around one third of Shell's revenues
Shell is currently organized into four major business groupings:
- Upstream – manages the upstream business. It searches for
and recovers crude oil and natural gas and operates the upstream and
midstream infrastructure necessary to deliver oil and gas to the market.
Its activities are organised primarily within geographic units,
although there are some activities that are managed across the business
or provided through support units.
- Integrated Gas and New Energies – manages liquefying natural gas, converting gas to liquids and low-carbon opportunities.
- Downstream – manages Shell's manufacturing, distribution and
marketing activities for oil products and chemicals. Manufacturing and
supply includes refinery, supply and shipping of crude oil.
- Projects and technology – manages the delivery of Shell's
major projects, provides technical services and technology capability
covering both upstream and downstream activities. It is also responsible
for providing functional leadership across Shell in the areas of
health, safety and environment, and contracting and procurement.
Oil and gas activities
Shell's primary business is the management of a
vertically integrated
oil company. The development of technical and commercial expertise in
all stages of this vertical integration, from the initial search for oil
(exploration) through its harvesting (production), transportation,
refining
and finally trading and marketing established the core competencies on
which the company was founded. Similar competencies were required for
natural gas, which has become one of the most important businesses in
which Shell is involved, and which contributes a significant proportion
of the company's profits. While the vertically integrated business model
provided significant
economies of scale and
barriers to entry, each business now seeks to be a self-supporting unit without subsidies from other parts of the company.
Traditionally, Shell was a heavily decentralized business
worldwide (especially in the downstream) with companies in over 100
countries, each of which operated with a high degree of independence.
The upstream tended to be far more centralized with much of the
technical and financial direction coming from the central offices in
The Hague. The upstream oil sector is also commonly known as the "exploration and production" sector.
Downstream operations, which now also includes the chemicals
business, generates the majority of Shell's profits worldwide and is
known for its global network of more than 40,000
petrol stations and its various
oil refineries. The downstream business, which in some countries also included
oil refining, generally included a retail
petrol station
network, lubricants manufacture and marketing, industrial fuel and
lubricants sales and a host of other product/market sectors such as
LPG and
bitumen.
The practice in Shell was that these businesses were essentially local
and that they were best managed by local "operating companies" – often
with middle and senior management reinforced by
expatriates.
Shell has a long history of motorsport sponsorship, most notably
Scuderia Ferrari (1951-1964, 1966-1973 and 1996-present),
BRM (1962-1966 and 1968-1972),
Scuderia Toro Rosso (2007-2013 and 2016),
McLaren (1967-1968 and 1984-1994),
Lotus (1968-1971),
Team Penske (2011–present),
Hyundai Motorsport (since 2005),
AF Corse,
Risi Competizione,
BMW Motorsport (2015–present with also
Pennzoil) and
Dick Johnson Racing (
1987-
2004). It will again become title sponsor for the latter (now rebranded as
DJR Team Penske) in
2017.
Africa
Shell began drilling for oil in Africa during the 1950s. Shell began production in
Nigeria in 1958. Shell operates in the
upstream oil sector
in Algeria, Cameroon, Egypt, Gabon where is the giant Rabi-Kounga oil
field, Ghana, Libya, Morocco, Nigeria, South Africa and Tunisia; and in
the
downstream sector in 16 other countries.
In
Nigeria, Shell told US diplomats that it had placed staff in all the main ministries of the government.
In April 2010, Shell announced its intention to
divest from downstream business of all African countries except South Africa and Egypt to
Vitol and "Helios". In several countries such as Tunisia, protests and strikes broke out. Shell denied rumors of the sellout. Shell continues however upstream activities/extracting crude oil in the oil-rich
Niger Delta
as well as downstream/commercial activities in South Africa. In June
2013, the company announced a strategic review of its operations in
Nigeria, hinting that assets could be divested. In August 2014, the
company disclosed it was in the process of finalizing the sale of its
interests in four Nigerian oil fields.
Asia
Mainland China
The company has upstream operations in unconventional oil and gas in China. Shell has a joint venture with
PetroChina at the Changbei
tight gas field in
Shaanxi, which has produced natural gas since 2008. The company has also invested in exploring for shale oil in Sichuan.
The other unconventional resource which Shell invested in in China was
shale. The company was an early entrant in shale oil exploration in
China but scaled down operations in 2014 due to difficulties with
geology and population density. It has a joint venture to explore for
oil shale in
Jilin through a joint venture with Jilin Guangzheng Mineral Development Company Limited.
Hong Kong
Shell
has been active in Hong Kong for a century, providing Retail, LPG,
Commercial Fuel, Lubricants, Bitumen, Aviation, Marine and Chemicals
services and products. Shell also sponsored the first Hong Kong-built
aircraft, Inspiration', for its around-the-world trip.
Malaysia
Shell discovered the first oil well in Malaysia in 1910, in
Miri,
Sarawak.
Today the oil well is a state monument known as the Grand Old Lady. In
1914, following this discovery, Shell built Malaysia's first oil
refinery and laid a submarine pipeline in Miri.
Philippines
Royal Dutch Shell operates in the
Philippines under its subsidiary,
Pilipinas Shell Petroleum Corporation. Its headquarters is in
Makati City and it has facilities in the
Pandacan oil depot and other key locations.
In January 2010, the Bureau of Customs claimed 7.34 billion pesos worth of unpaid
excise taxes against
Pilipinas Shell
for importing Catalytic cracked gasoline (CCG) and light catalytic
cracked gasoline (LCCG) stating that those imports are bound for tariff
charges.
In August 2016, Pilipinas Shell filed an application to sell
US$629 million worth of primary and secondary shares to the investing
public (registration statement) with the SEC. This was a prelude to
filing its IPO listing application with the Philippine Stock Exchange.
On 3 November 2016 the Pilipinas Shell Petroleum Corporation was
officially listed on the
Philippine Stock Exchange under the ticker symbol SHLPH after they held its
Initial Public Offering on 19 to 25 October of the same year.
Singapore
Shell
has a strong presence in Singapore, indeed Singapore is the main center
for Shell's petrochemical operations in Asia Pacific region. Shell
Eastern Petroleum limited (SEPL) have their refinery located in
Singapore's Pulau Bukom island. They also operate as Shell Chemicals
Seraya in Jurong Island.
Europe
Ireland
Shell first started trading in Ireland in 1902.
Shell E&P Ireland (SEPIL) (previously Enterprise Energy Ireland) is
an Irish exploration and production subsidiary of Royal Dutch Shell.
Its headquarters are on
Leeson Street in Dublin. It was acquired in May 2002. Its main project is the
Corrib gas project, a large gas field off the northwest coast, for which Shell has encountered
controversy and protests in relation to the onshore pipeline and license terms.
In 2005 Shell disposed of its entire retail and commercial fuels business in Ireland to
Topaz Energy Group. This included depots, company-owned petrol stations and supply agreements stations throughout the island of Ireland. The retail outlets were re-branded as Topaz in 2008/9.
Nordic countries
On 27 August 2007, Royal Dutch Shell and
Reitan Group, the owner of the
7-Eleven
brand in Scandinavia, announced an agreement to re-brand some 269
service stations across Norway, Sweden, Finland and Denmark, subject to
obtaining regulatory approvals under the different competition laws in
each country.
In April 2010 Shell announced that the corporation is in process of
trying to find a potential buyer for all of its operations in Finland
and is doing similar market research concerning Swedish operations.
In October 2010 Shell's gas stations and the heavy vehicle fuel supply
networks in Finland and Sweden, along with a refinery located in
Gothenburg, Sweden were sold to
St1, a Finnish energy company, more precisely to its major shareholding parent company Keele Oy.
United Kingdom
In the UK sector of the
North Sea
Shell employs around 4,500 staff in Scotland as well as an additional
1,000 service contractors: however in August 2014 it announced it was
laying off 250 of them, mainly in
Aberdeen.
North America
Shell gasoline station in Canada
Through most of Shell's early history, the
Shell Oil Company business in the United States was substantially independent. Its stock was traded on the
NYSE,
and the group's central office had little direct involvement in running
the operation. However, in 1984, Royal Dutch Shell made a bid to
purchase those shares of Shell Oil Company it did not own (around 30%)
and, despite opposition from some minority shareholders which led to a
court case, Shell completed the buyout for a sum of $5.7 billion.
Australia
On 20 May 2011, Royal Dutch Shell's final investment decision for the world's first
floating liquefied natural gas
(FLNG) facility was finalized following the discovery of the remote
offshore Prelude field—located off Australia's northwestern coast and
estimated to contain about 3 trillion cubic feet of natural gas
equivalent reserves—in 2007. FLNG technology is based on liquefied
natural gas (LNG) developments that were pioneered in the mid-20th
century and facilitates the exploitation of untapped natural gas
reserves located in remote areas, often too small to extract any other
way.
The
floating vessel to be used for the Prelude field, known as
Prelude FLNG,
is promoted as the longest floating structure in the world and will
take in the equivalent of 110,000 barrels of oil per day in natural
gas—at a location 200 km (125 miles) off the coast of
Western Australia—and cool it into liquefied natural gas for transport and sale in Asia. The Prelude is expected to start producing LNG in 2017—analysts estimated the total cost of construction at more than
US$12 billion.
Following the decision by the Royal Dutch Shell fuel corporation to close its
Geelong,
Australia refinery in April 2013, a third consecutive annual loss was
recorded for Shell's Australian refining and fuel marketing assets.
Revealed in June 2013, the write down is worth
A$203
million, and was preceded by a A$638m writedown in 2012 and a A$407m
write down in 2011, after the closure of the Clyde refinery in
Sydney, Australia.
In February 2014, Shell sold its Australian refinery and petrol stations for US$2.6 billion (A$2.9 billion) to
Vitol, a
Geneva-based company.
Vitol stated that the Geelong refinery will remain open, as the company
plans to expand further into the Australian market. At the time of the
sale, Royal Dutch Shell was expected to continue investment into the
Australian market, with projects that involve Chevron Corp.,
Woodside Petroleum and Prelude.
Shell sold 9.5% of its 23.1% stake in
Woodside Petroleum
in June 2014 and advised that it had reached an agreement for Woodside
to buy back 9.5% of its shares at a later stage. Shell became a major
shareholder in Woodside after a 2001 takeover attempt was blocked by
then federal Treasurer
Peter Costello
and the corporation has been open about its intention to sell its stake
in Woodside as part of its target to shed assets. At a general body
meeting, held on 1 August 2014, 72 percent of shareholders voted to
approve the buy-back, short of the 75 percent vote that was required for
approval. A statement from Shell read: "Royal Dutch Shell acknowledges
the outcome of Woodside Petroleum Limited's shareholders' negative vote
on the selective buy-back proposal. Shell is reviewing its options in
relation to its remaining 13.6 percent holding."
Alternative energy
In the early 2000s Shell moved into
alternative energy and there is now an embryonic "
Renewables" business that has made investments in
solar power,
wind power,
hydrogen, and
forestry.
The forestry business went the way of nuclear, coal, metals and
electricity generation, and was disposed of in 2003. In 2006 Shell paid
SolarWorld to take over its entire solar business and in 2008, the company withdrew from the
London Array which has become the world's largest offshore wind farm.
Shell also is involved in large-scale hydrogen projects.
HydrogenForecast.com describes Shell's approach thus far as consisting
of "baby steps", but with an underlying message of "extreme optimism".
Shell holds 50% of
Raízen, a joint venture with Brazilian sugarcane producer
Cosan which is the third-largest Brazil-based energy company by revenues and a major producer of
ethanol.
In November 2017, Shell's CEO Ben van Beurden announced Shell's
plan to cut half of its carbon emissions by 2050, and 20 percent by
2035. In this regard, Shell promised to spend $2 billion annually on
renewable energy sources. Shell began to develop its wind energy segment
in 2001, the company now operates six wind farms in the United States
and is part of a plan to build two offshore wind farms in the
Netherlands.
Current projects
Arctic
Following the purchase of an offshore lease in 2005, Shell initiated its US$4.5 billion
Arctic drilling program in 2006, after the corporation purchased the "
Kulluk" oil rig and leased the
Noble Discoverer drillship. At inception, the project was led by Pete Slaiby, a Shell executive who had previously worked in the
North Sea.
However, after the purchase of a second offshore lease in 2008, Shell
only commenced drilling work in 2012, due to the refurbishment of rigs,
permit delays from the relevant authorities and lawsuits. The plans to drill in the Arctic led to protests from environmental groups, particularly
Greenpeace;
furthermore, analysts in the energy field, as well as related
industries, also expressed skepticism due to perceptions that drilling
in the region is "too dangerous because of harsh conditions and remote
locations".
Further problems hampered the Arctic project after the
commencement of drilling in 2012, as Shell dealt with a series of issues
that involved air permits, Coast Guard certification of a marine vessel
and severe damage to essential oil-spill equipment. Additionally,
difficult weather conditions resulted in the delay of drilling during
mid-2012 and the already dire situation was exacerbated by the "Kulluk"
incident at the end of the year. Royal Dutch Shell had invested nearly
US$5 billion by this stage of the project.
As the
Kulluk oil rig was being towed to the American state of
Washington
to be serviced in preparation for the 2013 drilling season, a winter
storm on 27 December 2012 caused the towing crews, as well as the rescue
service, to lose control of the situation. As of 1 January 2013, the
Kulluk was grounded off the coast Sitkalidak Island, near the eastern
end of Kodiak Island. Following the accident, a
Fortune magazine
contacted Larry McKinney, the executive director at the Harte Research
Institute for Gulf of Mexico Studies at Texas A&M, and he explained
that "A two-month delay in the Arctic is not a two-month delay ... A
two-month delay could wipe out the entire drilling season."
It was unclear if Shell would recommence drilling in mid-2013,
following the "Kulluk" incident and, in February 2013, the corporation
stated that it would "pause" its closely watched drilling project off
the Alaskan coast in 2013, and will instead prepare for future
exploration.
In January 2014, the corporation announced the extension of the
suspension of its drilling program in the Arctic, with chief executive
van Beurden explaining that the project is "under review" due to both
market and internal issues.
A June 2014 interview with Pickard indicated that, following a
forensic analysis of the problems encountered in 2012, Royal Dutch Shell
will continue with the project and Pickard stated that she perceives
the future of the corporation activity in the Arctic region as a
long-term "marathon". Pickard stated that the forensic "look back" revealed "there was an on/off switch" and further explained:
In other words, don't spend the money unless you're sure you're going to
have the legal environment to go forward. Don't spend the money unless
you're sure you're going to have the permit. No, I can't tell you that
I'm going to have that permit until June, but we need to plan like we're
going to have that permit in June. And so probably the biggest lesson
is to make sure we could smooth out the on/off switches wherever we
could and take control of our own destiny.
Based upon the interview with Pickard, Shell is approaching the
project as an investment that will reap energy resources with a lifespan
of around 30 years.
Controversies
Former Shell Research and Technology Centre, Amsterdam
Brent Spar platform
In
the 1990s, protesters criticised the company's environmental record,
particularly the possible pollution caused by the proposed disposal of
the
Brent Spar
platform into the North Sea. Despite support from the UK government,
Shell reversed the decision under public pressure but maintained that
sinking the platform would have been environmentally better. Shell subsequently published an unequivocal commitment to
sustainable development, supported by executive speeches reinforcing this commitment.
2004 overstatement of oil reserves
In 2004 Shell overstated its oil reserves, resulting in loss of confidence in the group, a £17 million fine by the
Financial Services Authority and the departure of the chairman
Philip Watts. A lawsuit resulted in the payment of $450 million to non-American shareholders in 2007.
Corporate communications
Shell's advertising regarding its
renewable energy business has been described as a
greenwash by some environmental lobbies, leading to criticism from the British
Advertising Standards Authority
which ruled that Shell had misled the public in an advertisement when
it claimed that a $10 billion oil sands project in Alberta, Canada was a
"sustainable energy source".
Health and safety
A number of incidents over the years led to criticism of Shell's
health and safety
record, including repeated warnings by the UK Health and Safety
Executive about the poor state of the company's North Sea platforms.
Human rights
In the beginning of 1996, several human rights groups
brought cases to hold Shell accountable
for alleged human rights violations in Nigeria, including summary
execution, crimes against humanity, torture, inhumane treatment and
arbitrary arrest and detention. In particular, Shell stood accused of
collaborating in the execution of
Ken Saro-Wiwa and eight other leaders of the
Ogoni tribe of southern Nigeria, who were hanged in 1995 by Nigeria's then military rulers. The lawsuits were brought against Royal Dutch Shell and Brian Anderson, the head of its Nigerian operation. In 2009, Shell agreed to pay $15.5m in a legal settlement. Shell has not accepted any liability over the allegations against it.
In 2009, Shell was the subject of an Amnesty International report
into the deterioration of human rights as a consequence of Shell's
activities in the
Niger Delta. In particular, Amnesty criticised the continuation of
gas flaring and Shell's slow response to oil spills.
In 1998, on its first public report on community and environmental
issues in Nigeria, Shell promised "to end the practice of gas flaring in
ten years, while pledging to establish a youth training scheme in
Ogoniland".
In 2010, a leaked cable revealed that Shell claims to have
inserted staff into all the main ministries of the Nigerian government
and know "everything that was being done in those ministries", according
to Shell's top executive in Nigeria. The same executive also boasted
that the Nigerian government had forgotten about the extent of Shell's
infiltration.
Documents released in 2009 (but not used in the court case) reveal that
Shell regularly made payments to the Nigerian military in order to
prevent protests.
Arctic project
According
to the Bureau of Ocean Energy Management report in 2015 the chances of a
major spill in a deep-sea Arctic drilling is 75% before century's end.
Kodiak
In 2010
Greenpeace activists painted "No Arctic Drilling" with spilled BP oil on
the side of a ship in the Gulf of Mexico that was en route to explore
for Arctic oil for Shell. At the protest,
Phil Radford
of Greenpeace called for "President Obama [to] ban all offshore oil
drilling and call for an end to the use of oil in our cars by 2030."
On 16 March 2012, 52 Greenpeace activists from five different countries boarded
Fennica and
Nordica, multipurpose
icebreakers chartered to support Shell's drilling rigs near Alaska. Around the same time period, a reporter for
Fortune
magazine spoke with Edward Itta, an Inupiat Eskimo leader and the
former mayor of the North Slope Borough, who expressed that he was
conflicted about Shell's plans in the Arctic, as he was very concerned
that an oil spill could destroy the Inupiat Eskimo's hunting-and-fishing
culture, but his borough also received major tax revenue from oil and
gas production; additionally, further revenue from energy activity was
considered crucial to the future of the living standard in Itta's
community.
In July 2012, Greenpeace activists shut down 53 Shell petrol stations in
Edinburgh and
London in a protest against the company's plans to drill for oil in the Arctic. Greenpeace's "
Save the Arctic"
campaign aims to prevent oil drilling and industrial fishing in the
Arctic by declaring the uninhabited area around the North Pole a global
sanctuary.
A review was announced after the Kulluk oil rig ran aground near Kodiak Island in December 2012.
In response, Shell filed lawsuits to seek injunctions from possible protests, and
Benjamin Jealous of the
NAACP and Radford argued that the legal action was "trampling Americans' rights."
According to Greenpeace, Shell lodged a request with Google to take
down video footage of a Greenpeace protest action that occurred at the
Shell-sponsored
Formula One
(F1) Belgian Grand Prix on 25 August 2013, in which "SaveTheArctic.org"
banners appear at the winners' podium ceremony. In the video, the
banners rise up automatically—activists controlled their appearance with
the use of four radio car antennas—revealing the website URL, alongside
an image that consists of half of a polar bear's head and half of the
Shell logo.
Royal Dutch Shell then announced a "pause" in the timeline of the project in early 2013 and, in September 2015, the corporation announced the extension of the suspension of its drilling program in the Arctic.
Polar Pioneer
A
June 2014 interview with the corporation's new executive vice president
of the Arctic indicated that Royal Dutch Shell will continue with its
activity in the region.
On 6 May 2015 it was reported that during a coast guard inspection of Polar Pioneer, a piece of anti-pollution gear failed, resulting in fines and delay of the operation. Oil executives from Total and Eni interviewed by the New York Times,
expressed skepticism about Shell's new ambitions for offshore drilling
in the Arctic, and cited economic and environmental hurdles.
ConocoPhillips and Statoil suspended Arctic drilling earlier, after
Shell's failed attempt in 2012.
Oil spills
- Shell was responsible for around 21,000 gallons of oil spilled near Tracy, California in May 2016 due to a pipeline crack.
- Shell was responsible for an 88,200-gallon oil spill in the Gulf of Mexico in May 2016.
- Two ruptures in a Shell Oil Co. pipeline in Altamont, California -
one in September 2015 and another in May 2016 - had some questioning
whether the Office of the State Fire Marshal, charged with overseeing
the pipeline, was doing an adequate job.
Paradise Papers
On 5 November 2017, the
Paradise Papers, a set of confidential
electronic documents relating to
offshore investment, revealed that Argentine Energy Minister
Juan José Aranguren was revealed to have managed the
offshore companies
'Shell Western Supply and Trading Limited' and 'Sol Antilles y Guianas
Limited', both subsidiaries of Shell. One is the main bidder for the
purchase of diesel oil by the current government through the state owned
CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico).
Nigeria corruption scandals
Royal Dutch Shell and Italy's
Eni will stand trial in Italy over allegations of corruption in the 2011 purchase of a
big offshore oil field in
Nigeria known as OPL 245. Shell and Eni reportedly paid $1.3 billion in bribes. According to Barnaby Pace of campaign group
Global Witness,
"This trial should be a wake-up call to the oil industry. Some of the
most senior executives at two of the biggest companies in the world
could face prison sentences for a deal that was struck under their
watch."
In March 2018, Royal Dutch Shell has filed a criminal complaint
against Peter Robinson, a former vice president for sub-Saharan Africa.
Shell said the two cases were unrelated.
US$407.0 billion (2017)
