Checked content

Royal Dutch Shell

Related subjects: Companies

Background Information

SOS Children volunteers helped choose articles and made other curriculum material Sponsoring children helps children in the developing world to learn too.

Royal Dutch Shell plc

Euronext:  RDSA
Euronext:  RDSB

Industry Oil and gas
Founded 1907
Headquarters NetherlandsThe Hague, Netherlands
Area served Worldwide
Key people Jorma Ollila ( Chairman)
Peter Voser ( CEO)
Products Petroleum, natural gas, and other petrochemicals
Revenue Decrease US$ 278.188 billion (2009)
Operating income Decrease US$ 19.597 billion (2009)
Profit Decrease US$ 12.518 billion (2009)
Total assets Increase US$ 292.181 billion (2009)
Total equity Increase US$ 136.431 billion (2009)
Employees 102,000 - March 2009
Subsidiaries Shell Oil Company
Shell Nigeria
Shell Canada
Headquarters in The Hague

Royal Dutch Shell plc, commonly known simply as Shell, is a multinational petroleum company of Dutch and British origins. One of the six " supermajors" ( vertically integrated private sector oil exploration, natural gas, and petroleum product marketing companies), Shell was listed as the world's 8th largest corporation for 2010 by Forbes The company's headquarters are in The Hague, Netherlands.

Shell operates in over 140 countries. In the United States, the Shell Oil Company subsidiary, headquartered in Houston, Texas, is one of its largest businesses.


The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company (legal name in Dutch, N.V. Koninklijke Nederlandsche Petroleum Maatschappij) and the "Shell" Transport and Trading Company Ltd of the United Kingdom merged their operations – a move largely driven by the need to compete globally with the then predominant US petroleum company, John D. Rockefeller's Standard Oil. The terms of the merger gave 60% of the new Group to the Dutch arm and 40% to the British.

Royal Dutch Petroleum Company was a Dutch company founded in 1890 by Jean Baptiste August Kessler, along with Henri Deterding, when a Royal charter was granted by King William III of the Netherlands to a small oil exploration and production company known as "Royal Dutch Company for the Working of Petroleum Wells in the Dutch Indies" (now Indonesia).

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 and his brother Samuel Samuel. Initially the Company commissioned eight oil tankers for the purposes of transporting oil.

Chart of the major energy companies dubbed "Big Oil" sorted by latest published revenue
Royal Dutch dock in Indonesia, Tropenmuseum collection

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 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 Ltd, a company that traded until the brands separated in 1975.

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 principal listing on the London Stock Exchange and the Amsterdam Stock Exchange and its headquarters and tax residency in The Hague in the Netherlands. The unification was completed on 20 July 2005. Shares were issued at a 60/40 advantage for the shareholders of Royal Dutch in line with the original ownership of the Shell Group.

In November 2007 Shell acquired a majority stake in some gas fields owned by Regal Petroleum in Ukraine.

In March 2010, Shell announced selling of some of its assets, including its liquid petroleum gas (LPG) business, to meet the cost of a planned $28bn capital spending programme. Shell has invited buyers to submit indicative bids, due by 22 March, company will raise $2-3bn from the sale.

In June 2010, Royal Dutch Shell agreed to acquire all of the business of East Resources for a cash consideration of $4.7 billion. The transaction includes East Resources Tight Gas Fields.

Name and brand

A Shell-sponsored Ferrari F60 Formula One motor racing car

The name Shell is linked to the Shell Transport and Trading Company. In 1833, the founder's father, also Marcus Samuel, 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 brand is one of the most familiar commercial symbols in the world. Known as the "pecten" after the sea shell Pecten maximus (the giant scallop), on which its design is based, the current version of the brand was designed by Raymond Loewy and introduced in 1971. The yellow and red colours used are thought to relate to the colours of the flag of Spain as Shell built early service stations in the state of California which had strong connections with Spain.

The slash was removed from the name "Royal Dutch/Shell" in 2004, concurrent with moves to merge the two legally separate companies (Royal Dutch and Shell) to the single legal entity which exists today..


The upstream provides two thirds of Shell's revenues

One of the original Seven Sisters, Royal Dutch Shell is the world's largest private sector oil company by revenue, Europe's largest energy group and a major player in the petrochemical industry.

Core businesses

Shell has five core businesses: exploration and production ( the "upstream"), gas and power, refining and marketing( the "downstream"), chemicals, and trading and shipping. The company operates in more than 140 countries.

Shell oil depot in Kowloon, Hong Kong

Shell's primary business is the management of a vertically integrated oil company. The development of technical and commercial expertise in all the 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, there has been much less interdependence recently between the businesses, and each business now seeks to be a self-supporting unit without subsidies from other parts of the company.

The petroleum and gas business is increasingly an assembly of independent and globally managed business segments, each of which must be profitable in its own right.

The downstream, which now also includes the chemicals business, generates a third of Shell's profits worldwide and is known its global network of more than 40,000 petrol stations and its 47 oil refineries.


A Shell oil refinery in Martinez, California
Shell tank truck in Reykjavík, Iceland

Over the years Shell has occasionally sought to diversify away from its core oil, gas and chemicals businesses. These diversifications have included nuclear power (a short-lived and costly joint venture with Gulf Oil in the USA); coal (Shell Coal was for a time a significant player in mining and marketing); metals (Shell acquired the Dutch metals-mining company Billiton in 1970) and electricity generation (a joint venture with Bechtel called Intergen). None of these ventures were seen as successful and all have now been divested.

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 sold its entire solar business and in 2008, the company withdrew from the London Array which is expected to become the world's largest offshore wind farm.

Shell also is involved in large-scale hydrogen projects. describes Shell's approach thus far as consisting of "baby steps", but with an underlying message of "extreme optimism".


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.

As of 1 July 2009, Peter Voser was CEO of Shell. Peter, who is Swiss, is the first non-Dutch, non-British CEO of the company.

Corporate responsibility

Former Shell Research and Technology Centre, Amsterdam

Shell's compliance to corporate social responsibility also includes its UK and international Shell LiveWIRE programmes. This initiative has over 26 years experience of encouraging young people to start and develop their own businesses in the UK and 26 other countries in the world.

Shell has been criticised for its businesses in Africa, notably in relation to protests of the Ogoni in 1995.

In the 1990s, protesters criticized 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.

Shell Oil (the U.S. subsidiary) was one of the first companies to leave the Global Climate Coalition, a lobby group which had opposed restrictions on greenhouse gases. Shell is also a founding member of the World Business Council for Sustainable Development, which Watts led as Chairman in 2002/2003.

Delivering the annual business lecture hosted by Greenpeace in 2005, Shell chairman Lord Oxburgh said that we must act now on global warming or face a "disaster", and encouraged governments to provide a regulatory framework to encourage the reduction of greenhouse gas emissions.

Shell whistleblowers

Shell has set up a global internet-based facility for whistleblowers to report alleged violations of the law or the Shell general business principles, a voluntary code of ethics pledging transparency, integrity and honesty in all of Shell's business dealings. The introduction at the global helpline website says "Reporting and addressing suspected violations of the law or the Shell General Business Principles (SGBP) is of critical importance in protecting our reputation and the value of the Shell brand." Whistleblowers are asked to provide identity details but anonymous reports are also accepted. The Global Helpline operated by Global Compliance, Inc. is available to "customers, suppliers, partners, advisers and employees of Shell".

Corporate communications

Shell Centre building in London, UK

Shell's advertising regarding its renewable energy business has been described as a " greenwash" by some environmental lobbies, but praised by other commentators.

In August 2008, the British Advertising Standards Authority (ASA) ruled that Shell had misled the public in an advertisement, claiming that a $10 billion oil sands project in Alberta, Canada was a "sustainable energy source".

Oil reserves

In 2004, a disclosure about the overstatement of oil reserves was seen as the most serious crisis encountered in the Group’s nearly 100 years of history. A class action lawsuit was settled for $450 million, with Grant & Eisenhofer P.A. representing the class. The Economist asked in an article dated 11 March 2004 whether Shell could be seen as "another Enron", but answered its own question with "importantly, Shell's shifting of reserves (from “proven” to “probable”) simply cannot be compared with the phantom profits and bogus assets booked by Enron. That is because the oil and gas actually still exists, and Shell still owns them as real, usable assets". The crisis led to the dismissal of the chairman of the Committee of Managing Directors Philip Watts, and prompted a major reorganisation of the Group.

Health, safety, and other issues

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.

Problems have also occurred with the Sakhalin-II project in Russia and the controversial Corrib Gas Field development in Ireland. Shell's social investment initiative the Shell Foundation has also run into some controversy. In 2007 Friends of the Earth alleged that the damage caused by Shell's oil activities to local communities and the wider environment could be assessed at $20 billion. Accusations have also flown about the conduct of Shell in Nigeria.

Canadian oil sands

Shell are one of numerous firms who are extracting oil from Canadian oil sands, a process that produces four times as much CO2 as conventional drilling, and that some would argue has a negative impact on surrounding communities..

Human rights concerns

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 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.

Corporate governance

Shell service station in Hiroshima, Japan

Traditionally, Shell was a heavily decentralised 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 centralised with much of the technical and financial direction coming from the central offices in The Hague. Nevertheless. there were very large "exploration and production" companies in a small number of major oil and gas production centres such as the United Kingdom (Shell Expro, a Joint Venture with Exxon), Nigeria, Brunei, and Oman.

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. In the 1990s, this paradigm began to change, and the independence of operating companies around the world was gradually reduced. Today, virtually all of Shell’s operations in various businesses are much more directly managed from London and The Hague. The autonomy of “operating companies” has been largely removed, as more "global businesses" have been created.

North America

Service station near Lost Hills, California

Through most of Shell's history, its business in the United States, Shell Oil Company was substantially independent with its stock ("Shell Oil") being traded on the NYSE and with little direct involvement from the group’s central offices in the running of the American business. Such practice also changed in the 1990s when Shell first bought out the shares in Shell Oil that it did not own and then took a more hands-on approach. In Canada, also previously very independent, Shell has completed its purchase of the shares in Shell Canada that it did not own, to apply the new global business model.

Service station in Jamaica
Shell petrol station in Wagga Wagga, New South Wales.


In Australia, retailer Coles Group (now part of Wesfarmers) purchased the rights to the retail business from the existing Shell Australia multi-site franchisees in 2003 for an amount less than A$100 million. The purchase was made in response to a popular discount fuel offer by rival Woolworths Limited launched some years earlier.

Coles Express' only affiliation with Shell is that Shell is the exclusive supplier of fuel and lubricant products, leases the service station property to Coles, and maintains the presence of the "pecten" and other Shell branding on the price board and other signage. Coles Express sets fuel and shop prices and runs the business, provides convenience and grocery merchandise through its supply chain and distribution network, and directly employs the service station staff.

Norway, Sweden, Finland and Denmark

On 27 August 2007, Royal Dutch Shell and Reitan Group, the owner of the 7-Eleven brand in Scandinavia, announced an agreement to rebrand some 269 service stations across Norway, Sweden Finland and Denmark, subject to obtaining regulatory approvals under the different competition laws in each country.


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 licence 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 rebranded to Topaz in 2008/9.

The Philippines

On January of 2010, The bureau of customs is claiming 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.

Pilipinas Shell denied the claim stating that those imports are raw materials for making their products. The company later emphasized that they are considering to close their local oil refinery if the case continues. Pilipinas Shell informed the public that they will exhaust all necessary steps to meet the demand for fuel.

Retrieved from ""