Royal Dutch Shell Essay

 

The Royal Dutch Shell Company is a multinational petroleum (oil) company that began in the 1800s from a merger of two companies (1907), one of which was English and the other Dutch. Currently Shell is a private company, the second largest oil company, and one of the six major oil companies in the world. It is, after Wal-Mart and Exxon, the third-largest company in the world. Its headquarters and tax residency is in The Hague, Netherlands; however, it is incorporated in London as well. Its stock is listed as RDS.A on the New York, London, and other stock exchanges.

Petroleum—from exploration to marketing of oil and gas—continues to be its main business. Besides exploration, production, transportation, and marketing of oil, it also has a significant stake in the petrochemical industry. The latter business operations are conducted through its subsidiary Shell Chemicals. With the possibility of most of the world’s oil supplies being exhausted in the next century or more, it is also engaged in developing renewable sources of energy.

Shell Oil Company began in 1880 in the Dutch colony of Indonesia when Aeiko Jans Zijlker, a manager with the East Sumatra Tobacco Company, was shown a natural oil seepage. Over 50 natural oil seepages were known in the Indonesian archipelago. By 1885 the first well was producing and the Dutch king William III had granted the company formed to exploit the oil the Royal Dutch Company. When Zijlker died suddenly, he was replaced by Jean Baptiste August Kessler. The great early development of the Royal Dutch Petroleum Company was a result of his diligent efforts.

By 1900 Standard Oil and other oil companies were seeking to take over Royal Dutch. However, it was able to resist these efforts until it merged with M. Samuel & Company of London. The Samuel brothers, Marcus and Samuel, had developed a tanker fleet that had gained access to the British-controlled Suez Canal. Until the advent of the automobile, the oil business was the kerosene business. It was shipped in cans to consumers globally. However, with the development of tankers, the Samuels could ship kerosene in bulk to be dispensed locally in bulk and thereby master transportation costs.

In 1907 the Royal Dutch Shell Company was formed by a merger with the Shell Transport and Trading Company. The Dutch kept 60 percent of the company and the British arm got 40 percent. With the merger of operations, the new company was better positioned to compete with John D. Rockefeller’s Standard Oil. The Shell brand was to become one of the world’s most famous commercial symbols.

In 2007 Shell celebrated its 100th birthday. It has survived wars, depressions, competitors, and production and marketing challenges to become the second largest oil company in the world. Today it is an energy company with five main businesses it aims to conduct with environmental care. These businesses are Exploration and Production, Gas and Power, Refining and Marketing, Chemicals, and Trading/Shipping, which operates in more than 100 countries. It is vertically integrated in order to gain the maximum in economies of scale and efficiency production and marketing. Its Shell Oil gasoline stations are seen throughout the United States and the world.

Exploration and production of petroleum is essential for Shell. Oil is its raw material for gasoline and petrochemicals. Because natural gas is often found in oil fields, it is captured and either piped to markets or shipped as liquid petroleum gas (LPG) to markets. The shipping of oil and LPG is a historic part of the company’s operations. The use of natural gas as a clean fuel for the production of electricity for power and lighting is a natural outgrowth from its origins as a producer of kerosene lighting fuel.

With political instability in many oil-producing areas, which in the case of Nigeria have generated complaints of human rights violations, Shell has sought diversification into alternative energy production such as nuclear power (with Gulf Oil Company), coal, electrical generation, and with metals. These projects were not successful. Since 2000 it has sought to develop alternatives to fossil-fuel hydrocarbons through investments in solar power, wind-generated electricity, hydrogen fuel cells, and other sources of energy. However, in 2006 it quit the solar power business and in 2008 withdrew from a wind farm venture with London Array. It is currently invested in developing large-scale hydrogen projects.

Bibliography:

  1. Emily Boyle, A Study of a Dysfunctional Learning Organization: The Case of Royal Dutch Shell in the 1990s (University of Ulster, School of Business Organization and Management, 2001);
  2. Stephen Howarth, Joost Jonker, and Keetie Sluyterman, History of Royal Dutch Shell (Oxford University Press, 2007);
  3. Daniel Litvin, Empires of Profit: Commerce, Conquest and Corporate Responsibility (Cengage Learning, 2004);
  4. Malcolm McIntosh and Ruth Thomas, Royal Dutch Shell (Routledge, 2001);
  5. Ike Okanta, Where Vultures Feast—Shell, Human Rights, and Oil in the Niger Delta (Sierra Club Books, 2001);
  6. Alex Wright, A Social Constructionist’s Deconstruction of Royal Dutch Shell’s Scenario Planning Process (University of Wolverhampton, 2004).

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