Shell plc

Date founded: 1907

Industry: Oil and gas; petrochemicals

Corporate Headquarters: The Hague, the Netherlands

Type: Public

Overview

Shell, formerly Royal Dutch Shell, is a British-Dutch company and consistently one of the largest oil and gas companies in the world. The company’s origins and name can be traced back to an antique shop on the streets of 1830s London. By the turn of the twentieth century, the business had expanded and evolved to become a pioneering force in the burgeoning oil transportation industry. In an effort to compete with Standard Oil—the dominant American company of the time—the British company merged with a Dutch competitor in 1907 to officially form Royal Dutch Shell. In the twenty-first century, Shell was a worldwide leader in the exploration, refining, transportation, and distribution of oil, gas, and petrochemicals. The company operated in more than seventy nations and reported revenues of $272.7 billion in 2022.

History

In 1833, British antique dealer Marcus Samuel began selling seashells imported from Asia from his London East End shop. Samuel’s business proved very lucrative, and he left it to his two sons—Marcus Jr. and Samuel—when he died in 1870. By the 1880s, the children had expanded their father’s import-export business to include tools, machinery, and textiles. About 1890, Samuel was on a boat trip to collect seashells by the Caspian Sea when he realized there was potential in the exporting of lamp oil. At that time, oil was primarily used for lubrication and as a lighting fuel for lamps.

Getting the oil from the Caspian region to England by ship posed a problem, as oil barrels were cumbersome and prone to leakage. Marcus and Samuel ordered a fleet of tanker ships built that could safely transport the oil—in the process, revolutionizing the transportation of oil in bulk quantities. This allowed the Samuel brothers to export more oil at less expense than conventional land transportation such as trains. The brothers first named their oil transport company the Tank Syndicate, but changed it to the Shell Transport and Trading Company in 1897. The name was chosen to honor their father’s legacy as a trader in seashells.

The Shell Company grew to become one of the leading oil companies in the world, but it faced competition from several rivals. One was the Royal Dutch Petroleum Company, a smaller venture formed in 1890 that began refining and transporting oil from Dutch-held colonies in Indonesia. A more serious threat was Standard Oil, an American business run by industrialist John D. Rockefeller. Rockefeller had built Standard Oil into a business juggernaut and was notorious for attempting to stamp out his competitors. At about the same time, engineers had developed the first combustion engines and started to build the first automobiles. These automobiles ran on gasoline, a by-product of crude oil refining.

With the demand for oil and gasoline poised to explode, the Shell Company wanted to ensure it could compete against Standard Oil on a global scale. In 1907, the Shell Transport and Trading Company merged with the Royal Dutch Petroleum Company to form the Royal Dutch Shell Group. Royal Dutch Petroleum had a 60 percent interest in the new company while the British Shell Company had a 40 percent interest. To contrast its brand with the blue color used by Standard Oil, Shell chose red and yellow as its signature colors. While it had originally adopted a mussel shell as its logo, in 1907, the company began using the giant scallop shell as its official symbol.

Shell, as the company was most often called, rapidly expanded its operations throughout the United States, the United Kingdom, Europe, and Asia. It also established exploratory operations in Texas, Mexico, Romania, Russia, and Venezuela. In the years after World War II (1939–1945), Shell adjusted to a changing oil market by beginning off-shore drilling operations in the Gulf of Mexico and began exploratory efforts in Africa. In the 1950s, Shell began using massive supertankers to transport even more oil and started selling gasoline under its own brand name.

In the 1960s and 1970s, Shell began to diversify into other fuel sources such as coal, nuclear power, and petrochemicals. However, its coal and nuclear efforts were unsuccessful and phased out by the end of the twentieth century. In the 1990s, Shell invested in gas-to-liquid technology that converts natural gas—which is in gaseous form—into liquid fuels such as gasoline or diesel. In 2005, the Royal Dutch Shell Group officially dissolved its 1907 merger and reformed under a new corporate entity—Royal Dutch Shell plc. In December 2021, the company announced it would be dropping part of its name to officially become Shell. The change took effect in January 2022, and a year later, Wael Sawan took over as CEO of the company.

Impact

The company headquarters of Royal Dutch Shell is located in the Hague, the Netherlands, though it also has corporate offices in London. In 2022, the company reported operations in more than seventy countries around the world, with a workforce of more than 82,000 people. Shell’s business operations are divided into several separate ventures. Its upstream businesses manage the exploration and removal of crude oil and natural gas, the transportation of those fuels, and the infrastructure needed to deliver the fuels to markets worldwide. Downstream businesses include Shell’s refineries, gas stations, heating oil sales, aviation and marine fuel, and other petrochemicals.

Shell’s integrated gas ventures include liquefied natural gas and gas-to-liquid capabilities. It also includes the marketing of and trading in natural gas, crude oil, and electricity. Its new energy businesses explore emerging technologies and alternative fuel sources, such as wind energy and solar energy. The company’s focus is on products that show commercial promise, such as biofuels, charging for battery-powered electric vehicles, and hydrogen fuels.

According to Forbes magazine, Shell was sixteenth on the Global 2000 list in 2022. It was also listed in the top 100 best employers in Canada in 2023. The company listed its 2022 revenue at $261.8 billion, profits at $20.3 billion, and total assets at $404.4 billion.

Bibliography

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