Shell 10

[Elva Stuller]

Shell was formed in April 1907 through the merger of Royal Dutch Petroleum Company of the Netherlands and The "Shell" Transport and Trading Company of the United Kingdom. The combined company rapidly became the leading competitor of the American Standard Oil and by 1920 Shell was the largest producer of oil in the world.[7] Shell first entered the chemicals industry in 1929. Shell was one of the "Seven Sisters" which dominated the global petroleum industry from the mid-1940s to the mid-1970s. In 1964, Shell was a partner in the world's first commercial sea transportation of liquefied natural gas (LNG).[8] In 1970, Shell acquired the mining company Billiton, which it subsequently sold in 1994 and now forms part of BHP. In recent decades gas has become an increasingly important part of Shell's business[9] and Shell acquired BG Group in 2016.[9]

Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration, production, refining, transport, distribution and marketing, petrochemicals, power generation, and trading. Shell has operations in over 99 countries,[10] produces around 3.7 million barrels of oil equivalent per day and has around 44,000 service stations worldwide.[11][12] As of 31 December 2019, Shell had total proved reserves of 11.1 billion barrels (1.76109 m3) of oil equivalent.[13] Shell USA, its principal subsidiary in the United States, is one of its largest businesses.[14] Shell holds 44%[15] of Razen, a publicly-listed joint venture with Cosan, which is the third-largest Brazil-based energy company.[16] In addition to the main Shell brand, the company also owns the Jiffy Lube, Pennzoil and Quaker State brands.

Shell is a constituent of the FTSE 100 Index and had a market capitalisation of US$199 billion on 15 September 2022, the largest of any company listed on the LSE and the 44th-largest of any company in the world.[17] By 2021 revenues, Shell is the second-largest investor-owned oil company in the world (after ExxonMobil), the largest company headquartered in the United Kingdom, the second-largest company headquartered in Europe (after Volkswagen), and the 15th largest company in the world.[18] Until its unification in 2005 as Royal Dutch Shell plc, the firm operated as a dual-listed company, whereby the British and Dutch companies maintained their legal existence and separate listings but operated as a single-unit partnership. From 2005 to 2022, the company had its headquarters in The Hague, its registered office in London and had two types of shares (A and B). In January 2022, the firm merged the A and B shares, moved its headquarters to London, and changed its legal name to Shell plc.[5][19]

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.[20] It was a move largely driven by the need to compete globally with Standard Oil.[21] The Royal Dutch Petroleum Company was a Dutch company founded in 1890 to develop an oilfield in Pangkalan Brandan, North Sumatra,[22] 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.[23] Their father had owned an antique company in Houndsditch, London,[24] which expanded in 1833 to import and sell seashells, after which the company "Shell" took its name.[20][25][26]

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 stock ownership of the new group to Royal Dutch, and 40 percent to Shell. Both became holding companies for Bataafsche Petroleum Maatschappij, containing the production and refining assets, and Anglo-Saxon Petroleum Company, containing the transport and storage assets.[27] National patriotic sensibilities would not permit a full-scale merger or takeover of either of the two companies.[27] The Dutch company, Koninklijke Nederlandsche Petroleum Maatschappij at The Hague, was in charge of production and manufacture.[28] The British Anglo-Saxon Petroleum Company was based in London, to direct the transport and storage of the products.[28][26]

In 1912, Royal Dutch Shell purchased the Rothschilds' Russian oil assets in a stock deal. The Group's production portfolio then consisted of 53 percent from the East Indies, 29 percent from the Russian Empire, and 17 percent from Romania.[26][29]

During the First World War, Shell was the main supplier of fuel to the British Expeditionary Force.[30] It was also the sole supplier of aviation fuel and supplied 80 percent of the British Army's TNT.[30] It also volunteered all of its shipping to the British Admiralty.[30]

The German invasion of Romania in 1916 saw 17% of the group's worldwide production destroyed.[30] 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. During the Genoa Conference of 1922 Royal Dutch Shell was in negotiations for a monopoly over Soviet oilfields in Baku and Grosny, although the leak of a draft treaty led to breakdown of the talks.[31] In 1929, Shell Chemicals was founded.[30] 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.[30]

Located in the north bank of the River Thames in London, Shell Mex House was completed in 1931, and was the head office for Shell's marketing activity worldwide.[30] In 1932, partly in response to the difficult economic conditions of the Great Depression, Shell-Mex merged its UK marketing operations with those of BP (British Petroleum) to create Shell-Mex & BP,[33] 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.[34]

The 1930s saw Shell's Mexican assets seized by the local government.[30] After the invasion of the Netherlands by Nazi Germany in 1940, the head office of the Dutch companies was moved to Curaao.[30] In 1945, Shell's Danish headquarters in Copenhagen, at the time being used by the Gestapo, was bombed by Royal Air Force De Havilland Mosquitoes in Operation Carthage.[35]

In 1937, Iraq Petroleum Company (IPC), 23.75 percent owned by Royal Dutch Shell plc,[36] signed an oil concession agreement with the Sultan of Muscat. In 1952, IPC offered financial support to raise an armed force that would assist the Sultan in occupying the interior region of Oman, an area that geologists believed to be rich in oil. This led to the 1954 outbreak of the Jebel Akhdar War in Oman that lasted for more than 5 years.[37]

Around 1952, Shell was the first company to purchase and use a computer in the Netherlands.[38] 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.[39]

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.[41] Shell subsequently published an unequivocal commitment to sustainable development, supported by executive speeches reinforcing this commitment.[42] Shell was subsequently criticised by the European Commission and five European Union members after deciding to leave part of its decommissioned oil rigs standing in the North Sea. Shell argued that removing them would be too costly and risky. Germany said that the estimated 11,000 tonnes of raw oil and toxins remaining in the rigs would eventually seep into the sea, and called it a 'ticking timebomb'.[43]

On 15 January 1999, off the Argentinian town of Magdalena, Buenos Aires, the Shell tanker Estrella pampeana collided with a German cargo ship, 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.[44] Shell denied responsibility for the spill, but an Argentine court ruled in 2002 that the corporation was responsible.[45]

In 2002, Shell acquired Pennzoil-Quaker State through its American division for $22 USD per share, or about $1.8 billion USD. Through its acquisition of Pennzoil, Shell became a descendant of Standard Oil. With its acquisition, Shell inherited multiple auto part brands including Jiffy Lube, Rain-X, and Fix-a-Flat. The company was notably late in its acquisition as seen by journalists, with Shell seen as streamlining its assets around the same time of other major mergers and acquisitions in the industry, such as BP's purchase of Amoco and the merger of Exxon and Mobil.[46]

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.[47][48][49]

As a result of the scandal, the corporate structure was simplified. Two classes of ordinary shares, A (code RDSA) and B (code RDSB), identical but for the tax treatment of dividends, were issued for the company.[50]

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 LSE, a secondary listing on Euronext Amsterdam, its headquarters and tax residency in The Hague, Netherlands and its registered office in London. The company was already incorporated in 2002 as Forthdeal Limited, a shelf corporation incorporated by Swift Incorporations Limited and Instant Companies Limited, both based in Bristol.[19] 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,[51] whereas, Royal Dutch Petroleum Company from the New York Stock Exchange on 18 November 2005.[52] 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.[53]

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