Royal Dutch Shell

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Royal Dutch Shell PLC
Type of Company	Public (LSE: RDSA / RDSB) (NYSE: RDS.A / RDS.B)
Founded	1907
Headquarters	The Hague
Key people	Jeroen van der Veer, CEO Jorma Ollila, Chairman
Industry	Oil and gas
Products	Oil Natural gas Petrochemicals
Revenue	US$306.731 billion (2005)
Net income	US$26.261 billion (2005)
Employees	112,000
Slogan	You can be sure of Shell
Website	www.shell.com

Royal Dutch Shell MLC is a multinational oil company of Anglo Dutch origins, which is amongst the largest energy corporations in the world, and one of the six "supermajors" (vertically integrated private-sector oil exploration, natural gas, and petroleum product marketing companies). The company's principal business is the exploration for and the production, processing, transportation and marketing of hydrocarbons (oil and gas). Shell also has a significant petrochemicals business (Shell Chemicals), and an embryonic renewable energy sector developing wind, hydrogen and solar power opportunities. Shell is incorporated in the UK with its corporate headquarters in The Hague, its tax residence is in the Netherlands, and its primary listings on the London Stock Exchange and Euronext Amsterdam ("A" shares only).

Shell's revenues of $306.73 billion (2005) made it the third-largest corporation in the world by turnover in 2005 and its profits of $25 billion made it the world's second most profitable business in terms of gross profits after ExxonMobil. The Forbes Global 2000 for 2006 ranks it as the seventh largest company in the world. Shell operates in over 140 countries worldwide, and its largest revenues come from the United States. Its subsidiary in the U.S., Shell Oil Company, has its head office in Houston, Texas. It also operates in Canada as Shell Canada and is the third largest oil company in Canada behind Imperial Oil and Petro Canada.

Contents 1 History 2 Origin of the name and logo 3 Businesses 3.1 Texaco 4 Ownership 5 Management 6 Environmental and reputational issues 7 Combination of Royal Dutch and Shell 7.1 Royal Dutch Shell plc domain name oversight 7.2 Pioneering use of the Internet: The "Tell Shell Forum" 7.3 The Shell LiveWIRE Programme 7.4 The Shell Foundation 7.5 Shell whistleblower helpline 7.6 Profit announcement 8 See also 9 References and footnotes 10 External links

[edit] History

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 England merged their operations to compete against the then-giant American oil company, Standard Oil. Prior to unification, the group operated under a number of operating and shareholder agreements.

Royal Dutch Petroleum Company was a Dutch company founded in 1890 by Jean Baptiste August Kessler, along with Henri Deterding and Hugo Loudon, when a Royal charter was granted by Dutch king Willem III to a small oil exploration company known as "Royal Dutch Company for the Exploration of Petroleum Wells in the Dutch Indies".

The “Shell” Transport and Trading Company (the quotation marks are official) was a British company, founded in 1897 by Marcus Samuel and his brother Samuel Samuel.

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 1931, 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 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 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.

Under the old capital structure, Shell's ADRs were traded on the New York Stock Exchange under RD (Royal Dutch) and SC (Shell).

Shell is the world's second-largest publicly traded oil company based on revenues (after ExxonMobil) and the second most profitable (after ExxonMobil).^[1]

[edit] Origin of the name and logo

The origin of the brand name Shell is linked to the origins of 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 realised there was potential in exporting lamp oil from the region and commissioned the world's first purpose built oil tanker, the Murex, to enter this market. By 1907 the company had a fleet of oil tankers.

The Shell emblem is one of the most familiar commercial symbols in the world. Known as the "Pecten" after the sea shell, the giant scallop, Pecten maximus, on which its design is based, the current version of the logo was designed by Raymond Loewy and introduced in 1971.

[edit] Businesses

One of the original Seven Sisters, Royal Dutch/Shell is the world's second-largest oil company by revenue, and a major player in the petrochemical industry and the solar energy business. Shell has six core businesses: Exploration and Production, Gas and Power, Downstream, Chemicals, Renewables, and Trading/Shipping, and operates in more than 140 countries. Around the world, Shell has a high customer loyalty rate due to its high quality of fuels. (Only Chevron and BP have such high rates in the US.) In fact, after its introduction of its reformulated premium unleaded gasoline known as V-Power in 2004, it quickly surpassed BP Ultimate (known as Amoco Ultimate in the US, but still sold at BP stations) as the best-selling premium unleaded fuel in the world.

Shell’s primary business was, and 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 Group 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. The chemicals business, involving the production and marketing of a range of hydrocarbon-derived chemical products, was a logical step downstream from the processing of crude oil in the refinery. Some of the chemicals diversifications, e.g. agrichemicals, have been disposed of following major restructuring in Shell Chemicals over the past ten years, but there is still a large core chemicals business within the company.

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 disposed of. In recent years Shell has moved tentatively into alternative Energy with 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.

[edit] Texaco

In 2001, the Federal Trade Commission (FTC) demanded that Texaco, in order to merge with Chevron Corporation, sell 13,000 Texaco service stations and several refineries, including its stakes in Equilon (to Shell) and Motiva (three refineries; to Shell and Saudi Aramco, 50/50 joint venture).

Shell used Texaco brand exclusively in the U.S. through 2004, and non-exclusively through June 2006. Chevron now owns full U.S. rights to the Texaco moniker.

[edit] Ownership

Prior to unification on 20 July 2005, the group was a dual listed company. The two holding companies were the Royal Dutch Petroleum Company of the Netherlands and the Shell Transport and Trading Company plc of the United Kingdom. These two companies jointly owned all the operating companies in the group, although some (e.g. Shell Canada) also have local shareholders and are traded on local stock markets. The Shell interest in subsidiaries was always divided 60/40 in favour of Royal Dutch. In many cases, subsidiary companies are held in partnership with other companies or governments.

Even now, likely for tax reasons, the company's shares are divided into two classes, A and B, representing the former Royal Dutch and Shell shares respectively.

Although to meet company law in all countries, there were executive and non-executive nominated directors of both Royal Dutch and Shell Transport and Trading, the Group had in fact been run by an executive body called the "Committee of Managing Directors" (CMD), whose members were the (executive) Managing Directors of the two parent companies.

[edit] Management

• CEO: Jeroen van der Veer
• CFO: Peter Voser

On 4 August 2005, the board of directors of Royal Dutch Shell plc announced the appointment of Jorma Ollila, then Chairman and CEO of Nokia, to succeed Aad Jacobs as the company’s non-executive Chairman from 1 June 2006. Ollila is the first Shell Chairman to be neither Dutch nor British.

British stand-up comedian Jimmy Carr used to work in management for the firm, before taking up a redundancy payment, and a career change. On the hit BBC show Top Gear Jeremy Clarkson pointed out that Royal Dutch Shell made £800,000 an hour, profit. Jimmy Carr expressed surprise saying "An hour? That's more than I make in a week!" British Conservative politician William Hague also worked for a time for Shell on assignment from the Management consultants McKinsey.

[edit] Environmental and reputational issues

Main article: Royal Dutch Shell Environmental and reputational issues

Over the years Shell has been criticized by environmental and human rights groups for a number of its operations, especially in South Africa and Nigeria.

[edit] Combination of Royal Dutch and Shell

On 28 October 2004, the company announced its proposal to merge Royal Dutch and "Shell" Transport and Trading into one entity, Royal Dutch Shell plc, to be "incorporated in the UK but headquartered and tax resident in the Netherlands". The new parent company's primary listing will be on the London Stock Exchange. On 28 June 2005 investors in both Shell Transport and Trading and Royal Dutch approved, at their Annual General Meetings, plans to merge the Group's dual-ownership structure and create a single company worth £120bn ($219bn). The new company now operates in 140 countries and employs around 122,000 people.^[2]

The type of business structure now to be created was not legally possible in 1907 when the Group was established, and the unique form of organisation that was then adopted by Shell, although durable, had come under criticism in recent years. Some critics thought that as the two parent companies had separate boards, with separate memberships, this meant that there was a certain amount of (undesirable) independence of each of the companies from the other. Others felt that the real power in Shell lay not with the two parent company boards at all but with the "Committee of Managing Directors" (CMD), which had no legal status but nevertheless took all the key operational decisions. The new organisation structure follows a more conventional business model (e.g. in line with most other private sector oil companies) and most commentators have commented favourably on the change, which they believe will establish a more transparent and accountable corporation. The CMD is abolished under this new structure, board meetings will be more executive in character, and there will (now) only be one "Shell" AGM each year.

[edit] Royal Dutch Shell plc domain name oversight

Due to an oversight, Shell failed to register the top level internet domain name for the new company, royaldutchshellplc.com. In May 2005 it launched proceedings via the World Intellectual Property Organization to request the transfer of the domain name, along with two other domain names relating to Shell including royaldutchshellgroup.com, from their holder, Alfred Donovan, a former marketing consultant to Shell. However, Shell lost the case^[3] and Donovan retains the domain name registrations, which he uses on two websites, the first to publish extracts from and personal views on news articles relating to Shell in the international media, and the second expressing his critical views on a number of aspects of Shell's operations.^[4]

[edit] Pioneering use of the Internet: The "Tell Shell Forum"

The Royal Dutch Shell Group was the first multinational to set up an online discussion facility for its stakeholders and the public to engage in open debate about its activities: the "Tell Shell Forum". This was a farsighted innovation years before the advent of the blog sites which now proliferate on the Internet. On 7 June 1999, Mr. John Hofmeister, Shell's then Director of Human Resources, confirmed in a posting on the Forum that “We genuinely do welcome all comments, positive and negative. We also believe that employees must be able to speak out without fear of rebuke or retribution. This website is in itself evidence that we are interested in seeking your views and willing to listen and respond.” (Mr. Hofmeister is now President of Shell Oil Company in the United States). The intention to provide a forum without editing of comments by the forum staff members was confirmed in a posting made on the Tell Shell Forum by Claire Harris of Shell International Petroleum Company on 16 November 1999, under the subject heading of "Uncensored forums". Extracts from these postings can be read in a prophetic article by Shell critic Alfred Donovan posted on "the Tell Shell Forum" on 25 October 2005 shortly before the Forum in its "blog" form was suspended. At some point the censorship free policy changed. Shell now admits a policy of staff members editing comments made by forum members of the Forum. The Donovan article goes further by alleging that secret editing of posts by the owners of the forum has taken place on the forum. The Tell Shell Forum in its "Blog" form remains suspended. In May 2006, it was reported that Shell intends to appoint a digital agency with "experience in turning around corporate reputations" (Campaign Magazine: "Shell seeks agency for online makeover").

[edit] The Shell LiveWIRE Programme

Shell LiveWIRE has over 21 years experience of encouraging young people to start and develop their own businesses in the UK. Free information, one-to-one advice and practical support are available for 16-30 year olds exploring the possibility of starting their own business. There is an interactive website providing an idea exchange facility. Shell promotes the scheme with a contest offering a top prize worth over £10,000 and the title “Shell LiveWIRE Young Entrepreneur Of The Year”. Since the 1982 launch of the LiveWIRE programme in the UK, over £3 million in cash prizes have been awarded and over 600,000 young people have used the free service. This has resulted in the creation of 2,665 new jobs. Following the success of Shell LiveWIRE in the UK, similar LiveWIRE schemes have been set up by Shell in many other Countries.

[edit] The Shell Foundation

In 1997, Shell decided to launch a new worldwide, social investment initiative to concentrate on working with external partners to promote sustainable development . This decision led to the establishment of "The Shell Foundation", an independent registered charity. Three Shell executives are on the board of The Shell Foundation balanced by an equal number of independent non-executive directors, in line with UK Charity Commission rules. In 2000 Shell formalised the foundation by creating an income stream based on a notional capital set aside of $250m (£133m). This notional allocation is managed on the charity's behalf by independent advisers but the capital cannot be drawn upon until 2010. The Shell Foundation draws upon its links with Shell to "harness the knowledge, leverage and convening power of Shell companies in ways that add real and transparent value to achieving the charitable objectives of the Shell Foundation.” (extract from The Shell Foundation website). In South Africa and Uganda, The Shell Foundation has facilitated the formation of partnerships that help small local businesses to enter the energy services market on a financially viable basis which allows them to serve the needs of the impoverished. The Shell Foundation claims on its website that it is also "Bringing down the number of deaths caused by indoor air pollution; Easing the traffic congestion and pollution clogging up developing country mega-cities and; Giving developing-country producers improved access to world markets." Further details about the background and activities of The Shell Foundation are contained in a Daily Telegraph article “One Shell of a fight against poverty”, which is a source of some of the above information. On 28 September 2006, an article published in The Guardian newspaper alleged that "An attempt by Shell to portray itself as a model of corporate social responsibility was undermined last night after Whitehall documents showed its charitable arm discussing a key commercial project with a British government minister." The article entitled "Campaigners attack Shell’s charity arm over Sakhalin talks" related to The Shell Foundation. The Charity Commission subsequently conducted an inquiry and according to an article published in The Guardian on 17 October 2006, concluded that The Shell Foundation “has fallen short of the good governance and decision-making that we expect from large charities”.

[edit] Shell whistleblower helpline

Royal Dutch Shell Plc has set up a global internet based facility for whistleblowers to report alleged violations of the law or of Shell General Business Principles (the SGBP); a voluntary code of ethics pledging transparency, integrity and honesty in all of Shell’s business dealings. The SGBP were not drafted for use in the courts and are binding in honour only. Shell management believes the “Shell Global Helpline” is of “critical importance” in protecting Shell’s reputation. An independent firm, “Global Compliance”, has been retained to receive information and complaints. Such complaints will be passed to the Shell Group where authorised persons “will ensure they are dealt with in a professional and confidential manner.” Whistleblowers will be asked to provide identity details but anonymous reports will also be accepted. The Helpline is available to “customers, suppliers, partners, advisors and employees of Shell”.

[edit] Profit announcement

On 2 February 2006 the company released details of its profits. It broke the record for the greatest annual profit for a British or Dutch company, with a total of $26.261 billion, up by a third from the previous year. This met with controversy throughout Europe with high petrol prices being blamed, though most of their profits actually come from the sale of oil that they have found and extracted.^[5]

[edit] See also

• Coles Express
• Marcus Samuel, 1st Viscount Bearsted
• Henri Deterding
• Shell Guides, a series of guidebooks on the British Isles

[edit] References and footnotes

[edit] External links

Wikimedia Commons has media related to: Royal Dutch Shell

• Shell.com - The Royal Dutch/Shell Group of Companies
• World Internet News: "Big Oil Looking for a Government Handout", April 2006.
• Yahoo! - Royal Dutch/Shell Group of Companies Company Profile
• Profile @ Hoovers
• Works by Royal Dutch Shell at Project Gutenberg

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