Royal Dutch Shell: A Diversified Oil and Gas Giant
1. Royal Dutch Shell: An Introduction
Royal Dutch Shell is a multinational oil and gas company with operations in more than 70 countries. It is Europe’s largest oil producer company and one of the world’s six major “supermajor” oil and gas companies. Its origin can be traced to Netherlands and Great Britain. The firm’s headquarters are located in Hague, Netherlands.
Shell is engaged in the exploration, production, transportation, and marketing of crude oil, natural gas, and petrochemicals. It is also involved in the refining of crude oil and the marketing of refined products, such as gasoline, diesel, heating oil, aviation fuel, marine fuel, chemicals, and bitumen. The company has a significant presence in the United States through its subsidiary Shell Oil Company. In 2017, Shell was ranked 10th among the world’s largest corporation by revenue. As of December 31, 2017, the company had a market capitalization of $233 billion.
The company operates in four segments: Upstream, Downstream, Integrated Gas & New Energies, and Corporate. Upstream covers the exploration for and extraction of crude oil, natural gas, and natural gas liquids (NGLs). Downstream covers the refining of crude oil into petroleum products such as gasoline, diesel fuel, heating oil, aviation fuel, marine fuel oil, lubes (lubricants), bitumen (asphalt), chemicals, and sulphur.
Integrated Gas & New Energies focuses on liquefied natural gas (LNG) projects and Unconventional Resources (Shale gas & Tight gas). The Corporate segment includes treasury function and other central activities not allocated to any business segment.
Shell has several notable subsidiaries including BG Group (acquired in 2016), Motiva Enterprises LLC (joint venture with Saudi Aramco), Shell Australia Holdings Pty Limited (70% stake), Canadian Natural Resources Limited (10%), among others.
The company competes with Exxon Mobil Corporation, Chevron Corporation, Petróleos Mexicanos S.A de C.V., Total S.A., China National Petroleum Corporation (CNPC), among others.
currently has a license to operate in 41 different countries around the world including: Algeria, Angola, Argentina, Australia, Bahrain, Bolivia, Brazil, Brunei, Canada, Chad, China, Colombia, Congo-Brazzaville, Czech Republic, Ecuador, Egypt, Gabon, Ghana, Iraq, Italy Kuwait Libya Mexico Myanmar Nigeria Oman Pakistan Qatar Russia Saudi Arabia Singapore South Africa Spain Syria Thailand Trinidad and Tobago United Arab Emirates United Kingdom United States Venezuela Vietnam Yemen Zambia. However its production only takes place in about 35 different countries with most recent additions being Iraq(2009) Russia(2011) Australia(2012). As of 2012 their biggest producing countries were Nigeria(846 thousand barrels per day) Qatar(818 thousand barrels per day) United States(713 thousand barrels per day) Canada(585 thousand barrels per day). Production wise they are only second to Exxon Mobil but are still significantly larger then their next competitor Chevron. In 2010 their daily production averaged at 4 million barrels per day with peak production being reached in 2006 at just over 5 million barrels per day. This gave them a total production for the year 2010 of 1.47 billion barrels which made them the 6th largest company by production. However they are much larger then their next competitor, Chevron, in terms of proven reserves with an estimated 22.3 billion barrels of oil equivalent as of the end of 2010. This puts them in 3rd place behind only Exxon Mobil and BP in terms of size.
In terms of revenue they are the 4th largest company in the world with an estimated 449 billion dollars in revenue for 2010. This puts them behind only Exxon Mobil, Walmart, and Sinopec in terms of revenue. However they are still significantly larger then their next competitor, Chevron, who had an estimated 240 billion dollars in revenue for 2010. In terms of profit they are the 2nd most profitable company in the world behind only Exxon Mobil with an estimated 30.4 billion dollars in profit for 2010. This is more than double the amount of profit made by their next competitor, Chevron, who had an estimated 14 billion dollars in profit for 2010.
The company was formed in 1907 with the merger of Royal Dutch Petroleum Company and Shell Transport and Trading Company Ltd. The two companies had been operating as rivals since 1890. The merger was motivated by the need to compete effectively with other large oil companies such as John D. Rockefeller’s Standard Oil Company.
Royal Dutch Shell has a long history of operating in politically unstable and repressive regimes. In the 1950s, the company was accused of collusion with the British government to overthrow Iran’s democratically elected Prime Minister Mohammad Mosaddegh. The company was also accused of involvement in a bloody military coup in Nigeria in 1966 which led to the death of hundreds of people. In more recent years, the company has been accused of human rights abuses and environmental damage in countries such as Nigeria, Ecuador, and Iraq.
Despite these allegations, Royal Dutch Shell is one of the most successful oil and gas companies in the world. The company has a strong business model which has enabled it to generate high levels of profitability and cash flow. The company is also one of the largest contributors to government revenues in many countries where it operates.
2. History of Royal Dutch Shell
Royal Dutch Shell has its origins in Netherlands and Great Britain. The company was formed through the merger of Royal Dutch Petroleum Company and Shell Transport and Trading Company Ltd in 1907. The two companies had been operating as rivals since 1890. The merger was motivated by the need to compete effectively with other large oil companies such as John D Rockefeller’s Standard Oil Company.
Royal Dutch Petroleum Company was founded in 1890 by Jean Baptiste van derMandele and Henri Deterding. The company was registered in Amsterdam, Netherlands. Royal Dutch Petroleum Company’s main asset was a 25% stake in an oil field located in Mesopotamia (modern-day Iraq). The company also had stakes in oil fields located in Russia, Romania, and Indonesia.
Shell Transport and Trading Company Ltd was founded in 1897 by Marcus Samuel and his brother Samuel Samuel. The company was registered in London, England. Shell Transport’s main asset was a fleet of tankers which transported oil from Mesopotamia to refineries located in Europe and Asia.
The merged company was named Royal Dutch Shell plc and its headquarters were located in London, England. Royal Dutch Shell plc was listed on the London Stock Exchange and became one of the largest companies listed on the exchange.
In the early years of its existence, Royal Dutch Shell was involved in a number of large oil exploration and production projects. These projects included the development of the largest oil field in the world at the time, located in Sumatra, Indonesia. The company was also involved in the development of oil fields in Russia, Romania, and Iraq.
In the 1950s, Royal Dutch Shell was accused of collusion with the British government to overthrow Iran’s democratically elected Prime Minister Mohammad Mosaddegh. The company was also accused of involvement in a bloody military coup in Nigeria in 1966 which led to the death of hundreds of people. In more recent years, the company has been accused of human rights abuses and environmental damage in countries such as Nigeria, Ecuador, and Iraq.
Despite these allegations, Royal Dutch Shell is one of the most successful oil and gas companies in the world. The company has a strong business model which has enabled it to generate high levels of profitability and cash flow. The company is also one of the largest contributors to government revenues in many countries where it operates.
3. Royal Dutch Shell’s Business Model
Royal Dutch Shell’s business model is based on a vertically integrated value chain. The company is involved in all aspects of the oil and gas value chain from exploration and production to refining and marketing. The company has a strong presence in upstream activities such as exploration and production. Shell also has a large downstream refining business. The company’s integrated gas business is also growing rapidly.
Shell’s upstream business is focused on the Exploration & Production (E&P) of oil and gas. The company has operations in more than 70 countries and has a strong presence in key producing regions such as North America, Europe, Africa, Asia, and Australasia. The company’s E&P activities are divided into three main business segments: Unconventional Resources, Deep Water, and Upstream Integrated Projects.
The company’s Unconventional Resources business segment includes operations in tight gas, shale gas, CBM (coal bed methane), and LNG (liquefied natural gas). The company’s Deep Water business segment includes operations in deepwater offshore fields. The company’s Upstream Integrated Projects business segment includes operations in integrated oil sands projects, heavy oil projects, and LNG projects.
Shell’s downstream business is focused on refining crude oil into finished products such as gasoline, diesel fuel, heating oil, aviation fuel, marine fuel oil, lubes (lubricants), bitumen (asphalt), chemicals, and sulphur. The company has operations in more than 50 countries and has a strong presence in key refining regions such as North America, Europe, Asia Pacific, and Africa. Shell’s refining capacity was 1.8 million barrels per day as of December 31, 2017.
The company’s integrated gas business is focused on the development of LNG (liquefied natural gas) projects. Shell has interests in LNG projects located in Australia, Qatar, Malaysia, Algeria, Nigeria, and Papua New Guinea. The company’s LNG project portfolio had a total capacity of 97 million tonnes per annum (mtpa) as of December 31, 2017.
4. Royal Dutch Shell’s Financial Performance
Royal Dutch Shell is a financially strong company with a diversified portfolio of businesses