Shell

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The Royal-Dutch/Shell groups of companies is an Anglo-Dutch group, the holding companies who own the group being The Shell Transport and Trading Company PLC (UK) and Koninklijke Nederland (Royal Dutch Petroleum Company: Netherlands). These two holding companies own 40 per-cent and 60 per-cent respectively of the following 3 subsidiaries, which are themselves holding companies for further operating subsidiaries:

  • Shell Petroleum NV (Netherlands)
  • Shell Petroleum Company LTD (UK)
  • Shell Petroleum Inc. (USA)

The three companies and their operating subsidiaries are managed worldwide by Shell International. Operating subsidiaries are divided into the following divisions:

  • Exploration & Production
  • Oil products
  • Chemicals
  • Gas & Power

(Other small divisions include Coal, Hydrogen, Forestry and Renewables)

Over recent years Shell has successfully come to be seen as one of the more progressive companies within its sector. Since it withdrew from the Global Climate Coalition (lobby group) in 1998[1]. Shell has tried hard to brand itself as a caring, green company. Even before that, a concerted public relations campaign had followed the execution (in November 1995) of Nigerian writer and campaigner Ken Saro Wiwa[2]. Shell portrays itself as a good corporate citizen, but like all multinationals and all oil companies Royal-Dutch/Shell continues, behind the greenwash, with many of its old ways.

Market share/importance

The oil sector accounts for about 13.3 per cent of FTSE 100[3] in the UK Royal-Dutch/Shell is one of the largest players in this sector. As such, it is one of the barometer companies of the British economy. Shell's successes and failures are likely to be mirrored in the UK economy as a whole.

  • Shell's Crude oil production in 2000 stood at 2,274 thousand barrels per-day[4]
  • Shell's Natural gas production available for sale at 8,212 million standard-cubic-feet per-day[5]
  • Shell's oil product sales at 5,574 thousand barrels per-day[6]

For comparison:

  • BP's crude oil production in 2000 stood at 1,928 thousand barrels per-day,[7]
  • Gas production at 7,609 million cubic-feet per-day,[8]
  • Marketing sales at 3,756 thousand barrels per-day,[9]
  • Exxon-Mobil's liquids production in 2000 stood at 2,600 thousand barrels per-day [10]
  • Exxon-Mobil's natural gas production available for sale at 10,300 million cubic-feet per-day [11]
  • Exxon-Mobil's petroleum product sales at 8,000 thousand barrels per-day[12]

For a guide to the units used by the oil and gas industry try: www.nepo.go.th/ref/UNIT-OIL.html

History

The 'Royal Dutch Company for the Exploitation of Petroleum Wells in the Netherlands East Indies' was registered in the Hague in 1890. The name was abbreviated in 1949 to Royal Dutch Petroleum Company[13]. -* Shell was first registered in London in 1897 by the brothers Marcus and Sam Samuel as `The "Shell" Transport and Trading Company, Ltd.' (Now PLC: public limited company)[14].

The first Royal-Dutch/Shell joint operating company: the Asiatic Petroleum Company was established in 1903 and in 1907, Royal-Dutch and Shell merged all of their operations: 60% Royal-Dutch; 40% Shell. Despite merging their interests the companies remain separate: One can buy shares in Royal-Dutch or in Shell-Transport, but not in the Group as such[15].

In 1912, the Group founded the American Gasoline Company to sell gasoline along the Pacific Coast and Roxanna Petroleum to buy oil in Oklahoma[16]. US operations have grown so that in 2000, 34 per-cent of earnings from exploration and production and 4 per-cent of earnings from oil product sales were generated in the USA[17].

Shell's Chemical division has grown since 1928 when, Shell Development Company was established to identify chemical products which could be made from refinery by-product gases. One year later, Shell Chemical Company was chartered to manufacture these products[18].

In 1972 Shell pioneered CO2 injection, as an enhanced recovery technique,[19] a process it is now branding as a solution to climate change[20].

In 1995, the Shell Learning Centre was opened 40 minutes north of Houston. As Shell puts it the training school has been conceived to encourage "out-of-the-box free thinking."[21]

Also in 1995 a question mark was put over Shell's real commitment to free thinking when Nigerian writer Ken Saro Wiwa and eight other Ogoni were hanged, by the Nigerian authorities "for speaking out against the environmental damage to the Niger Delta caused by Shell Oil".[22]

Shell had already suffered a blow earlier in 1995 when in April, Greenpeace activists occupied the Brent Spar oil platform which had come to the end of is working life and was due to be dumped at sea[23].

The platform contained tonnes of toxic drilling muds, plus oil residues and radioactive waste. Shell's cosy relationship with the UK Department of Trade and Industry (DTI) ensured that it got approval for the dumping - indeed the DTI refused to accept written protests from Greenpeace. Shell said it had submitted an objective view from "independent" scientists but a number of reports are alleged to have been hidden or destroyed. One of these predicted that the Spar would break up on its way down to its intended resting place 150m below the surface, dispelling its waste into the water column[24].

After a three year campaign by Greenpeace the Brent Spar was, in November 1998, broken up and incorporated into a new ferry terminal in the harbour of Mekjarvik, Norway[25]. Since this decision, European countries surrounding the North Sea have invoked a moratorium on such dumping of platforms, avoiding a dangerous precedent for the misuse of our seas.

In March of 1997, Shell, Texaco and Saudi Aramco announced, a hugely significant joint venture that would combine their Eastern and Gulf Coast United States refining and marketing businesses[26].

From July 2000 Jeroen van der Veer replaced Maarten van den Bergh as president of Royal-Dutch[27] and in 2001 Phil Watts replaced Sir Mark Moody Stuart as chairman of the board of Shell transport and Trading[28].

Shell, Over a Century

Shell was first established in 1892 when Marcus Samuel commissioned the first oil tanker, and as a result delivered 4,000 tonnes of Russian kerosene to Bangkok and Singapore. As the oil industry was unravelling in Britain, Royal Dutch had been formed in the Netherlands to develop oil fields in Asia. By 1896, Royal Dutch was in strife competition against the British with its own tanker fleet. In 1907 the two companies joined together, rather than competing against one another, the Royal Dutch/ Shell Group of companies was established to incorporate their operations worldwide.

Throughout the 1960’s and 1970’s Shell’s operation had become so vast that it supplied one seventh of the world’s oil products. In the 1970s Shell made a major discovery, in the form of oil and gas in the North Sea. By the end of the 1970’s people had turned to natural gas to provide their energy and by the end of the 70’s, Shell and its partners provided half of the natural gas used across Europe. During the 1980’s Shell began to sell unleaded petrol and in turn acquired a world wide leadership position in their field. With the 90’s came lower oil prices, and a concentration on Shell’s core businesses- mainly oil, gas and chemicals. As the new millennium approached, Shell looked ahead to a commitment to sustainable development throughout the Shell business.[1]

Operation Shell

Shell operates in over 140 countries and territories, with over 109,000 employees working for them. Shell works alongside and often with industry, governments, and society to deliver what is expected of them environmentally, socially and economically. Shell is best known to the public for its petrol stations, they do however operate in a number of different areas, such as: exploring and developing oil and gas on land and at sea; transporting and trading oil and gas; producing and selling oil for ships and planes; generating electricity; and providing energy efficiency advice.[2]

The Executive Group

Shell Business Principles

The Shell business principles govern how each Shell company which makes up the Shell Group conducts its affairs. The objectives of Shell are to engage efficiently, responsibly and profitably in oil, gas and chemicals. Shell aims to work closely with its customers, partners and policy-makers to advance more efficient and sustainable use of energy and natural resources.

Shell employees share a set of core values, these being honesty, integrity and respect for all people. They state that they firmly believe in the fundamental principles of trust, openness, teamwork and professionalism, whilst taking pride in what they do. Shell has devised five key areas of responsibility, these being: responsibility to shareholders; to customers; to employees; to those with whom they do business with; and to society as a whole. Shell takes the responsibility to protect the investment of their shareholders; to win and maintain customers by developing and providing products and services which offer value in terms of price, quality, safety and environmental impact; to respect the human rights of their employees, to promote the interests and skills of their employees; to seek mutually beneficial relationships with contractors, suppliers and in joint ventures and to promote the application of the Shell general principles; to conduct business as responsible corporate members of society and to give proper regard to the environment, health, safety and security.

Eight Principles of Shell

  • Principle one, Economic: long term profitability is essential to Shell for achieving their business goals and to continuous growth of the company.
  • Principle two, Competition: Shell seeks to compete fairly and ethically, and within the framework of applicable competition laws, they will not prevent others from competing against them.
  • Principle three, Business Integrity: Shell companies insist on a principle of honesty, integrity and fairness in all aspects of their business and expect the same in their relationships with those whom they do business with.
  • Principle four, Political Activities: of companies; Shell companies must act in a socially responsible manner within the laws of the countries in which they are operating. Of employees; where individuals desire the possibility to engage in political activities at all levels, they will be allowed the opportunity to do so.
  • Principle five, Health, Safety, Security and the Environment: Shell companies manage matters regarding health, safety, security and the environment as critical business activities, they continually look for ways to reduce the risk of possible environmental damage.
  • Principle six, Local Communities: Shell companies aim to be good neighbours by improving the way in which they contribute either directly or indirectly to the well being of the communities of which they work.
  • Principle seven, Communication and Engagement: Shell companies realise that communication and engagement with their shareholders is essential.
  • Principle eight, Compliance: Shell state that they comply with all laws and regulations of the countries in which they operate.[3]


Shell,a lack of Corporate Social Responsibility?

Shell stands accused of failing to adhere to CSR and as a result fuels the debate on Corporate Social Responsibility (see: Corporate Social Responsibility the current debate for more information) through its pollution of communities, its practices which damage wildlife habitats and its failure to live up to its promise of environmental and social responsibility as outlined in its business principles. Several different case studies will be presented to emphasise these facts, firstly an examination of the operation of Shell in Nigeria.

Nigeria

Shell sources 10% of its oil in the Niger Delta, it is here where one of its greatest crimes against the environment has been uncovered. In the Niger Delta, the failure of the company to invest in technology has resulted in 700 million scf/d of gas being burnt off into the atmosphere in 2005, which is an increase on the previous year despite the new business principles. Gas flaring has become an every day occurrence in the Delta, one which wastes energy, contributes to global warming and pollutes the environment. Oil spills are also extremely common in this area with 9,900 barrels of oil spilt in 2003.

Oronto Douglas of Friends of the Earth Nigeria claims "Shell's business practices in the Niger Delta have destroyed our environment, our farmland and our fisheries. Oil spills are not cleaned up and gas flares dominate the sky line. The people in Nigeria are not benefiting from Shell's presence in our country - we are paying the price. Shell must work with local communities to clean up the Niger Delta and make sure communities receive the benefits of their operations there". (Friends of the Earth, 2004 )[4]

In Nigeria, Shell works in a coalition with the Nigerian government. In 1995 nine activists who spoke out against the exploitation carried out by Shell were executed by the Nigerian government, as a result outrage exploded across the globe. The conviction of the men was part of a joint effort by the government and Shell to hamper the growing movement of the Ogoni people- a movement for environmental justice, economic justice and the acknowledgment of their human rights. Oil from Ogoniland has contributed to $30billion to the economy of Nigeria, yet nothing has been put back into the local community, “Ogoni villages have no clean water, little electricity, few telephones, abysmal health care, and no jobs for displaced farmers and fisher persons, and adding insult to injury, face the effects of unrestrained environmental molestation by Shell everyday” (Boycott Shell, Essential Action). [5] Shell began drilling in Ogoniland in 1958, at that point establishing pipes across the farmland and covering the land with oil from the leaks in the pipes. This assault on the environment has killed masses of local fish, smothered the land and introduced devastating acid rain to the area. The Ogoni people’s livelihood was based on the use of the land for crops and fish for food, no longer could this be done as it led to devastating health consequences.

Ken Saro-Wiwa and the Ogoni8 were all leaders of MOSOP, the Movement of Survival for the Ogoni People, who claimed that Shell was not welcome in Ogoniland. On the 10th of November 1995, all nine were hanged after being found guilty of the murder of four other Ogoni activists, even though none of the nine were present in Ogoniland on the day of the murders. Two witnesses against the MOSOP leaders later admitted that they had been bribed by both Shell and the Nigerian military to testify against Ken Saro-Wiwa. All across the Niger Delta, indigenous groups are being displaced, forced to suffer the same environmental devastation and oppression under Shell and the Nigerian military. [6]

Ever since the discovery of oil in Nigeria in the 1950s the country has been suffering devastating environmental damages as a result of oil spills, gas flaring and deforestation. The Nigerian Federal Government has attributed to these problems by failing to enforce environmental laws and regulations. There have been over 4,000 oil spills in the Niger Delta since 1960, and gas flaring from oil extraction has resulted in serious air pollution problems in the area. The Nigerian federal government has indicated that it is no longer willing to tolerate oil companies absolving themselves of their responsibility to reduce pollution. [7]

In 1996 Shell launched a PR campaign to clean up their image in the western world, to reassure customers and business partners of their actions. Shell reinstated itself as a company with human rights, social responsibility and sustainable development at the heart of all of its operations. However, after having stated this, the infrastructure of pipelines still criss-cross over the Niger Delta, leaks and oil spills are still common place.

South Africa

In South Africa, the largest oil refinery is a joint venture between Shell and BP, called the South African Petroleum Refinery (SAPREF). Locals have claimed that explosions, fires and leaks from the pipelines are a regular occurrence in the vicinity of the refinery. Many oil leaks have taken place in the past few years, contaminating Durban Harbour and protected wetlands, and settling under the homes of locals, causing severe illness. Shell is attempting to address issues raised against it, by stating that it operates (voluntarily) under the guidelines of the Organisation for Economic Cooperation and Development, as well as policies established by the European Union in its management and operation of the SAPREF refinery.

(Lessons Not learned: The Other Shell Report).[8]

Brazil

In Brazil, in January 2005 Shell was forced to comply to government orders requiring Shell to: abstain from its practices of dumping and burying toxic waste; remediate contaminated area; monitor the water in artesian wells for toxic chemicals and heavy metals; implement effective measures to remove high concentrations of harmful substances detected in the wells; and also to protect the health of their workers both previous and current. In Brazil instead of cleaning up the contamination Shell has been “evading responsibility for years”. (Lessons Not learned: The Other Shell Report). [9]


USA

Not only have the claims that Shell has been avoiding its responsibility to local citizens coming from the developing world, claims too have come from the United States:

“We see a side of Shell that its board of directors and managers try to hide from the public. The Shell we know recklessly operates an oil refinery across the street from our homes. Every day Shell dumps toxic pollution on our neighbourhood that is damaging our health, especially that of our children who can’t breathe without an inhaler.” -Hilton Kelley, Director of Community In-power Development Association (Lessons Not learned: The Other Shell Report). [10]

Texas

Shell operates a huge oil refinery called Motiva in West Port Arthur, Texas. An independent survey conducted by the University of Texas at Galveston Medical Branch in 2002 found that 80% of the residents of West Port Arthur surveyed, suffered from heart conditions and respiratory problems, compared to 30% of people who do not live in the vicinity of a refinery (Lessons Not learned: The Other Shell Report). [11] Motiva takes advantage of huge exemptions in the US environmental regulations, which allow the refinery to exceed pollution limits in a time of malfunction. In 2003 the Motiva refinery polluted the air with 233,559 kg (514,910 pounds) of toxins as a result of malfunctions.

Louisiana

The town of Norco in Louisiana is home to a large Shell refinery and a Shell chemical facility. The Norco neighbourhood of Diamond is situated in the middle of the two Shell facilities. The CCN (Concerned Citizens of Norco) was established to lobby Shell, and finally in 2002 Shell agreed to meet the demands of the local community for a fair and just relocation and a reduction on the pollution of its own facilities. One downfall facing the CNN is that “Shell has not acknowledged any of the potential health impacts of its operations” (Lessons Not learned: The Other Shell Report). [12]


What all of these communities across the globe have in common, is that they have been used by Shell as the “dumping grounds for oil refining, chemical manufacturing, oil and gas drilling, and storage of oil products”. [13] This blatant lack of respect for communities(both for the people and the environment of such communities) has caused Shell to be attacked by many lobbyists. The remainder of this report shall be presented in Shell vs Human Rights and Environmental Lobbyists.

Public Relations

Deutsche Shell is listed as a client of FischerAppelt Kommunikation[14]

Resources

References

[1] www.worldwatch.org/chairman/issue/000725.html [2] www.greenpeace.org/~comms/ken/murder.html [3] www.business-line.com/business-weekly/archives/233/investor.html [4] Results, 4th quarter and full year 2000, Royal Dutch/Shell group of companies www.Shell.com/investordata/downloads/134/q42000pdf3.pdf / (page 4) [5] Results, 4th quarter and full year 2000, Royal Dutch/Shell group of companies www.Shell.com/investordata/downloads/134/q42000pdf3.pdf / (page 5) [6] Results, 4th quarter and full year 2000, Royal Dutch/Shell group of companies www.Shell.com/investordata/downloads/134/q42000pdf3.pdf / (page 6) [7] BP annual report 2000: www.bp.com/downloads/457/BP_RA_Complete.pdf [8] BP annual report 2000: www.bp.com/downloads/457/BP_RA_Complete.pdf [9] BP annual report 2000: www.bp.com/downloads/457/BP_RA_Complete.pdf [10] ExxonMobil, summary annual report, 2000 (page 8) [11] ExxonMobil, summary annual report, 2000 (page 8) [12] ExxonMobil, summary annual report, 2000 (page 16) [13] www.shell.com/royal-en/content/0,5028,25448-50918,00.html [14] www.shell.com/royal-en/content/0,5028,25448-50918,00.html [15] www.shell.com/royal-en/content/0,5028,25448-50918,00.html [16] www.countonshell.com/welcome/history/history.html [17] Financial and Operating Information, 1996-2000, Royal-Dutch/Shell group of companies, page 10 [18] www.countonshell.com/welcome/history/history_1912.html [19] www.countonshell.com/welcome/history/history_1942.html [20] The Ecologist, Climate Change Report, November 2001, page 27 [21] www.countonshell.com/welcome/history/history_1992.html [22] www.greenpeace.org/~comms/ken/murder.html [23] www.greenpeace.org/~comms/brent/diary.html [24] www.corporatewatch.org.uk/publications/shell.html [25] www.greenpeace.org/pressreleases/oceandumping/1998nov25.html [26] www.countonshell.com/welcome/history/history_1992.html [27] www.shell.com/royal-en/content/0,5028,25455-50931,00.html [28] www.shell.com/royal-en/content/0,5028,25456-50912,00.html

  1. Boycott Shell, Essential Action, 2001, [15]
  2. Corporate Watch Website [16]
  3. Friends of the Earth, Lessons Not learned: The Other Shell Report, 2004
  4. Friends of the Earth, Call on UK government to stop funding oil destruction, 2004, [17]
  5. Shell Website: The History of Shell [18]
  6. Shell Website: The Shell Group [19]
  7. Shell Website: General Business Principles
  8. Shell Website: Lobbying

^ FischerAppelt Kommunikation Current & former clients Accessed 14th February 2008

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