Royal Dutch/Shell

fr:Shell (compagnie)

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A Shell petrol station sign in the UK
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A Shell gas station in the US
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A Shell gas station in Poland

The Royal Dutch/Shell Group of Companies (called Shell Oil Company in the United States) is a major oil company, one of the top four oil companies in the world (along with BP, ExxonMobil, and Total). Its headquarters are split between the Shell Centre in London, United Kingdom and The Hague, Netherlands. The company was founded in 1890 by Jean Kessler, along with Henri Deterding and Hugo Loudon, when a Royal charter was granted by Queen Wilhelmina to a small oil exploration company known as "Royal Dutch."

To compete against the giant American oil company, Standard Oil, in 1907 Royal Dutch merged its business with The "Shell" Transport and Trading Company of the UK. They currently operate under a number of operating and shareholder agreements, although it was announced in November 2004 that the group would move to a single capital structure, with the new parent company named Royal Dutch Shell plc, incorporated in England and Wales, and with its principal listing on the London Stock Exchange but its headquarters in the Netherlands.

This was not possible under the relevant laws in 1907, and the form of organisation, although durable, have come under criticism in recent years. The core of the trouble was that the two parent companies had separate boards, with separate memberships, reflecting a certain amount of (undesirable) independence of the companies from the other. The two companies co-ordinated their activities through a third, joint, board. Under the old capital structure, its ADRs are currently traded on the New York Stock Exchange under RD (Royal Dutch) and SC (Shell).


Origin of the name

The origin of the name Shell is linked to the origins of The "Shell" Transport and Trading Company. The company was founded by Marcus Samuel in 1833 to sell seashells to collectors in London. When collecting seashell specimens in the Caspian Sea area in 1892 Samuel’s son 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.


One of the original Seven Sisters, Royal Dutch/Shell is the world's third largest oil company by revenue, and a major player in the petrochemical industry and the solar energy business. Shell has five core businesses: Exploration and Production, Oil Products, Downstream Gas and Power, Chemicals and Renewables, and operates in more than 140 countries across the world.


In 2001, Shell purchased about 13,000 Texaco stations and several refineries to permit Texaco to merge with Chevron Corporation. Shell may exclusively use the Texaco brand in the U.S. through 2004, and non-exclusively through 2006.


The group is a dual listed company. The two holding companies are the Royal Dutch Petroleum Company of the Netherlands and The "Shell" Transport and Trading Company, plc of the United Kingdom. These two companies jointly own all the operating companies in the group. The Shell interest in subsidiaries is always divided 60/40 in favor of Royal Dutch. In many cases, subsidiary companies are held in partnership with other companies or governments.

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Shell Centre Building in London, UK
Although to meet company law in all countries there are nominated directors, the Shell Group of Companies is in fact run by an executive body called the "Committee of Managing Directors", whose members are chosen from the overall group.

An original investor, the largest single shareholder of Royal Dutch/Shell is the holding company owned by the Dutch Royal Family, which was set up by Queen Wilhelmina of the Netherlands.


Environmental issues

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

Their involvement in Nigeria came to the forefront after the execution of dissident Ken Saro-Wiwa and eight others.

Shell was also attacked by Greenpeace for plans to sink the Brent Spar, an old oil transport and hub station located in the North Sea, into the North Atlantic. They eventually agreed to disassemble it onshore in Norway, although Shell has always maintained (supported by third party advice) that its original plan to sink the platform was safer and better for the environment.

In Canada, Shell Canada settled a lawsuit in which an additive in their gasolines created problems on fuel gauges, especially in automobiles produced by DaimlerChrysler.

A settlement was reached in the class actions filed against Shell Canada Limited on behalf of persons who used Shell gasoline products between March 1, 2001 and April 15, 2002 and who incurred out-of-pocket expenses due to fuel system problems before July 31, 2002. The settlement applies to Canadian residents outside of Quebec.

Under the settlement, Shell compensated people who owned or leased vehicles that were filled with at least $100 worth of Shell branded gasoline between March 1, 2001 and April 15, 2002 and that experienced fuel pump or fuel sensor problems before July 31, 2002.

There are three classes of claims and compensation:

  • People who owned or leased 1996-2002 Chrysler vehicles (except Jeeps) were fully reimbursed for fuel pump and fuel sensor repairs and for eligible out-of-pocket expenses.
  • People who owned or leased other 1996-2002 vehicles and who can establish that the fuel pump or fuel-sending unit had a particular residue on it were reimbursed for eligible repairs and out-of-pocket costs to a maximum of $175.
  • People who owned or leased pre-1996 vehicles and who can establish that the fuel pump or fuel-sending unit had a particular residue on it were reimbursed for eligible repairs and out-of-pocket expenses to a maximum of $100.
  • On the financial side Shell drew fire in 2004 when it had to perform a major recategorization of its reserves, admitting that a significant share of reserves previously booked as proven did not fulfill the requirements for proof under the US regulatory provisions. The delayed Annual report and Accounts 2003 restated proven reserves reduced 6.648 mn USD in 2001 and reduced by 6.469 mn USD in 2002. This corresponds to roughly 13% of the previous proven reserves base. As a contributing factor, it was identified that in previous years the leading management's bonus payments were linked to the proven reserves base. This practise has since been discontinued. The issue also forced the resignation of the CEO and CFO.

    On June 17th of 2004, Shell chairman Ron Oxburgh made a statement (,12374,1240566,00.html) to The Guardian that in the face of the threat of global warming he was "really very worried for the planet”. As a remedy he proposed the practice of carbon sequestration, which involves removing carbon dioxide from the atmosphere and burying it underground. "Sequestration is difficult, but if we don't have sequestration then I see very little hope for the world," he said.

    Combination of Royal Dutch and Shell

    On October 28, 2004, the company announced its proposal to formally 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

    See also

    External links

    de:Shell (Konzern) ja:ロイヤル・ダッチ・シェル nl:Koninklijke Olie/Shell Group zh-cn:壳牌公司


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