External Influences on Shell Petroleum Operations

EXTERNAL INFLUENCES

1
Contents
Task 1....................................................................................................................................................1
Executive Summary...........................................................................................................................1
Current competition impact...............................................................................................................2
Globalisation and its effect on Shell petroleum operations................................................................2
Task 2....................................................................................................................................................3
Impact of Shell’s poor ethical behaviour...........................................................................................3
If Shell was a very ethical firm..........................................................................................................4
Cost Benefit analysis chart................................................................................................................4
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6

2
Task 1
Executive Summary
Royal Dutch Shell plc. also known by the name Shell and it is a British-Dutch oil and gas
firm. This company was established back in the year 1907 by merger of Netherland’s Royal
Dutch Petroleum company and United Kingdom’s “Shell” Transport and Trading Company.
This company first entered into the chemical industry in the year 1929. It is one of the six
major oil and gas firm and it is the fifth largest in terms of revenue. In 2013, its revenue was
around 84% of the Dutch national $556 billion GDP. This company is vertically integrated
and is highly active in the different regions of oil and gas industry (Schifferes, 2007). This
includes production, transportation, petrochemicals, trading, exploration, refining, marketing
and distribution and power generation. It is having renewable energy activities that include
hydrogen, wind biofuels and energy-kite systems. This company does operations in over 70
nations and it produces approx. 3.7 million barrels of oil equivalent per day. They are having
44,000 service stations throughout the world. This company till the year 2014 had a total
proved reserves of around 13.7 billion barrels of oil equivalent.
In the recent decades exploration and production of gas has become extensively essential for
this firm’s business. After acquisition of BG group in the year 2016, this company became
the largest producer of the liquefied natural gas. This company has primary listing on the
London Stock Exchange and is a part of the FTSE 100 index (Shell, 2018). This company is
organised into four major business groupings namely upstream (It searches for and recovers
crude oil and natural gas and also operates the midstream and upstream infrastructure that is
crucial for delivering oil and gas to the market), Integrated gas and new engines, Downstream
(manages manufacturing, distribution and marketing of Shell for chemical and oil products),
Project and technology (manages the delivery of major projects of Shell) (Topmba, 2014).
Apart from all stages of vertical integration their other competencies lies in natural gas.
Vertical integration business model gives significant barriers to entry and economies of scale.
Their full year profits in 2018 jumped by around 36% to reach to $21.4 billion. National
competitors of Shell include British Petroleum, Opus Energy, Calor Gas, New World Oil and
Gas, Ophir Energy, Petroceltic international etc. International competitors of Shell includes
Valero energy, Citgo, Chevron, DCP Midstream partners, Conocophilips, Repsol,
HollyFrontier etc (Shell, 2018).