Royal Dutch Shell

The business
Royal Dutch Shell is one of the world’s largest oil and gas companies. The upstream division explores for and extracts crude oil and natural gas; converts gas to liquid petroleum products; and turns bitumen from tar sands into synthetic oil. It produces 3.3 million barrels of oil and gas per day and has around 14 billion barrels of proven reserves. The downstream business converts crude oil into products such as fuels, lubricants and chemicals. It operates 43,000 petrol stations worldwide.

The history
The company was formed in 1907 from the merger of Shell Transport and Trading and Royal Dutch Petroleum. Major oil discoveries in California, South America and the Middle East saw it become the world’s leading oil company by the late 1920s. World War II inflicted heavy damage on its assets, but the company recovered afterwards as demand for oil soared. However, the growing influence of politics in the oil industry saw it lose sites in Iraq and Egypt. The Arab-Israeli wars during the 1970s led Shell to diversify into coal, nuclear power and metals, but with limited success. The development of offshore oil in the North Sea and the US combined with biomass and renewable energy businesses proved to be more profitable. During the 1990s and 2000s Shell expanded into Russia and China while building a leading position in liquefied natural gas (LNG).

The leadership
Peter Voser has been chief executive since 2009. Prior to joining Shell, he was chief financial officer of Swiss company ABB. His basic salary is £1.5m. Ex-Nokia CEO Jorma Ollila is chairman. Simon Henry is chief financial officer.

The outlook
From 2012, most of Shell’s production will be natural gas where long-term demand looks promising. The company has 20 new projects coming onstream during 2011-2014. The key one is a gas-to-liquids plant in Qatar, which will turn gas into products such as diesel, kerosene and paraffin. Shell also has big gas projects in North America and Australia. If oil and gas prices don’t collapse, Shell’s cash flow should rise and generate higher dividends.