Shell Oil Case Study

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Upstream Americas:

This part of shell manages the upstream sector of North and South America, it searches for new oil and natural gas reserves and maintain Midstream facilities that ensure the transportation and storage of its upstream product. Upstream Americas also extracts bitumen from oil sands. This part of Shell is the major business income of the Shell group.

Downstream:

This part of Shell manages the manufacturing, distributing and marketing of downstream products, which includes gasoline, airplane fuel, diesel fuel, and hundreds of petroleum based chemical products.

Projects:

This part is the research and development arc of the Shell cooperation group, it provide the technical solution for both upstream and downstream sectors, it also provide management and leadership for Shell. It is also in charge of the alternative energy development.

Business Principles

There are eight major principles that guild the Shell group.

- Economic: The core functionality of Shell is to generate long-term steady profit to its shareholders, it is the most important measure of Shell’s product and service. Without profits, it is impossible for a company to carry out its responsibilities.

- Competition: Shell promotes free enterprise. It seek to compete fairly with any other companies around the globe and it will not prevent any other companies from competing with Shell.

- Business Integrity: Shell insist on honesty, integrity and fairness in every aspect of business and expect the same with whom it do business. It holds zero tolerance of any kind of bribe in any form. It requires its employees to avoid interest conflict between their own and the company.

- Political Activities: Shell will not, in any form, make any payment to political parties and organizations. Shell will not take part in political policy making in any country it operates in.

- Health, Safety, Security and the Environment: Shell holds a systematic approach in health, safety, security and environmental management in order to keep a long-term performance. Shell will continually look for environmental friendly methods to reduce the impact of Shell’s production to the environment.

- Local Communities: Shell wants to be part of the local communities in which It resides and operate. Shell will actively participate in any social work in the local communities.

- Communication and Engagement: Shell thinks that it is essential to maintain healthy relationships with its employees, customers and shareholders. To achieve this, timely and efficient communication is crucial. Shell will listen to and give feedback to any person or company that cares about Shell’s interest.

- Compliance to Law: Shell will comply with any and all laws and regulations of those countries in which Shell operates.

Competition

Chevron

Chevron is a US based oil giant, its predecessor is the Standard Oil Company which is the primary monopoly oil company in the 19th century. It is the 9th biggest oil company in the world.

In the Upstream side, Chevron’s main oil and gas exploration and production resides in the US, it also operates in Australia, Nigeria, Angola, Kazakhstan and the Mexican Gulf. Daily production is reported to be 2.76 million barrels per day.

In the Downstream side, Chevron has similar product line as Shell. It can manufacture all major petroleum products, its most significant area of operation is the west coast of North America, the U.S Gulf Coast and Southeast Asia. It is reported that Chevron produces 3.1 million barrels per day of gasoline, diesel and jet fuel. It also owns 19,550 retail stations in 84 countries.

The most remarkable side of Chevron is its renewable energy. Unlike Shell, Chevron put tremendous amount of effort in renewable energy research. It includes geothermal, solar, wind, biofuel, fuel cells and hydrogen. It is the largest producer of geothermal energy in the world.

BP

BP, which is also referred by its former name, British Petroleum, is a British oil company. Its headquarter is in London, England. It is the sixth largest oil company in the world.

In the Upstream side, BP’s largest oil and gas production area is in the United States, it takes 1/3 of its total production. The second largest area is the Gulf of Mexico. BP controls most part of Alaska North Slope production and is the major shareholder of the Alaska pipelines.

In the Downstream side, BP has similar product line as of Shell; it owns 14 refineries and 17 petrochemical manufacturing factories worldwide. It also has around 17800 service station in 80 countries.

In renewable energy field, BP’s strength is solar power. It has a plan of investing $8 billion during a 10-year period in renewable energy development.

Exxon Mobile

Exxon Mobil Corp is a American oil company, which has its headquarter in Irving TX. Exxon Mobil is another descendant of John D Rockefeller’s Standard Oil Company. It is a result of a merge between Exxon (Standard Oil New Jersey) and Mobil (Standard Oil New York). After the merge, Exxon Mobil is the 5th largest company in the world by revenue, Shell is the 4th. It is the closest competitor with Shell.

Exxon Mobil is the largest privately owned energy company in the world. It produces about 3 percent of the world oil and 2 percent of the world total energy. (ExxonMobil, n.d.)

The Organization of Petroleum Exporting Countries

The Organization of Petroleum Exporting Countries, or OPEC, is an international governmental organization formed by major oil exporting countries, such as Saudi Arabia, Iraq, Iran, Kuwait. It was founded on 10-14 September 1960. The purpose of this organization is to coordinate and unify oil production of its member nations in order to control the oil price. It is also for competing with other giant oil companies, collectively named “ seven sisters “ , Shell is of course, one of them. OPEC will set up a production target for its member nations according to the price of oil. It will cut down production when the price is low and increase production when the price is high.

As for now, OPEC has 13 member nations, they are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and