Royal Dutch Shell PLC

Royal Dutch Shell was created in 2005 out of a reorganization of the Royal Dutch/Shell Group, a corporate entity that since 1907 had been headed by two parent companies, NV Koninklijke Nederlandse Petroleum Maatschappij (Royal Dutch Petroleum Company Ltd.) of The Hague and Shell Transport and Trading Company, PLC, of London. Below those two parent companies were subsidiary companies that operated around the world. The company’s principal American subsidiary was Shell Oil Company (SOC), founded in 1922. SOC is still Royal Dutch Shell’s largest subsidiary.

The two parent companies of Royal Dutch Shell began as rival organizations in the late 19th century. In 1878 in London, Marcus Samuel (1853–1927) took over his father’s import-export business (which included the import of Oriental shells—hence the later name) and started a sideline of handling consignments of kerosene. In 1892 he began operating tankers sailing to the Far East and set up oil depots and eventually (1896) oil wells and refineries in Borneo. In 1897 he formed a separate company for his oil interests, the “Shell” Transport and Trading Company, Limited, and in the ensuing decade contracted for petroleum supplies in Sumatra, Texas, Russia, Romania, and elsewhere. (Samuel was knighted in 1898 and would become Viscount Bearsted in 1925.)

Meanwhile, in 1890 a group of Dutch bankers, businessmen, and former colonial administrators formed Koninklijke Nederlandse Maatschappij tot Exploitatie van Petroleumbronnen in Nederlands-Indië (Royal Dutch Company for Exploitation of Oil Wells in the Dutch Indies). That company developed its first pipeline and refinery in Sumatra in 1892, tapping the local oil fields; after 1896, under the leadership of Hendrik W.A. Deterding (1866–1939), it began the construction of tankers and storage facilities and the creation of a sales organization.

In 1903 Royal Dutch and Shell made their first move toward merger by integrating their distributing and sales operations involving Far East sales and East Indies production. In 1907 the more complete merger resulted in the Royal Dutch/Shell Group headed by the two parent companies, with Deterding as general managing director of the group. By 1913 the two companies together, combined with others, had risen to a prominent position among the world’s oil companies, acquiring producing concerns in such areas as Romania, Russia, Iraq, Egypt, Venezuela, Mexico, California, and Oklahoma and enlarging sales operations in Europe, Asia, Australia, Africa, and North and South America.

Throughout the 20th century the group continued to search for new reserves, from the Middle East to Africa to the North Sea to North America, where it drilled in the Gulf of Mexico and extracted oil sands in Alberta, Canada. In 2004 Royal Dutch/Shell announced that it had seriously overestimated its proven oil and gas reserves. Revised estimates released over the following year lowered the company’s reserve estimates by as much as 40 percent. The lower figures reduced the value of the company’s stock, prompting shareholders to demand a more open and responsive corporate structure. In 2005 the century-old Royal Dutch/Shell Group was replaced by a single company, which immediately announced an ambitious program of investment in exploration and production in order to rebuild its oil and gas reserves. In 2015 Royal Dutch Shell agreed to purchase the BG Group, a major producer of liquefied natural gas (LNG), in order to solidify its position as one of the leaders in the emerging LNG industry.