Shell The Multinational Company Commerce Essay


Shell is multinational company in the petroleum refining, marketing and retailing industry. It comprises of two founding companies, Royal Dutch Petroleum Company of the Netherlands and Shell Transport and Trading Company of United Kingdom. Shell is present in Australia and its aim is to meet the needs of society, in ways that are economically, socially and environmentally viable (at least according to its stated mission) - now and in the future. It is involved in both exploration and production of crude oil and natural gas as well as the manufacturing and marketing of end products.

The oil and Gas Sector is known for its making of strong claims to business ethics and/ or corporate social responsibility - human rights, employee rights, stakeholder

rights, environmental protection, community relations, transparency, corruption,

product stewardship, principles and codes of practice (Frynas, 2005). Shell Australia is one such company. Its footprints can indeed found be in Australia in terms of foreign direct investment, skills, technology and employment creation. It is also a source of government revenue for Australia.

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Shell does offer a wide range of products for Australian population. Its downstream business consists of refining and marketing operations. It manufactures petroleum products, trades with thousands of customers throughout the country and supplying a quarter of Australia's petroleum requirements. The products supplied by our shell business empire and the jobs they generate make a significant contribution to the Australian economy. The downstream businesses consist of 10 diverse, but interlocking businesses: manufacturing, supply, logistics, commercial, lubricants, retail, aviation, bitumen, marine and chemicals. (, 2009)

The range of end products is quite extensive. Lubricants come in handy for the locomotive and manufacturing industry, with most popular being Shell Helix for cars, Shell Advance for motorcycles and Shell Nautilus for marine engine. The higher end automotive fuel includes products such as Shell Optimax and Shell lead replacement fuel. Gogas which is an automotive Liquid Petroleum Gas and Diesoline 500 are mainly for industrial use. The chemicals include solvents, detergent intermediates, and bitumen important for pavement sealing. Oils, lubricants and bitumen in addition are marketed at businesses within agriculture, aviation, power and mining industries.

Liquefied natural gas and liquefied petroleum gas is produced for international market and natural gas for Western Australia. Production of natural gas, natural gas is clean, less costly and is relatively in abundance supply. Consequently it can lead to significant reductions in emissions of greenhouse gases. Environmentalists, however, see a sadistic motive on part of Shell's continued extraction of natural gas, in that it is still harmful and non-renewable. It is produced from fossil fuel thereby the emissions contribute to global warming.

Shell provides employment opportunity to a sizable number of Australian populations therefore providing them with a means of putting a meal on the table. As at December 31, 2005, Shell's total Number of employee exceeded 3200. It directly employs over two hundred staff in the Australia's upstream business.

In 2003 Shell had more than 600 Shell stations in Australia selling its products besides offering other services such as car repair and convenience goods including food, water and grocery. As of 28th May 2003, following a deal struck with Shell and Coles Myer, the supermarket retailer took over 584 retail Shell outlets in a move to compete with rival Woolworths discount fuel offer. By the end of 2004 Shell sites under the previous brand name of "Select" in Victoria, NSW, ACT, Tasmania, South Australia, Western Australia and Northern Territory had been renamed under the "Coles Express" brand name.

Shell is known for it innovativeness as far as technology is concerned. Development of petroleum resources is quite an uphill task. This is because the fossils fuel is located in inaccessible location. In response to this, Shell plans to use FLNG technology whereby gas will be processed on a floating facility directly over the gas field. FLNG technology is a crucial development for LNG industry as it not only reduces the cost of the project but also the negative impact on environment. During 2007, Shell discovered the 'Prelude' gas field and in March 2009 discovered the 'Concerto' gas field in the permit area. As the gas reserves are relatively small and remote, Prelude and Concerto are well suited to development 'in situ' using Shell's FLNG technology whereby gas will be processed on a floating facility directly over the gas field.

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Equally important Shell pumps is the fact that shell has necessary capital to venture in projects that require huge amounts of venture capital or that are risky. It has indeed invested lot of money in its development projects. For example it owns a considerable share of North West Shelf project which is Australia's most large development project with investment close to 27 billion US Dollars. Shell has 1/12 interest in the domestic gas joint venture, 1/6 in the LNG, LPG and condensate venture. Overall, it has 34% equity stake in NWS which is operated by Woodside Petroleum Limited .The NWS project has built a solid reputation for Australia as a reliable supplier of LNG to North Asia. It supplies domestic gas to Western Australia, LNG to Japan, Korea, China, Taiwan, India, Europe and the USA, and condensate and LPG to international markets. The NWS project was the first supplier of LNG to China with the first cargo of Australian LNG arriving on a Shell ship into Guangdong in May 2006. In addition to LNG for export, the NWS project supplies around 60% of Western Australia's domestic gas. This is pumped through the existing pipeline infrastructure from Dampier to Bunbury. Indeed shell's vision for its gas business in Australia is to grow its Equity in LNG.

There is a downside of shells activities. Global warming being a primary concern in society, Shell is not doing enough to curb it. This is because it is still geared towards manufacturing products that are oil based. This is not only ecologically inefficient but also ineffective since the world is shifting towards renewable energy sources. As such it is involved in seeking a method that will aid in alleviating adverse environmental outcomes associated with fossil fuel. The technology has the ability to support continued use of fossil fuel until the fears associated with new alternative sources technologies are resolved. The technologies include coal gasification and coal liquefaction as well as development of oil sands and tar sand extraction technology. Shell is working on "Spellment", a product that converts captured carbon dioxide into useful building materials.

Shell expects dramatic increase in the use natural gas whether as fuel used for generation of electricity or as primary fuel.  Consequently, Shell is aggressively growing its gas portfolio around the world, particularly here in Australia.  And there is a recently established connection between the work of the Centre and Shell's gas aspirations.  Shell Global Solutions, one of Shell's technology arms, recently signed an intellectual property and technology development agreement with Australian company and Centre member Cool Energy in relation to its CryoCell gas sweetening technology.  The partners in this technology are hoping that it will help to open up reserves of natural gas which are currently uneconomic because of their CO2 content or remote location.  This will have undoubted benefits for Australia - both in terms of additional domestic gas

Shell believes that nuclear energy should be considered incase a breakthrough in new technology is not realized soon and the society is sincerely serious about reduction of emissions and combating global warming. This is because nuclear energy is the only one that is presently available that is capable of commercially scaling to meet significant demand and offers low CO2 emissions. On the other hand uses of Nuclear energy will does raise a whole host of environmental and social concerns which are hard to overcome to provide a way out. Shell proposal of expansion of exploratory drilling would only result to industrial noise to aquatic life while emitting pollutant into the air and in water in form of oil spills. The latter puts marine life at risk.

Shell as a multilateral company has had the negative effect on the economy in that it has led to its distortion. This is by introducing undue completion in the Australia's Economy. For example prior to 2003, Shell Australia operated its retail businesses. Cole Express, currently part of Westfarmers, purchased the right to carry out the business for less than 100m dollars. Shell was responding to its Woolworths (its rival) limited discount offer on fuel. Shell still holds the exclusive right of supplying lubricant and fuel products as well as retains its branding such places such as the price board.

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It has also been known for trade violations for example in engaging in pre-arranged or fictitious trade in oil.

Shell activities have great benefit for Australian people in terms of provision of employment and a wide range of products as well as being a source of revenue for the government. Shell companies also do make enough profit some of which it is taxed hence a source of revenue for Australia's government. However these benefits are not sustainable given the impact of global warming whose impact can be felt right here in Australia. There is need to focus more on the renewable sources of energy such as wind and solar energy to avoid mutual annihilation of human kind. Hiding behind the assertion of provision of friendly Natural Gas, LNG and LPG is really campaigning against environmental and human rights. Shell's Chairman, Phillip Warts has been attacked playing a leading role in corporate social responsibility while lobbying against tougher international law as far as environmental protection is concerned. It has been proposed that environmental and social reporting should be made mandatory; make the company legally responsible for their actions in host countries.

Work cited

Bryan D and Rafferty M.1998. The global Economy In Australia: global integration and national economic policy. St. Leonards, NSW: Allen & Unwin (accessed March 16, 2010) (accessed March 16, 2010)

Frynas J.G. 2009. Beyond Corporate Social Responsibility: Oil Multinational and Social Challenges

Mellahi K., Paul N.F and Frynas J.G. 2005. Global Strategic Management. London: Oxford University Press.