To survive, Shell had adopted a policy of diversification – in particular into coal, nuclear power and metals. In 1970, it purchased Billiton, a metals mining company, an old-established Dutch company (later sold).
In 1973, Shell moved into nuclear energy by forming a partnership with Gulf Oil to manufacture gas-cooled reactors and their fuels. The initial cost was $200 million but Shell quickly discovered that the political problems of the oil industry were multiplied in the nuclear industry, particularly after the accident at Three Mile Island in the USA in 1979, which set the industry back by decades. The following year Shell sold its interests.
The third leg of the diversification policy was coal, but success was limited.
The 1970s were chiefly remarkable for Shell’s work in developing the oil fields in the North Sea. This was the most difficult offshore work the Group had ever undertaken. Although the water is not particularly deep, the weather conditions are adverse and the instability of the sea-bed necessitated a huge investment to extract the oil. Reduced supplies from the Middle East, however, and the size of the fields in the North Sea justified the cost.
General Business Principles
The Amoco Cadiz disaster ended the decade. This tanker ran aground off the coast of France and broke up, spilling its entire crude oil cargo. Shell did not own the tanker but it did own the oil and it suffered the public backlash against oil companies as a result. The incident proved a catalyst for the industry to raise environmental standards.
In 1976, to ensure ethical business standards across Shell’s global operations, the Group drew up General Business Principles. These, regularly updated, still govern Shell’s conduct in all its countries of operation today.
The Iranian revolution in 1979 triggered the second oil price shock as the supply of oil from this critically important country dried up. The Iran-Iraq war which began later that year added to the supply problems: the price of oil doubled and carried on rising, reaching $7 a barrel. In response the Group sought cost savings, renewed its search for non-OPEC sources of oil and sought further diversification.
In production, the Group stepped up its development of subsea exploration both in the North Sea and the United States. The development of the Cognac platform was a huge technical achievement - at 335 metres (1,100 feet) tall it was a record-breaking height.
The Group’s early steps into renewable energy began with solar heating with the acquisition of a 50% interest in an Australian company Solarhart. It also moved into forestry, producing softwoods for paper, construction and fuel. Out of this came its interest in biomass integrated gasification, and eventually the new biofuels of which Shell is today the world’s leading distributor.