Growth through acquisition

In the 1980s, Shell sought to grow through acquisition. It bought out the remaining 30% shareholding in Shell Oil in 1985 to consolidate its American operations. This was a period of consolidation in the industry through mergers and acquisition activity – a necessary move as trading conditions became difficult. Shell also sold down its stockpile, anticipating to some extent the coming weakness in the oil price.

Plummeting oil prices

In 1986 the oil price collapsed. OPEC had lost power in the market place as other non-OPEC sources came on stream, including the North Sea output. It had initially tried to ignore price pressures through cutting production but it abandoned this strategy in late 1985 and turned on the taps. The price fell over the winter from $31 per barrel to $10.

After years of living with a high oil price, the Group had to adjust to low prices, requiring a change in the way it judged investment projects. The budget was halved within two years: the company had to work much harder to develop new projects more cheaply. Intensive research led to huge improvements in drilling techniques such as slim-hole drilling and directional drilling. The use of 3D seismic became widespread.

Offshore exploration projects were located in more challenging locations, including the Troll field in the Norwegian sector of the North Sea
Towing the Troll production platform to its site location 80 kilometres north-west of Bergen, Norway, in May 1995

Global markets and new technologies

The 1980s saw the development of offshore exploration projects, which were in much more challenging conditions than had previously been attempted. The Troll field in Norway was one example; another was in the Gulf of Mexico where a new well was drilled at a depth of 2.3 kilometres, a new record.

In 1989, the Communist regimes of Eastern Europe collapsed, reopening these markets for Shell for the first time since the Second World War. The Group began to steadily accumulate assets; the first was a joint venture in auto retailing in Hungary, which rapidly grew to fifty outlets. But the more strategic ventures were in Russia which offered opportunities for joint production agreements as well as marketing.

The 1990s saw the technology of biomass fuels and gas-to-liquids make a giant leap forward. The basic technology had been established for several decades but the cheap, plentiful supplies of crude oil meant there had been little interest in developing GTL commercially. The opening of Shell’s Bintulu GTL plant in Malaysia in 1993 was a pioneering step, a precursor to the importance that gas-to-liquids was to play in the Group in the following decade.

Public scrutiny

Shell was criticised over the Brent Spar episode in 1995, which centred on its plans to dispose of the storage platform. The Group learned that public opinion had become much more sensitive to environmental issues. In the next decade, the Group worked much harder to open a dialogue with interested parties regarding its environmental impact and to develop good relations with the communities affected by its work.

Another problem to hit the Group arose from its presence in the Nigerian region of Ogoniland. The tribal minority in the Ogoni were aggrieved with the Nigerian government because they felt denied a proper share of federal revenues from the oil, and what they saw as other fundamental human rights. Their champion was the writer Ken Saro-Wiwa. The oil companies were targeted as “collaborators” with the corrupt government. Shell was accused of environmental despoiliation. The story achieved international notoriety when Saro-Wiwa and eight of his colleagues were sentenced to death by hanging for their activities.

Shell has since strived to follow a policy of demonstrating its community of interests and reciprocal good feeling with both the governments and the local populaces it deals with.

The 1990s were notable for Shell for the development of the LNG business. Improved transportation and rising demand made this area of the Group’s activities increasingly important and are expected to continue to do so in the first decades of the 21st century.

Meeting increasing energy demand

The turn of the century saw Shell begin to move into new growth areas of the world – notably China and Russia. Shell had several oil and gas projects in development in Russia, including Sakhalin, and built a massive petrochemical plant in China to supply the country’s rapidly-growing consumer market.

Oil exploration projects have become more complex as the Group has found itself working in increasingly hostile environments. Shell’s record of technological innovation has been critical to its ability to partner national governments keen to exploit their natural resources.

Shell headquarters, The Hague
Shell headquarters in The Hague, the Netherlands

The birth of Royal Dutch Shell plc

In 2005, the Group underwent a major structural reorganisation as the near century old partnership between Royal Dutch and Shell Transport and Trading was dissolved and Shell unified its corporate structure under a single new holding company, Royal Dutch Shell plc. The headquarters of the new company are in The Hague. July 5, 2007 marked the first centenary of the original partnership.

Tackling the energy challenge

Looking back over 100 years of history, it has been an amazing journey. Mankind has managed to adapt, time and time again, through a century of rapid change and periodic upheaval. So has Shell. There are big challenges in the century ahead, as well. Shell and other energy companies must find more energy to help keep the world’s economy humming, as places like China and India expand at a rapid pace. And they must do so in ways that safeguard society and the environment.

In 1950, Velutina was the largest tanker ever built at a British shipyard

Post-war expansion

Oil demand soars and Shell expands dynamically. The super-tanker is born, Shell extends its exploration overseas and forms a partnership with Ferrari.

The post-war expansion programme
The first consignment of liquefied natural gas was shipped in 1964 from Algeria in the SS Methane Princess.

1960s to the 1980s

Shell Chemicals enters a golden period of research; Shell produces its General Business Principles and diversifies its operations.

Innovation and diversification

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