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Shell's post-war years were marked by reconstruction and an ambitious expansion programme. Scientific advances and a growing number of cars in the US led to an exploding oil demand. Shell contributed to the invention of the jet engine and in 1950 formed a partnership with Ferrari. In the late 1950s the Group’s structure was reorganised.
A new order for the international oil industry
The immediate post-war years were some of the toughest Shell had yet faced. Reconstruction was hugely expensive. But the market for oil was changing rapidly and the Group needed a programme of ambitious expansion. New programmes of exploration began in Africa and South America and new refineries were built in the UK. Shipping became larger and better powered so that more bulk could be carried. The supertanker was born.
Shell Oil's Marine drilling rig No. 10 in the Gulf of Mexico, 1950
In 1947, the first commercially viable offshore oil well was drilled in the Gulf of Mexico. Two years later Shell drew its own first subsea oil there. By 1955 Shell had 300 offshore wells, mostly in the Gulf. But there were also new discoveries in the Niger delta and in Borneo. Commercial production of oil in Nigeria began in 1958.
The return of peace brought an explosion in civilian demand for oil products – in particular gasoline in the USA, where the number of cars rose by 60% between 1945 and 1950. To end its supply bottlenecks, Shell formed an alliance with Middle East Gulf Oil, giving it a substantial stake in this increasingly important region.
Scientific advances increase oil demand
A number of scientific advances also boosted demand for oil. Shell contributed to the invention of the jet engine - its architect Sir Frank Whittle worked for the Group for a number of years. The 1940s also saw the development of the catalytic cracker, which was cheaper and more effective than its predecessor thermal cracking. Shell’s lubricants were also much improved. In 1950 Shell formed a partnership with Ferrari in Formula One to help develop its lubricants – a partnership which endures to this day.
In 1953, as rationing finally ended, Shell in the UK was allowed for the first time since the war to sell petrol under its own brand name. It prompted a huge advertising campaign. It was a time when Shell used visiting artists and published its famous road guides, all of which contributed to building the Shell brand.
New political reality
But the sensitivity of the oil industry to volatile political environments was demonstrated by events such as the sequestration of assets in Iran (1951-53) and in Egypt during the Suez crisis (1956-57). This “new reality” was to impinge more strongly on the Group in later decades. It led to a new emphasis on security of supply; refineries would in future be built near their markets, crude oil would be transported through a network of pipelines and in more supertankers.
In the late 1950s the Group’s structure was reorganised, with new operating companies created below the two holding companies and the setting up of a Committee of Managing Directors to set direction. This structure was to survive for almost 40 years.
In tandem with this reorganisation, work began in London on a major new headquarters building for Shell Transport, Shell Centre. When it opened in 1963 it was London’s tallest building. Other new Shell buildings went up around the world, in Melbourne, Toronto and Caracas.