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Shell for suppliers
Building strong relationships with our contractors and suppliers is essential to delivering new projects and running our operations. We recognise and select them for their commitment and expertise in areas that include innovation, safety, quality and sustainability. This approach, combined with our global purchasing power, helps us to gain competitive advantage.
Shell Contracting & Procurement is responsible for nearly everything that Shell buys across the full scope of activities in the Upstream, Downstream, and Projects & Technology sectors of our business.
This currently amounts to about $65 billion in annual spend.
With Shell active in more than 70 countries, this means our Contracting & Procurement specialists are purchasing from thousands of suppliers worldwide.
In line with our Shell General Business Principles, we seek to work with contractors and suppliers who contribute to sustainable development and are economically, environmentally and socially responsible.
We purchase products and services that support our approach to sustainability. For example, we work with suppliers that can build pipelines using non-metallic materials, where appropriate, instead of carbon steel. Non-metallic pipes have a smaller carbon footprint than carbon steel pipes. Transportation and installation are also easier as non-metallic pipes weigh around a quarter less than the equivalent size steel pipe. Shell Shipping also uses a supplier that provides low-friction paint for ship hulls, which makes the ship more fuel efficient.
The Shell Supplier Principles provide a simple and consistent framework of our expectations for all our suppliers in the following areas:
• Business integrity;
• Labour conditions and human rights;
• Social performance.
Download the Shell Supplier Principles in your local language:
Local development and global sources
Shell works to share the benefi ts of its projects and operations by creating jobs and helping local businesses and economies to develop . At the outset of a project we consider how we can make the best use of local suppliers and locally-produced materials, where possible.
For example, in Malaysia we spent a total of around $3 billion in contracts in 2013 across 150 local suppliers. In Nigeria, Shell introduced a new scheme supported by five local banks to assist Nigerian contractors in accessing finance. In 2013, the funding scheme enabled 39 contractors to access loans worth over $700 million.
In Canada, Shell has invested more than $1 billion with aboriginal contractors over six years on the Athabasca Oil Sands Project.
This has helped to boost the local economy and develop individual skills.
We built the Sakhalin 2 mega project in Russia’s far east, for example, using a workforce which was 70% Russian and with many project materials from Russian firms.
We also buy goods and services in the global market to secure cost competitive, international rates, increasingly through framework agreements.
Our approach of selecting primary suppliers of specific goods and services also means the supplier benefits from large orders and we can bring down costs through economies of scale.
We often introduce local suppliers to global suppliers, which provides both parties with potential new business opportunities and the benefit of shared experience. Some of these introductions take place in Supplier Forums, which have been held over the last few years in locations such as Nigeria, China, India, and Mexico.
We work to establish agreements with suppliers which allow us to share our respective expertise and build on innovative thinking.
Other examples of effective relations with suppliers include those with the main contractors on our groundbreaking project to design and build a floating liquefied natural gas plant, Prelude FLNG.
We have also joined forces in research and development, for example through the multi-year research technology co-operation agreement to boost oil and gas production and extend the life of existing fields.
Health, Safety, Security, and Environment
Safety is critical to the responsible delivery of energy. We develop and operate our facilities with the aim of preventing any incidents that may harm our employees and contractors or nearby communities, or cause environmental impact. Our Goal Zero programme and supporting company-wide initiatives are helping to strengthen our safety culture. To this end, it is also imperative to build strong relationships with our suppliers and contractors to ensure outstanding HSSE performance across all of our activities.