A Progressive Digital Media business
COMPANY PROFILE
Shell plc.
REFERENCE CODE: D92F7766-4521-4359-857D-3E0F3A288EAB
PUBLICATION DATE: 27 Apr 2022
[Link]
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
Shell plc.
TABLE OF CONTENTS
TABLE OF CONTENTS
Company Overview ........................................................................................................3
Key Facts ......................................................................................................................... 3
SWOT Analysis ...............................................................................................................4
Shell plc. Page 2
© MarketLine
Shell plc.
Company Overview
Company Overview
COMPANY OVERVIEW
Shell plc. (Shell or 'the company'), formerly Royal Dutch Shell plc, explores for and recovers crude oil,
natural gas, and natural gas liquids (NGLs); transport oil and gas; and operates the upstream and
midstream infrastructure necessary to deliver oil and gas to market. The company is engaged in refining
and marketing activities for oil products and chemicals as well as gas power. The company offers
petroleum products supply and distribution services; gas service stations; and automotive technical
support services. Shell sells its products and services under the brands: Shell and V- Power. Shell
operates through four segments namely: Downstream; Integrated Gas; Upstream and Corporate. It has
operations in Europe, Asia, Oceania, Africa, and the Americas. The company is headquartered in The
Hague, the Netherlands.
The company reported revenues of (US Dollars) US$261,504 million for the fiscal year ended December
2021 (FY2021), an increase of 44.8% over FY2020. The operating profit of the company was US$27,828
million in FY2021, compared to an operating loss of US$25,741 million in FY2020. The net profit of the
company was US$20,101 million in FY2021, compared to a net loss of US$21,680 million in FY2020.
Key Facts
KEY FACTS
Head Office Shell plc.
Shell Centre
London
London
GBR
Phone 44 20 79341234
Fax
Web Address [Link]
Revenue / turnover (USD Mn) 261,504.0
Financial Year End December
Employees 82,000
London Stock Exchange (LON) SHEL
Ticker
Shell plc. Page 3
© MarketLine
Shell plc.
SWOT Analysis
SWOT Analysis
SWOT ANALYSIS
Royal Dutch Shell plc (Shell or 'the company') explores for and recovers crude oil, natural gas, and
natural gas liquids; transport oil and gas; and operates the upstream and midstream infrastructure
necessary to deliver oil and gas to market. The company is also involved in refining and marketing
activities for oil products and chemicals. The company has interests in oil production operations in several
countries and majority interest in 24 refineries worldwide. The company's strong market position gives it
significant bargaining power in the global oil industry. However, challenging downstream industry
environment characterized by weak demand and overcapacity would pressurize the company's
profitability.
Strength Weakness
Strong Market Position and Reserve Base Violation of Anti-Corruption Laws
Extensive research and development competencies
Wide Geographic Presence
Opportunity Threat
Agreements Risks Associated with Wide Geographic Presence
Strategic growth initiatives Deteriorating Business Environment in Nigeria
Divestments Price Fluctuations
Regulation of Greenhouse Gas Emissions
Strength
Strong Market Position and Reserve Base
Shell is one of the largest oil companies in the world. Its operations include upstream and downstream
operations. The company has interests in oil production operations in several countries and majority
interest in many refineries worldwide. Shell operated more than 46,000 Shell-branded retail stations in
over 80 countries at the end of 2020. The company sells fuels under the Shell V-Power brand in more
than 68 countries. The cornerstone of the company is its leadership position in various domains such as
oil products, deep-water production, liquefied natural gas (LNG), and polyolefin. The company has
established a strong brand image operating for over 100 years worldwide. Also, Shell is a leading biofuel
producer and fuel retailer in Brazil, through its Raizen joint venture. The company has a strong retail
position not only in the major industrialized countries, but also in developing countries. Also, the company
has strong reserves for future production. In FY2020, the company's proved developed and undeveloped
reserves totaled 9,124 MMboe including 3,977 MMbbls of oil and NGLs; 26,114 bcf of natural gas; and
644 MMbbls of synthetic crude oil. The company's strong market position coupled with strong reserve
base gives it significant bargaining power in the global oil industry.
Extensive research and development competencies
Shell plc. Page 4
© MarketLine
Shell plc.
SWOT Analysis
Shell has robust research and development (R&D) capabilities. The company in recent times, through its
three R&D centers, has been trying to improve its technologies and also reduce its carbon footprint. In
FY2020, the company's R&D expenses were US$907 million on R&D, which as a percentage of revenue,
stood at 0.5% and decreased 5.7% YoY. As of December 2020, Shell had 8,480 granted patents and
pending patent applications.. The company’s main technology centers are located in India, the
Netherlands and the US, with other centers in Canada, China, Germany, Norway, Oman and Qatar. The
sustained investment in R&D has enabled the company to advance technologies that helps it to access
new resources and meet the customer needs for improved efficiency and better performance. For
example, the company developed Shell Cariphalte, a polymer-modified binder with very high resistance to
deformation and excellent low-temperature flexibility, and which is therefore ideally suited to extreme
climatic conditions. Shell Cariphalte is an innovative, cost-effective solution that helps conserve natural
resources and reduce total asset cost. It is a cost-effective polymer modified bitumen designed for high
performance road applications in combination with Reclaimed Asphalt Pavement in base, upper and high-
quality layers. Another example is Shell Bitufresh. This is an additive which reduces bitumen odor, and
can therefore significantly improve the work environment during asphalting works. The company's strong
R&D capabilities provide it with a competitive advantage and help it build a portfolio of innovative
products.
Wide Geographic Presence
Shell has wide presence across various regions. The company's revenue stream is diversified in terms of
geographies. The company operates in over 70 countries and divides its geographic divisions as Asia,
Oceania, Africa; Europe; the US; and Other Americas. In FY2020, the company generated 36.1% of the
total sales and operating revenues from the Asia, Oceania, Africa; followed by Europe with 27.8%; the US
with 28.2%; and Other Americas with 8%. The company's global operations and regional brand identity
gives it competitive advantage over its competitors and also indicates that the company has a wider
scope in increasing its revenues by utilizing its global presence. Further, its worldwide presence reduces
exposure to economic conditions or political stability in any one country or region.
Weakness
Violation of Anti-Corruption Laws
Shell is currently subject to violations of the US Foreign Corrupt Practices Act (FCPA) by the US
Securities and Exchange Commission (SEC) and the US Department of Justice. The Nigeria Federal
High Court issued an Interim Order of Attachment for oil block OPL 245, pending the conclusion of the
investigation. Further, the company received notice of the request of indictment from the Italian
prosecution office in Milan with respect to this matter. In relation to this, the company had to pay a penalty
of GBP869 million to the DOJ for a 2012 value-added tax claim. Any violations of this nature or any other
legal allegations by the regulatory bodies could impact the goodwill and brand image of the company and
could have a downward impact on its profits.
Opportunity
Shell plc. Page 5
© MarketLine
Shell plc.
SWOT Analysis
Agreements
In September 2020, Shell's subsidiary, Shell Brasil Petroleo Ltda, along with Petrobras, and Repsol
Sinopec signed contracts for sharing infrastructure for the flow and processing of natural gas. In the same
month, the company's subsidiary, Shell Global Solutions International received a contract to Kongsberg
Digital for the supply of Kognitwin energy, digital twin software. In September 2020, the company’s
subsidiary BV Dordtsche Petroleum Maatschappij entered into an agreement to acquire exploration
assets from Kosmos Energy Ltd for US$200 million. In August 2020, Shell announced its plans to acquire
50% stake in Nayara Energy Limited, a downstream oil company. In July 2020, CrossWind, a joint
venture between Shell and Eneco, secured a tender to build the 759MW offshore wind farm Hollandse
Kust (noord) in the Netherlands. In the same month, Shell and Gazprom Neft agreed to launch a joint
venture for the development of a major hydrocarbon cluster on the Gydan peninsula. In July 2020, Shell
and The Miles Consultancy announced a partnership for a new fuel management solution to improve
electric vehicle charging and tracking business trips. In June 2020, Shell and Bureau Veritas entered into
an agreement to benefit from expert solutions in the detection of leaks across all assets. In the same
month, Shell and Peterson announced their contract extension to provide quayside, warehousing and
transport services. In June 2020, Shell and Wells Fargo entered into a contract, in which Wells Fargo will
buy 150 megawatts of solar power from Shell. In June 2020, Shell and IBM entered into a partnership to
introduce a new online marketplace, Oren to accelerate digitalization in the mining industry. In the same
month, Shell entered into a joint development agreement with Dow Inc to accelerate technology to
electrify ethylene steam crackers. In June 2020, Shell secured approval from National Hydrocarbons
Commission for the exploration plan on deepwater contract AP-PG06 in Gulf of Mexico. In April, Shell and
GCL Oil & Natural Gas entered into an agreement to explore the supply and trade of LNG in eastern
China. In March 2020, the company's Shell Energy India signed a MoU with INOX India for LNG supply
from Shell's LNG terminal in Hazira, Gujarat, India. In the same month, the company and Equinor signed
a MoU on digital collaboration to develop solutions and methods in various fields.
Strategic growth initiatives
In September 2020, Shell opened its fifth LNG-fueling station in Kirchheim unter Teck, Germany. In April
2020, Shell invested in Ningbo Offshore Fresh Information Technology (Offshore Fresh). In July 2020,
Shell along with Energy Efficiency Services announced their plans to form a joint venture to invest
INR400 billion to set up 5,000 MW decentralised solar plants for low-cost electricity in rural India. In June
2020, Shell announced its plans to sell its 6.45% stake in the Kvitebjorn field and pipeline, and 3.225%
stake in the Valemon Unit and Valemon Rich Gas Pipeline in Norway. In May 2020, the company and
CNOOC entered into a contract, worth US$5.6 billion, to build a new ethylene plant in Huizhou, China.
Divestments
In October 2020, Shell entered into a cellulosic fuel purchase and sale agreement with Red Rock to to
market and distribute low-carbon, sustainable aviation and diesel fuel. In September 2020, Shell
announced its plans to sell its 45% stake in the Malampaya gas-to-power project in the Philippines. In
August 2020, Shell's subsidiary, SWEPI LP sold its Appalachia shale gas position to Seneca Resources
Company LLC, and NFG Midstream Covington LLC, valued for US$541 million.
Shell plc. Page 6
© MarketLine
Shell plc.
SWOT Analysis
Threat
Risks Associated with Wide Geographic Presence
The company operates in more than 70 countries in different political conditions. Its wide geographic
presence exposes Shell to a wide range of political developments and resulting changes to laws and
regulations. The potential developments that could affect Shell include forced divestment of assets;
expropriation of property; limits on production; import and export restrictions; and international conflicts,
including war. In addition, the effects include civil unrest, and local security concerns that threaten the
safe operation of company facilities; price controls, tax increases, additional windfall taxes, and other
retroactive tax claims; re-writing of leases; cancellation of contract rights; and environmental regulations.
The assessment of the impact of these developments on the company's operations is difficult. The
sudden imposition of any of these developments could affect the employees, reputation, operational
performance, and financial position of Shell.
Deteriorating Business Environment in Nigeria
The company conducts its business activities in 80 countries, including Nigeria. In Nigeria, Shell faced
various risks and adverse conditions, some of which deteriorated. These risks and conditions include:
security issues surrounding the safety of its people, host communities and operations; sabotage and theft;
and the company's ability to enforce existing contractual rights. Further, the risks include: litigation; limited
infrastructure; potential legislation that could increase the company's taxes or costs of operations; the
impact of lower oil and gas prices on the government budget; and regional instability created by militant
activities. Moreover, the Nigerian government is contemplating new legislation to govern the petroleum
industry which, if passed into law, could likely have a significant adverse impact on Shell's existing and
future activities in Nigeria.
Price Fluctuations
The prices of crude oil, natural gas, oil products and chemicals are affected by supply and demand, both
globally and regionally. Prices for oil and gas can move independently of each other. Factors that
influence supply and demand include operational issues, natural disasters, weather, political instability,
conflicts, economic conditions and actions by major oil and gas producing countries. In a low oil and gas
price environment, Shell would generate less revenue from its Upstream and Integrated Gas businesses,
and, as a result, parts of those businesses could become less profitable, or could incur losses. Low oil
and gas prices could also affect Shell’s ability to maintain the long-term capital investment program and
dividend payments. In a high oil and gas price environment, the company could experience sharp
increases in costs, and, under some production-sharing contracts, shell’s entitlement to proved reserves
would be reduced. Higher prices could also reduce the demand for company’s products, which could
result in lower profitability, particularly in Shell’s downstream business. Accordingly, price fluctuations
could have a material adverse effect on Shell’s earnings, cash flows and financial condition.
Regulation of Greenhouse Gas Emissions
Due to the increasing focus on issues concerning climate change, the role of human activity in it, and
Shell plc. Page 7
© MarketLine
Shell plc.
SWOT Analysis
potential mitigation through regulation by various governments could have a material impact on the
company's operations and financial results. International agreements and national or regional legislation
and regulatory measures to limit greenhouse emissions (GHG) are currently in various stages of
discussion or implementation. These and other GHG emissions-related laws, policies, and regulations
may result in substantial capital, compliance, operating, and maintenance costs. The level of expenditure
required to comply with these laws and regulations is uncertain and is expected to vary depending on the
laws enacted in each jurisdiction, the company's activities in it, and market conditions. GHG emissions
that could be regulated include those arising from the company's exploration and production of crude oil
and natural gas; the upgrading of production from oil sands into synthetic oil; power generation; the
conversion of crude oil and natural gas into refined products; the processing, liquefaction, and
regasification of natural gas; and the transportation of crude oil, natural gas, and related products.
Material price increases or incentives to conserve or use alternative energy sources could reduce
demand for products the company currently sells and influence Shell's sales volumes, revenues, and
margins.
Shell plc. Page 8
© MarketLine
Copyright of Royal Dutch Shell PLC SWOT Analysis is the property of MarketLine, a
Progressive Digital Media business and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright holder's express written permission.
However, users may print, download, or email articles for individual use.
