BP & SHELL

Michelle Chandy (107) Srotoswini Roy (144) Harshita Singh (152)

Over the years – BP & SHELL
• • • • 1970 - Royal Dutch Shell buys Dutch metals and mining company Billiton in a diversification drive. 1973 - Shell further diversifies into nuclear energy by forming a partnership with Gulf Oil to manufacture gas-cooled reactors and their fuels. The following year, Shell sells those interests. 1977 - Atlantic Richfield Company (ARCO) buys Anaconda Copper Mining Company. 1981 - Italy's ENI and U.S. Occidential Petroleum form Enoxy Inc, a coal mining joint venture in Kentucky and West Virginia. 1981 - Sir Peter Walters becomes CEO of British Petroleum, who embarks on a fiveyear acquisition spree costing 10 billion pounds, including takeover of Purina Mills animal feed company. 1981 - Standard Oil of Ohio (SOHIO) purchases Kennecott Copper Corp. 1987 - British Petroleum buys SOHIO's mining interests. 1989 - BP sells its mining operations to Rio Tinto Zinc for $4.3 billion, marking the end of its foray into mining. 1994 - Royal Dutch Shell sells mining assets of Billiton to South Africa's Gencor for $1.2 billion. 2002 - Exxon Mobil sells its interests in copper producer Disputada to Anglo American for $1.3 billion.


• • • •

BRITISH PETROLEUM

a non-profit carbon offsetting initiative Gas and fuel cards Industrial lubricants Invoice tracking system Marine fuels and lubricants Solar power for your business .BP: Horizontal Scope BP On The Road For The Home For Business BP Biofuels Gas and fuel cards Gas and petrol stations Motor oil and lubricants Liquefied Petroleum Gas (LPG) Solar powered energy Air BP ARCO Aluminum Aromatics & Acetyls Asphalt and bitumen BP Crudes BP Franchising BP Shipping Route & journey planner Gas and petrol station locator Targetneutral .

BP: Vertical Scope Finding Oil & Gas Extracting Oil & Gas Moving Oil & Gas Making Fuels & Products Selling Fuels & Products Generating Low Carbon Energy .

BP: Geographical Scope Algeria Benin Botswana Burkina Faso Cameroon Cape Verde Cote D’Ivoire Djibouti Ethiopia Gabon Gambia Namibia Ghana Guinea Kenya Lesotho Libya Madgascar Mali Mauritius Morocco Mozambique Nigeria Sudan Rwanda Senegal Togo Tunisia Uganda Zimbabwe Brunei Fiji Guam India Laos Japan Malaysia Vietnam Thailand Sri Lanka Taiwan South Korea Singapore Philippines China and Hong Kong Cambodia Iraq Kazakhstan Kuwait Oman Pakistan Saudi Arabia Australia New Zealand Azerbaijan Cyprus Belgium Croatia Czech Republic Denmark Finland France Germany Gibraltar Greece Georgia Hungary Italy Luxembourg Netherlands Norway Poland Portugal Ireland Slovakia Slovenia Spain Sweden Switzerland Turkey UK Canada United States Of America Mexico Trinidad and Tobago Argentina Brazil Colombia Venezuela .

• Explosion of BP refinery in Texas that caused 100 injuries and 15 deaths in 2005 THREATS •Expansion of frontier areas suitable for BP’s future reserves (post-Soviet Union territories). • Increase in petrol prices in the UK. • Extension of strategic oil and gas acquisitions in North Sea area • Launch of more flexible price policy to compete main rivals • Environmentally unsound policies due to oil and toxic spills • Occasional refinery explosions • Corrosion in pipelines • Competition from Shell and Chevron . IPO in New York Stock Ex OPPORTUNITIES WEAKNESS • Launch of controversial business with the Baku-Tbilisi-Ceyhan pipeline.BP: SWOT STRENGTHS • Operates petrochemical businesses worldwide through the network of its subsidiaries and retail brands • BP Amoco strong brand loyalty for oil • Participates in London Stock Exchange.

but these operations were sold. not divesting its shares until the 1980s. the UK government took over some ownership. food products were developed as a fuel byproduct. in the 1970s.Strong brand management driven by the ‘Beyond Petroleum’ slogan.BP Best Practices – Various Functions • Marketing .A fundamental BP commitment to comply with all applicable legal requirements and with high ethical standards • BP has evolved from several companies dating back to the early years of the 20th century. When political upheaval threatened the UK’s interest in Iranian oil in the 1950s. focused initially on oil extraction in Iran. • Operations . . with national interest safeguarding the organisation • A programme of investment and divestment has kept the portfolio focused: for example.

Although BP’s area of the depot was not significantly damaged. locals are apprehensive regarding its wish to begin storing oil at the depot again. and it is having to go through a lengthy risk assessment and planning application process with the local authority • TNK BP in Russia is currently experiencing power struggles between British executives running it and Russian billionaire shareholders . competitors are also able to take these routes and continue to outperform BP • The company’s safety record has been questioned: in 2005.Problems faced by BP • BP is currently underperforming compared against its competitors • Its strategy to overcome underperformance is simplification and increased efficiency of operations: however. an explosion at its main Texas refinery killed 15 workers and mismanagement has been blamed. • BP held oil at the Buncefield depot where there was also an explosion in 2005.

static kill and cementing. claims paid and federal costs) . relief-well drilling. destroying the Deepwater Horizon rig that drilled it.BP: Worst Offshore Spill in U. off the Louisiana coast.5 billion (including the spill response. history.S. grants to Gulf states.S History • Incident: BP Oil Well blew out. containment. • Cost of Spill: ~$9. • Casualties: 11 men killed and the spill triggered the worst offshore spill in U.

. the repercussions of the disaster will be felt for years. for his handling of the spill. – Market value halved as investors dumped the stock.Repercussions Though the well is now plugged. fell off Interbrand's top-100 list. Tony Hayward. besieged by bad publicity after the Deepwater Horizon oil spill. possibly decades. spooked by the mounting costs of the clean-up and the prospect of unlimited liability for oil spill-related damage. – BP. had been on the list for nine years. He is now succeeded by Dudley.S. to come. – It dumped its chief executive. long considered one of the world's premier brands. – BP is facing civil and criminal probes and a wave of litigation that could tie it up in the courts for years. and ranked as the world's 83rd most valuable brand last year. who had been savaged in the U. The oil company.

Shell is now ranked 81—up from 92 last year—in this year's standings. they announced the formation of a $1 billion joint venture to design. As a result of BP's fall from grace. • BP's environmental disaster and inability to make good on its brand promise of 'Beyond Petroleum' led to its falling off the Interbrand’s Top 100 brands list and helped competitor Shell emerge as an industry leader. build and operate a new rapid-response system for containing a massive deepwater oil spill. . In July 2010.BP Oil Spill: Opportunities for Shell • The incident has galvanized BP's rivals—including Exxon Mobil Corp and Royal Dutch Shell PLC—into action.

ROYAL DUTCH SHELL .

SHELL: Horizontal Scope SHELL On The Road For The Home Solutions For Business Shell Motorsport Liquefied Petroleum Gas (LPG) Card Services Fuels Loyalty Oils Station Locator Shell Aviation Bitumen Chemicals Commercial Fuels Shell Global Solutions Shell for Lubricants Marine Products Shell Gas LPG Sulphur Shell Trading & Shipping Shell & Ferrari Shell & Ducati Shell & Nascar .

which are moved and marketed around the world for domestic. . Projects & Technology It manages the delivery of major projects and helps to improve performance across the company.SHELL: Vertical Scope Downstream Upstream explore for and extract crude oil and natural gas. often in joint ventures with international and national oil companies Collectively these turn crude oil into a range of refined products. These include fuels. industrial and transport use. lubricants and bitumen.

SHELL: Geographical Scope Algeria Benin Botswana Burkina Faso Cameroon Cape Verde Cote D’Ivoire Djibouti Ethiopia Gabon Gambia Namibia Ghana Guinea Kenya Lesotho Libya Madagascar Mali Mauritius Morocco Mozambique Nigeria Sudan Rwanda Senegal Togo Tunisia Uganda Zimbabwe Brunei Fiji Guam India Laos Japan Malaysia Vietnam Thailand Sri Lanka Taiwan South Korea Singapore Philippines China and Hong Kong Cambodia Australia New Zealand Australia Belgium Croatia Czech Republic Denmark Finland France Germany Gibraltar Greece Hungary Italy Luxembourg Netherlands Norway Poland Portugal Ireland Slovakia Slovenia Spain Sweden Switzerland Turkey UK Canada United States Of America Mexico Argentina Bolivia Brazil Chile Colombia Costa Rica Dominican Republic Equator El Salvador French Antilles & Guiana Guatemala Honduras Jamaica Nicaragua Panama Paraguay Peru Puerto Rico Suriname Trinidad and Tobago Venezuela .

solar power. and there is the potential to discover more •Emerging economies have a large and growing demand for fossil fuels. reducing profit potential • The economic downturn has led to a decrease in demand for fossil fuels .SHELL: SWOT STRENGTHS • Research into biofuels. WEAKNESS • Uses the environmentally unfriendly technique of flaring and burning gas from oil extracting sites • Strong focus on oil and gas requires it to search continually for replacement supplies THREATS • Political Issues in some regions • Fuel prices in recent months have been particularly volatile. spreading risk • Utilised opportunities to develop strategic partnerships OPPORTUNITIES • Investments in exploration will ensure activity over coming decades • New oil and gas reserves are still being found. wind power and energy helps the organisation diversify in a market. • Wider portfolio of products.

Commitment to technology and innovation is the core of Shell’s strategy. The company believes technologies and technical expertise will be telling factors in the growth of the business.SHELL Best Practices – Various Functions • Technology. • Sustainable Development .Contribution to sustainable development helps create business value and reduce operational and financial risk .

SHELL Best Practices – Various Functions • IT . .Shell's approach to IT is rooted in its primary business strategy .the need to increase upstream activities and make all of downstream business profitable.The corporation therefore invests solid funds into the improvement of professional capacity of it enormous staff and attempts to implement flexible working practices as far as possible. IT investments are prioritized based on how critical the investment is to meeting these two strategic objectives • HR . and makes considerable investments to ensure the company’s profitability. • The company pays competitive dividends.

That's after discovering 3. The company has delayed its annual report.evaporated in January.9 billion barrels had . due on Friday. at least . Competition • Compared to its big competitors. The firm isn't finding new oil and gas anything like as fast as the other two. In 2003 it was 98% at Shell.Problems faced by Shell Reserves under scrutiny • Shell overstated oil reserves by 250 million barrels in Norway. and with the recent departure of Chairman Sir Philip Watts. until later in the year in less than four months. • The so-called reserves replacement ratio shows how much new oil and gas a firm is discovering compared with the amount it is pumping out.metaphorically. Shell is now looking distinctly third rate. . Investors' trust in the company is at a low ebb. this mistake means Shell will have to work even harder to rebuild its image. BP and ExxonMobil. BP's was 175%.

• US Government’s moratorium on deep water drilling. and day-to-day decision-making is snarled up in endless committees. • But BP. • Shell defends its position.something that can pose a problem during acquisitions. and issue their own debt . The two constituent firms are separately listed. based in the Hague. For shareholders. with control split 60:40 between Royal Dutch. for one. most other functions are split between the Netherlands and UK. the structure pushes their interests to the back of a long queue. has been able to successfully to reconcile long-term thinking with the short-term demands of the market. a major problem for Shell . • Financing too is tricky. and London-based Shell Transport & Trading.Problems faced by Shell Structural Problems • The key issue here is Shell's peculiar corporate structure. • Although there is a unified management board. arguing that the strategic time-horizon in the oil business can be 50 years and more.

Saro-Wiwa. hastily tried by a special military tribunal. it settled out of court for US $15 million to bring the case to an end. and in June 2009.The Nigerian Controversy • • • • • Nigeria suffered extreme and unremediated environmental damage from decades of indiscriminate oil waste dumping. . President. This was seen as if Shell had something to hide. Shell was brought on trial in New York with the accusation of having collaborated with the military executions. Saro-Wiwa and other members were arrested. of the Movement for the Survival of the Ogoni People (MOSOP). and hanged in 1995 by the Nigerian military government of General Sani Abacha. At the peak of his non-violent campaign. especially Shell. all on charges widely viewed as entirely politically motivated and completely unfounded Their executions provoked international outrage and resulted in Nigeria's suspension from the Commonwealth of Nations. led a nonviolent campaign against environmental degradation of the land and natural waters of Ogoniland by the operations of multinational oil companies.

build and operate a new rapid-response system for containing a massive deepwater oil spill. • BP's environmental disaster and inability to make good on its brand promise of 'Beyond Petroleum' led to its falling off the Interbrand’s Top 100 brands list and helped competitor Shell emerge as an industry leader. . As a result of BP's fall from grace. Shell is now ranked 81—up from 92 last year—in this year's standings. In July 2010.BP Oil Spill: Opportunities for Shell • The incident has galvanized BP's rivals—including Exxon Mobil Corp and Royal Dutch Shell PLC—into action. they announced the formation of a $1 billion joint venture to design.

BP & SHELL Acquisitions & Tests of Horizontal Scope .

– Create future opportunities for leveraging cellulosic ethanol technologies. from the initial research and development to distribution and blending. • It bolsters BP’s position as a leader in the biofuels market with an integrated end-to-end capability.BP: Acquisition • BP and Verenium Corporation formed of a 50-50 joint venture to develop and commercialize cellulosic ethanol from nonfood feedstocks. . • Strategic Rationale: – Increased investment in clean energy to improve their image in the market and to undermine potential competition to their oil and gas business.

– It is a critical next step in positioning Verenium and BP at the forefront of commercializing cellulosic biofuels in the United States. • Best Alternative Test – The joint venture company will be led and supported by a team comprised of employees from both BP and Verenium and will be governed by a board with equal representation from both parent companies – The joint venture company will initially be based in Cambridge. . Massachusetts.) • Better-off Test – The joint venture company will act as the commercial entity for the deployment of cellulosic ethanol technology being developed and proven under the first phase of the BP-Verenium partnership.BP: Acquisition (contd.

engineering capability and market expertise required to demonstrate that they can deliver better.) • Best Parent Test – The creation of this joint venture brings together innovative and experienced developers. which will allow them to deliver cleaner. more sustainable fuels. – BP and Verenium together have the technological know-how.BP: Acquisition (contd. . engineers. more sustainable biofuels. – This is a true convergence of industrial biotechnology and energy production processes. operators and managers capable of realizing the potential of this technology. designers.

together with the coal seam gas resources and expertise built up by Arrow’s staff. • Strategic rationale: – This acquisition is underpinned by rising global demand for gas as a clean source of energy. a 50/50 joint venture company owned by Shell Energy Holdings Australia Limited and a subsidiary of PetroChina Company Limited bought 100% shares of Arrow Energy Ltd. – Shell’s LNG expertise and PetroChina’s access to the Chinese energy market.SHELL: Acquisition • CS CSG (Australia) Pty Ltd. . will further consolidate Australia’s position as a global leader in energy and resources supply.

• Good Parent Test – Shell’s has LNG expertise and PetroChina can provide access to the Chinese energy market . with a board of directors composed of experienced Shell and PetroChina executives. Australia.SHELL: Acquisition (Contd. • Best Alternative Test – Arrow will remain based in Brisbane.) • Best Parent Test: – It is a joint acquisition with PetroChina company limited to broaden the geographic scope of the entity. The new chief executive officer of Arrow is Andrew Faulkner. Mr Faulkner has worked for Shell for 28 years and has extensive LNG experience.

• BP’s strategic focus on alternative energy has the potential for success as it is the fastest growing sector for energy suppliers at the moment. • BP will be sponsoring the 2012 Olympics. but has clearly struggled to compete recently. affording it the opportunity to reverse some of its less favourable PR.The Future…for BP • BP appears positive regarding its future strategic intentions. but still retain coverage: franchising could threaten the company’s span of control. raising questions about its future performance • The organisation plans to franchise and exit from some of its operations over the next few years. .

Shell's other North American plans include pushing forward on some 12.000 possible drilling sites for natural gas shale where the company believes most prospects remain profitable at a market price of $3 per million cubic feet. . but with plans to capture and store more than 1 million tons of CO2 created during extraction underground.000 barrels per day with another 100. and the potential of algae for tackling climate change operating in emerging markets and vulnerable communities. but Royal Dutch Shell sees plenty of hot prospects there in its future.Future SHELL • • • • • Shell’s “energy scenarios” see fossil fuels remaining a huge part of the energy mix to 2050 ClimateChangeCorp.000 barrels.com and Ethical Corporation about Shell's reporting. In addition to the Gulf of Mexico. carbon capture and storage. A five-month drilling ban may have chilled some on the Gulf of Mexico. investments in renewables and Canada's oil sands. Shell announced plans to expand Canadian tar sands production from the current 170.

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