Essay Sample on Shell Company: Advantages and Limitations Experienced

Paper Type:  Essay
Pages:  7
Wordcount:  1723 Words
Date:  2022-10-23


Shell is an Oil and Gas company whose headquarters are at The Hague, Netherlands. It began its operations in 1937 initially known as Shell d- Arcy. In its case to grow globally, the management first discovered an Oilfield in 1956 at Oloibirri Bayetsa state, and many more areas have been found in the present days. The first shipment oil to Nigeria occurred in 1958, and the company made its residence at the Niger Delta in Nigeria. In the present day, the company produces over 1milion Barons of Oil per day under its able managing Director Osagie Okunbor who has been in office since 1st March 2015. The company is the largest source of Crude Oil in Nigeria which makes the Country a world class Oil supplier. Nigeria is taken to be the fifth biggest supplier of crude Oil to America and Western Europe. The company does not work independently but has established a joint venture with Nigeria National Petroleum Cooperation, Total Limited, and Nigeria Ajip Oil Company Limited. The company has not only grown to achieve its set goals but also has improved the living standards of the locals majorly in Niger Delta and the host country as a whole. We may focus during the research was on how Shell has grown in Nigeria and how it has dealt with the challenges along the way (Armiero, M., & Sedrez, L. 2014).

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The Royal Dutch Shell pioneered Nigerians Oil and Gas industry and remain a significant investor in the West African Counties in Oil operations. But over a year it has come under challenges like over spills, Oil theft, and Corruption and Oil fueled violence. In 1979 the Shell Petroleum Development Company of Nigeria (SPDC) was established, and over time, the Nigeria National Petroleum Corporation come to own 55%, Shell 30%, France Total holds 10% and Italy's Eni 5%, while Shell remains the primary operator. During the movement for the survival of the Ogoni people in 1990 lead by the environmental right activist Ken Sarowiwa, the Ogoni and Delta people living in the Oilfields started agitating for their fair share of Oil wealth and environmental damage compensation (Brennan, L. C. 2014). The MOSOP organized a massive protest in 1993 that led to Nigeria Military occupying the region, and by 1995 the Shell Nigeria Company signed a production sharing contract to develop foreign Oil and Gas interests.

Overtime Shell focuses shifts to offshore operations where it enjoys fewer threats of attack by Militants. In April 2011 -Shell and Italy's Eni acquired Oil Production License (OPL) 245, a large offshore field for $ 1.1 billion from local Company Malabu. By March 2012, Bodo, Ogoni groups and other Nigerian citizens launch a suit against the Shell at the London High Court seeking compensation for 2008 Oil spill, and by January 2015, Shell accepted liability for the Bodo spills agrees to pay 55 million pounds to Bodo villagers and to clean the lands and waterways. Up to date, many cases are still in Milan court against Shell and Italy's Eni companies over the 2011 Oil Production License (OPL) 245 acquisition over bribe to secure the license (Cui, R. 2015).

Participatory management in Shell company is seen its consultative measures with other companies. The company offers 94% of its contractors top local Nigerian countries as part of involvement in the company. The Managing Director of the shell is a Nigerian citizen by the name Osagie Okunbor who is also a top official of all shell companies in Nigeria. Another senior official of Nigerian origin is Ms. Thelma Ekiyor a co-founder and Chief Executive officer of Afrigants. The company has also worked in collaboration with other labor organizations like financial institution through the signing of a Memorandum of Understand in which they contribute to the supply of oil through vendors in the country. During the oil spillage response and cleanups, they lie with the national government to inspect the area and improve the security of the city. The company also receives supportive security measures to curb theft or sabotage (Igbinovia, E. 2014).

Therefore provides security for the company's assets because the company contributes mainly to the county's economy. Some of the institutions involved are the Access Bank Plc, Standard Chartered Bank, Zenith Bank Plc among others. In 2017, the firm established a joint venture with the national government in which the federal government through The Nigerian National Petroleum Corporation received the lion's share of the merge by taking 55% of it.

Shell oil company has dramatically participated in the development of people in Niger Delta as well as the country as a whole. The company has developed the Pipeline transport systems in which it covers more than six thousand kilometers. It has recorded 87 flow stations, eight gas plants, and more than 1000 oil-producing wells. On average it employees mere than four thousand five hundred people directly and 95% of its staff are Nigerians.66% of the Nigeria staff are from Niger Delta. It also networks with other companies that provide suppliers and services thus creating employment for twenty thousand people Indirectly. The Company works with other oil and gas producing companies in Nigeria to contribute an amount of money to the Niger Delta development commission on an annual basis. Other than that the company contribute significantly to the revenues of the country by 70% and also takes a 90% share of the export proceeds. It aids in the production of power used in the manufacture of household goods that are used by the locals. Shell contributed $2.3 billion between 2013 and 2017 to the Nigerian economy and had accumulated priorities and corporate taxes of $ 1.1billion to the Federal Government of Nigeria. In the supply chain department of the country, the company signed a memorandum of understanding (MOU) in 2016 with the Seven Nigerian banks to support local Oil vendors and suppliers (In Steven et al. 2015).

The seven banks were; Access Bank Plc, Skye Bank Plc, Zenith Bank Plc, Stanbic IBTC Bank, First of Nigerian Bank LTD, Standard Chartered Bank, and Guarantee Trust Bank Plc. The banks have allocated a total of $ 2.2 billion to develop projects in Nigerian companies. Shell has also awarded 94% of their contracts to Nigerian companies'.Generally, this has contributed greatly to improving the living standards of the Nigerian citizens and the Gross Domestic Products of the country by 10%. The company has also been involved in youth empowerment programs such as Shell's flagship youth empowerment program that aimed at providing alternative sources of income to the youths that were allegedly involved in oil theft. It also improved the healthcare and education system of the company (International, B. P. U. 2015).

Terrorism has been an issue of concern to the Nigerian government especially since the coming up of Boko Haram. Shell has on various occasions been associated with claims of links to these terrorist groups even though oil companies in Nigeria have proved to be venerable to terror attacks. By keeping a low profile, the company has tried to disengage itself from such claims and maintain an impressive public image. Some of the strategies the company has adopted include; Sensitizing their employees on risk management procedures supposed they are faced with such, Training employees and creating awareness campaigns which provides for travel advice and medical assistance before travel and finally verification of the employees ' identities and there access to sites and company activities like contracts. Other risks arise from oil spillage and theft, and they have been dealt with through numerous measures. Firstly, prevention of spills has been done through implementing their ongoing work programs to appraise, maintain, and replace key areas of pipelines and flow lines. The replacement that was effected in 2017 targeted 40 kilometers of pipelines and 188 kilometers of flow lines achieving 1230 kilometers. There has been the installation of surveillance cameras in a special helicopter to watch over the company's assets and operations (Mikler, J. 2013).

On ground surveillance of areas of operations has been implemented through pipeline networks which have prevented third-party interference of theft, sabotage and detecting spills. Daily over flies of the pipeline network areas is done to detect any new spills. The Company has worked in collaboration with the local government to harness the citizens on the effect of illegal oil refining and crude oil theft, For instance, the company has provided an alternative livelihood through Shell's Flagship youth Entrepreneurship Program, and Shell lives WIRES. The Company responded to spills by sending its staff and government representative to the area of spillage to obtain records to clean up and replace the spilled amounts (Olorunfemi et al. 2014).


Conclusively, Shell Company has a mission to be the operator of first choice oil in Nigeria through its commitment for strong economic performance to every aspect of sustainable developments. Its recommended for the company to create a committee to oversee gas spills and learn from them as there exists an oil spill surveillance team. The company should also progressively include more locals in its operations. Other than that they should also stay away from any illegal activities that would create political instability since the company has been accused of supporting the rebels in the past such as the Boko Haram. They should also develop more comprehensive measures to deal with risk management that results from piracy around the Niger Delta. The above recommendations will see to it that the company also prevents the possibility of gas spillage rather than focusing on oil alone. Involvement of more locals shall boost the image of the company globally based on the thesis that they give back to the community of their host countries. If the company disengages itself from any form of law breakage, it maintains political stability of the host country and will improve its sales through uninterrupted operations.


Armiero, M., & Sedrez, L. (2014). A history of environmentalism: Local struggles, global histories.

Brennan, L. C. (2014). The Gulf oil spill

Cui, R. (2015). Oil multinationals in Nigeria: Human rights, sustainable development, and the law

Hunt, J. T. (2006). The politics of bones. Toronto: McClelland & Stewart.

Igbinovia, E. (2014). Oil Thefts and Pipeline Vandalization in Nigeria

Ikelegbe, A. (2013). Oil, environment and resource conflicts in Nigeria. Zurich: Lit Verlag

In Steven, D., In Jones, B. D., & In O'Brien, E. (2015). The new politics of strategic resources: Energy and food security challenges in the 21st century.

International, B. P. U. (2015). Nigeria investment and business guide: Strategic and practical information. Place of publication not identified: Intl Business Pubns the USA

Mikler, J. (2013). The handbook of global companies

Olorunfemi, M., Olaiya, A., & Adetunji, A. (2014). Nigerian Oil and Gas: A Mixed Blessing?. Cork: BookBaby

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