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Shell

Adapted from www.shell.comFrom humble beginnings as a family shop selling sea shells to one of the worlds leading energy companies Shell has a rich history. In 1833 shopkeeper Marcus Samuel decided to expand his London business. He already sold antiques but decided to try selling oriental shells aiming to capitalise on the fashion for using them in interior design. Such was the demand that Samuel quickly began importing shells from the Far East laying the foundations for an import-export business that would eventually become one of the worlds leading energy companies.The market for oil remained confined to lighting and lubricants until in 1886 the internal combustion engine and demand for petrol (gasoline) arrived with Karl Benz and the first Mercedes. By now the Samuel business had passed to Marcus Samuel junior and his brother Sam. They exported British machinery textiles and tools to newly industrialising Japan and the Far East and on return imported rice silk china and copperware to the Middle East and Europe. In London they traded in commodities such as sugar flour and wheat worldwide.It was during a trip to Japan that Marcus became interested in the oil exporting business based in Baku Azerbaijan which was then part of Russia. The Rothschilds had invested heavily in the 1880s in rail and tunnels to overcome the transport difficulties of getting oil from this landlocked base to the Black Sea and from there to overseas markets. Shipping still posed a problem as the oil was carried in barrels which could leak and took up a lot of space in the hold.Marcus and Sam commissioned a fleet of steamers to carry oil in bulk including the Murex which in 1892 became the first oil tanker to pass through the Suez Canal. They also set up bulk oil storage at ports in the Far East and contracted with Bnito a Russian group of producers controlled by the Rothschilds for the long-term supply of kerosene.Their strategy was high-risk if news of their operations got out they would be squeezed out by Rockefellers dominant Standard Oil. With the maiden voyage of the Murex Samuels had achieved a revolution in the transport of oil. Bulk transport substantially cut the cost of oil by enormously increasing the volume that could be carried. The Samuel brothers initially called their company The Tank Syndicate. In 1897 renamed it the Shell Transport and Trading Company.Petroleum was also being produced in the East Indies a Dutch colony and in 1890 a company had been formed to develop an oil field in Sumatra. This was to become the Royal Dutch Petroleum Company.Under the management of J.B. August Kessler the company built a pipeline and refinery at Pangkalan Brandan. Kessler was joined in 1896 by a dynamic young marketing director Henri Deterding who would become a dominant figure in the company until the outbreak of the Second World War. Faced with competition from the Samuels low bulk transport costs Royal Dutch began to construct tankers and bulk storage installations and set up its own sales organisation.By the turn of the century Marcus Samuel had become the model of an Edwardian plutocrat with a grand house in London and a country mansion which had been bought along with furniture pictures and parkland from Lord Romney. He kept horses and a carriage and was active in public life in the City of London. He was knighted in 1898 became Lord Mayor of London in 1902 and was a leading figure in the business community. But Marcus Samuels dependence on Russian producers left him vulnerable and he decided to seek other sources of oil.The Far East was the obvious place to look and his first venture into Borneo brought him up against Royal Dutch Petroleum one of the regions biggest competitors. The two companies decided to join forces to protect themselves against the might of Standard Oil forming a sales organisation in 1903 the Asiatic Petroleum Company.In 1904 the scallop shell or pecten replaced Shell Transports first marketing logo a mussel shell. In various forms it has remained in use ever since becoming one of the best known brand symbols in the world.The full merger of the two companies into the Royal Dutch Shell Group came in 1907. There were two separate holding companies with Royal Dutch taking 60% of earnings and Shell Transport and Trading taking 40%. The merger transformed the fortunes of both companies. Under the management of Henri Deterding they turned from struggling entities to successful enterprises.The RDS Group rapidly expanded across the world. It formed marketing companies throughout Europe and in many parts of Asia. Exploration and production began in Russia Romania Venezuela Mexico and the USA.The first 12 years also provided many exciting opportunities to demonstrate the quality of the products in the new fast-developing market for petrol (gasoline). These included record-breaking races flights and journeys of exploration. In 1907 Prince Borghese won the Peking to Paris motor rally using Shell spirit motor fuel. The same fuel was used at the Brooklands racing track in the UK. In the Antarctic explorers Ernest Shackleton and Captain Scott used Shell fuel while Bleriots inaugural cross-Channel flight was made using Shell Spirit.World War 1 inevitably brought mixed fortunes. Shell made a major contribution to the Allies war effort by becoming the main supplier of fuel to the British Expeditionary Force. It also offered all of its ships to the British Admiralty. It therefore managed to enhance its reputation while also managing to improve its profits in parts of the world unaffected by the conflict such as Venezuela Mexico and Sarawak.The post-war period began positively when Alcock and Brown used Shell fuel to make the first transatlantic flight in 1919. The inter-war years were a time of rapid expansion for oil companies as the use of motor cars and demand for gasoline increased. There were also huge gains as major oil fields were discovered in California South America and the Middle East.Drilling techniques improved with the use of mud to regulate pressure in oil wells. The refining and downstream businesses also grew rapidly and in 1929 Shell Chemicals was founded to advance the refinement of chemicals from oil.By the end of the 1920s Shell was the worlds leading oil company producing 11% of the globes crude oil supply and owning 10% of its tanker tonnage. Its fuel quality was high it was diversifying its product base and it had an assured and prolific supply of oil from the Middle East. But the price of oil proved to be volatile and efforts to control the market by price-cutting or through an informal cartel with other oil majors failedThe 1930s began with the Great Depression forcing Shell to reduce its workforce and impose financial cuts. But the decade saw many advances great progress in fuel and chemicals research and an explosion of brilliant advertising with themes of power purity reliability modernity and getting away from it all. Many designs have become classics as has the slogan created in this period You can be sure of Shell.As a mark of confidence the group also purchased a large riverside plot on the Thames in London to build ShellMex House a landmark building. The ShellMex company handled all marketing of Shells products. Part of the growing maturity of the marketing activities was the development of a global network of service stations where cars could refuel. The service stations with their distinctive appearance helped build Shells reputation for reliability and quality.

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