Royal Dutch Shell (RDS'A)

For the past thirteen years Shell has tried to shake off allegations that work by the company led to the executions of nine Ogoni activists. The suit alleged that Shell encouraged Nigeria's military regime to crack down on Ogoni activists that were threatening oil production in the Nigeria Delta. This eventually led to the torture and execution of nine activists.^[1]

In April the company was told that the suit would finally go to trial. Though not admitting any wrong doing, rather than going to court Shell agreed to pay $15.5 million to have the suit dropped This will be used to compensate families of civilians maimed or hanged by the regime and to create a development trust for the Ogoni people from the Niger Delta.^[1]

Though $15.5 million is not much money to Shell the negative publicity could be especially harmful. As an example, after the Exxon Valdez disaster there was such negative publicity that Exxon shipping was renamed the Sea River Shipping Company to dissociate from the disaster.^[2] This isn't as large as the Exxon disaster, but ties to a military regime and decision to settle out of court rather than to clear the company name could lead to further protests and movements against the organization.

As showcased by other major oil companies, the industry is suffering from significantly lower margins in refining and E&P because of lower oil prices in the short- tot medium term.

Unlike its competitors, Shell has not been able to replace its depleting oil and gas reserves; hence, sustaining long-term growth in such a scenario will be a challenge for the company.

Shell is facing intense competition from large national oil companies supported by their home governments, making it difficult for the company to access the oil and gas reserves.

International operations in politically unstable countries such as Nigeria have resulted in a major decline in the company’s daily oil and gas output.