Business Insight Zone

Today’s Company of the Day is Royal Dutch Shell.

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So far, 2007 has been a mixed year for the world’s top oil companies. Overall they continue to make piles of money, yet BP and Exxon Mobil each reported declines in earnings for the past quarter. Meanwhile, Royal Dutch Shell’s profits rose nearly 20%, even in the face of continued civil strife around its oil holdings in Nigeria. The improved earnings are a happy turn of events for Shell, which has suffered some real setbacks in recent years. One of the worst came in 2006, when Shell lost control of a $20 billion oil and gas project on the Russian island of Sakhalin — a project that the Kremlin basically took from Shell and handed to Gazprom. Worse, this externally imposed setback came in the wake of an internally driven scandal in which some Shell executives systematically misreported the company’s oil reserves.

With these events now safely in the past, it will be interesting to see what Shell does going forward. Like its peer BP (and unlike Exxon Mobil), Shell has invested heavily in alternative energy. But perhaps more so than any of its rivals, Shell has staked its future success on improved use of technology, which helps to explain why Nokia’s well-regarded former CEO Jorma Ollila is now Shell’s chairman. While the move may not be as historic as bringing in Boeing veteran Alan Mulally to run Ford (or GE and Home Depot veteran Bob Nardelli to run Chrysler), the oil industry is like the auto industry in its tendency to be insular. But since Ollila has such a hand in shaping the company’s strategy, it seems clear that Shell wants to be a technology-driven energy company rather than “merely” one of the world’s largest oil producers.

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Category: Company of the Day, Energy