Imane El Hajj Niangadou

Soufiane Mjahed
Ramya Nimali
Miguel Maestas
Farah Gaha
Assignment No 02

The Geopolitical Environment

Analyze how the socio-cultural and demographic factors have played a role in the geopolitical

environment of the firm.

Socio-cultural tendencies greatly affect the way oil companies operate. Currently, as

many societies around the world look down on the use of oil and gas because of how it affects

the environment. This impact on Shell was most apparent by the legal action brought against

them by a number of organizations and individuals which has declared that they must reduce

their CO2 emissions. One of Shell’s responses to the rise in concern for the environment is to

focus on how they can manage to produce cleaner energy for the sake of the environment.

Also, Shell has reacted to certain non environmental factors in the geopolitical

environment. For example, a very wealthy country generated by commodities, such as oil, is

most likely to deal with a corrupted political system that is socioculturally entwined with certain

areas such as Latin America, while lower oil revenues create a healthier environment for

democratic political growth. The purpose of mentioning this information is to show the strength

of Shell plc, and the relative immunity it enjoys towards most variables. The economic

development of Shell is additionally related to the geopolitical success of the United States of

America in the world, especially in the Arabian Gulf region, and the best evidence of this is the

partnership between Shell and Saudi Aramco, with a 50/50 ratio. Among the precautionary
policies adopted by the oil companies, led by Shell, is to invest in gas, as it is still the preferred

environment and the demand for it is likely to continue in the long term compared to oil so it

took the trend of increasing the share of gas in its operations.

Demographic factors have had one of the bigger impacts on the behavior of Shell in the

geopolitical environment and reacts to each region individually. One of the main demographic

factors is the overall rise of the global population which leads to a high rate of consumption,

which is what is called in the field of energy: peak oil demand. This has been the biggest concern

not just for Shell but for all countries and companies producing oil and gas and it leads to the

adoption of new policies that adapt to any socio-cultural or demographic scenario, whether the

sector is declining or not. There is also the impact of cultural heritage. Shell looks into culturally

and environmentally sensitive sites to keep their actions in accordance with international

standards. They have additionally been training their staff on how to act in case an unknown

cultural site is revealed during the project. Shell has made it a tenant of theirs as well to be

mindful of their land acquisition and respectful of indigenous peoples. Shell uses international

guidelines in their expansion, the largest of which has been in Africa.

Africa is a significant and growing market for European goods and services and a source

of essential ores and minerals and this has made it a target for Shell operation expansion. Africa

has the fastest-growing population of any continent in the world, even though its birth and

mortality rates are the highest. The investment gap to meet the Sustainable Development Goals

(SDGs) of the 2030 Agenda is estimated at US$2.5 trillion annually over 2015-2030. However,

most of the working population still engages in subsistence farming and cash crop production.

challenges can limit Africa's development prospects. This has a limit on potential expansion into

a more industrial and heavily oil and gas power using society.
Sources

(https://www.britannica.com/place/Africa/Fruits-and-vegetables)

(https://www.policycenter.ma/sites/default/files/PP_19-14%20%28Ishmael%29%281%29.pdf)

https://www.shell.com/sustainability

Shell Annual Report 2019

Low Oil Prices Part 2: Geopolitical and Socio-political Impacts, (2016), Dun&Bradstreet.