1901 - '10
In this era, preparations were soon underway for the coming oil age as the inventions of the petroleum internal-combustion engine, car and aeroplane coincided with new technological developments, oilfields were discovered in quick succession around the world, and major oil companies were established in each country.
In 1900, Samuel and Company, which had started in Japan as an international trading business in Yokohama, created an independent petroleum division. It subsequently set up Rising Sun Petroleum Co. Ltd (which later became Shell Petroleum) to expand its distribution channels of candles and kerosene for lamps.
Before long, Samuel and Company, which expanded as Shell Transport, merged with Royal Dutch to form Royal Dutch/Shell. Rising Sun Petroleum continued to expand its operations as the base of the Shell Group in Japan. At the same time, oilfields were discovered in Japan along the coast of the Japan Sea primarily in Niigata Prefecture. Hayama Sekiyu and Niitsu Sekiyu, the predecessors of Showa Sekiyu, were established amidst the production of domestic petroleum.
1911 - '20
With developments such as the internal-combustion engine and the marine boiler, the supply of energy from kerosene and industrial fuels established petroleum as a crucial energy and basic production resource. The experiences of the First World War demonstrated petroleum to be an important military material exerting influence on the survival of nations.
The First World War was also a major turning point for the world petroleum industry. In Japan, the Navy continued to increase its presence as the largest consumer in the heavy oil market.
With the demand from the military, domestic petroleum corporations were repeatedly restructured to expand their corporate scale, and productivity continued to increase as a result of advanced technologies introduced through collaboration with foreign companies.
The proliferation of automobiles in Japan came later than in the west. In 1918, the total number of passenger vehicles and trucks passed the 4,500 mark, and the demand for gasoline gradually increased. Rising Sun marketed its gasoline under the "Red Shell Symbol" and "Black Shell Symbol" brands.
1921 - 1940
1921 - '30
Supported by a vast industrial output and rich oil reserves, the United States had successfully popularized the automobile in the early 1920s through mass-production, and an age was fast approaching where every household had a car.
In Japan, an expanded fuel oil supply from refining imported crude oil and home-grown technology of the large-scale internal-combustion engine were established. Yet, the need to look to other countries for a supply of crude oil was a persistent Achilles heel.
Asahi Oil, later to become Showa Sekiyu via a merger, borrowed Rising Sun Petroleum's Saitozaki refinery and started to import and refine crude oil. Rising Sun Petroleum reconstructed new premises in Yokohama after the Great Kanto Earthquake, and enhanced its personnel line-up. The company also improved its supply capabilities by establishing gasoline stations across the country and importing tanker lorries from the United Kingdom.
The Great Depression triggered by the collapse of Wall Street on Black Thursday in 1929, and the political instability in Germany, which was struggling with astronomical post-war reparations and inflation, cast an ominous shadow across the world.
1931 - '40
Japan, which had seceded from the League of Nations, concentrated most of its resources on the development and production of modern arms such as aircraft. This era also saw the founding of automobile companies such as Toyota, Nissan, and Isuzu, which would lead the post-war motorization of Japan.
Focusing on the state-run Yawata Steel Works, the government merged the steel manufacturing conglomerates and launched Japan Iron & Steel Co. Ltd. It also promulgated the Petroleum Industry Act, made oil storage obligatory for business operators, and stepped up the management of petroleum products.
In 1937, there was a shift to a wartime economic system with the promulgation of three wartime control acts, and the strengthening of control over crucial industries progressed. Likewise, laws governing every day life such as the National Mobilization Law, the Blackout Order, and the Newspaper Regulation Order were promulgated together with the Crucial Industries Control Order, a system of rationing rice, oil, and coal was imposed, and eventually the White Rice Prohibition Order was implemented.
During this time, fascism was gaining momentum in Europe. In Germany, the Hitler dictatorship emerged and started to invade its neighbouring countries. 1939 saw the outbreak of the Second World War.
1941 - 1960
1941 - '50
As the Sino-Japanese War escalated, the United States placed a total embargo on petroleum products. Subsequently, the United States, the United Kingdom, and the Netherlands froze Japanese assets, and Japan became increasingly isolated internationally. The Japanese government continued to nationalise key industries such as the petroleum industry, and strictly governed the consumption of private sector oil products under the motto "one drop of oil, one drop of blood".
While Japan was advancing its preparations for emergency times, the Pacific War broke out in December 1941. With the outbreak of war, the assets of Rising Sun Petroleum were placed under the control of the government as enemy assets, and the company was shut down.
Under the wartime system, the three domestic oil companies Hayama, Niitsu and Asahi were merged to create Showa Sekiyu. During the war, intensive air-raids by the Allied military caused explosions and evacuations of oil refineries and oil depots, which devastated two-thirds of Japan's crude oil processing capability. Thereafter, Japan lost the war in 1945 with an unconditional surrender. Abolition of the wartime system progressed under the strict rule of General Douglas MacArthur.
In 1947, Rising Sun Petroleum was renamed Shell Sekiyu and resumed business. Starting with a capital agreement between Showa Sekiyu and the Shell Group, domestic oil companies deepened the collaboration with foreign oil companies, and before long were preparing to be a key industry to support the energy needs of the impending recovery period.
1951 - '60
The Treaty of San Francisco was signed and enacted, and subsequently accession to the International Monetary Fund (IMF) was approved. Japan was finally starting to become a member of the international society.
Towards the end of the occupation, the Allied Powers sequentially abolished oil restrictions, and private corporations started to import crude oil and petroleum products after independence. The commercial production of Middle Eastern crude oil was developing, while in Europe refining expanded in the main consumer regions.
From the late 40s, the landscape was steadily paved for the coming oil era with collaboration with foreign oil companies continuing actively, as the regeneration, reconstruction and construction of oil refineries progressed. Against the background of this era, Shell Group and Showa Sekiyu progressed multiple capital tie-up agreements and decided on a 50% capital subscription, thereby constructing a strong collaborative relationship.
In addition to reopening the war-damaged oil refineries in Kawasaki and Niigata, capabilities continued to be strengthened through the introduction of the latest technologies. Similarly, with receipt of the former Navy's vacant fuel depot in Yokkaichi, construction of the Showa Yokkaichi Sekiyu's Yokkaichi Refinery began, which, after completion in 1958, flourished as a major refining hub for the Shell Group in Japan and Showa Sekiyu.
1961 - 1980
1961 - '70
The energy revolution progressed, and coal, which had long been the primary fuel supporting the recovery of the Japanese economy, was replaced by the more efficient oil. Japan entered a period of high growth in the 1960s, with statistical data showing growth in Gross National Product (GNP) of 500%, industrial output of 300% and fuel demand of 250% compared to the early years of the decade. In 1968, Japan's GNP reached 142.8 billion dollars and achieved second position after the United States.
With increases in income, the proportion of people with aspirations for the 3 Cs (namely colour television, air-conditioning and cars) increased.
Triggered by the sales of private and public vehicles, motorization progressed rapidly from the late 1950s, coinciding with road network improvements such as Japan's first full-scale expressway (the Meishin/Tomei expressway). Filling stations conventionally known as "gasoline stands" were also redefined to become hospitable "service stations" focused on serving car-owners.
In the domestic sphere, a comfortable and safe supply of hot water and heating became widespread due to the spread of petroleum products such as refined kerosene and propane gas (LPG) along with electrical appliances.
On the supply side, the company's sales division was organised according to market segments and sales activities expanded in areas such as the automotive, industrial, and home segments.
1971 - '80
Upon entering the 1970s, in response to inflationary incentive packages to break the United States out of economic stagnancy, countries planned inflationary economic priming measures to augment their treasuries and finances. This resulted in significant income erosion for oil-producing nations as inflation caused a steep rise in imported products and a weakening dollar lowered the export price of oil.
Under these circumstances, the Fourth Arab-Israeli war triggered the Organization of Petroleum Exporting Countries to reduce crude oil production and to impose an embargo in October 1973. As a result, the price of crude oil rocketed from 3 dollars to 15 dollars a barrel within the space of two months.
Six years after the first oil crisis in February 1979, the Iranian Revolution brought about the second oil crisis. Upon entering the 1980s, the price of crude oil rocketed to above 40 dollars a barrel. Japan had achieved high growth by depending on the Middle East for 80% of its crude oil imports.
70% of the imports were via international oil companies, so the reduced production was immediately accompanied by reduced supply. Japan was thereby pressed to make a policy switch from a cheap and abundant oil supply. There was a recognised need for energy efficiency, development of alternative energy, and crude oil stockpiling for emergencies, which prompted Shell to form an internal "Stockpiling Committee".
From the end of the 1960s, Shell prepared for a joint project with Mitsubishi Corporation to liquefy and import Brunei's natural gas. The project commenced in the early 70s, and supplied natural gas to electricity and gas companies in Tokyo and Osaka. This led to Japan gradually converting its town gas to natural gas.
1981 - 1995
1981 - '90
After the two oil crises, the oil industry went through major transformations including the securing of oil reserves, peaking of oil demand, and the relaxation of regulations and developments in alternative energy. Calls started to be made for the corporate restructuring of distributing companies.
Shell Sekiyu and Showa Sekiyu, which had played crucial roles since the dawn of Japan's oil industry, merged in January 1985 to form Showa Shell Sekiyu, so as to build a more robust corporate foundation. A year later, Daikyo Sekiyu and Maruzen Sekiyu merged to form Cosmo Sekiyu.
Throughout the 1990s, business alliances and consolidation on the manufacturing and distribution fronts continued between oil companies. In 1986, the Act on Interim Measures concerning the Importation of Designated Petroleum Products was implemented. There were clear moves towards the liberalisation of petroleum products import. This led to closure of surplus facilities and promotion of a shift in demand towards lighter oil products. The deteriorating business performance at gasoline stations facilitated an expansion of business scope, and we took up the challenge of business diversification.
Throughout the late 80s, the oil industry faced the new challenge of responding to deregulation, such as the abolition of gasoline production quotas.
1991 - '95
With the conclusion of the Cold War at the end of the 80s, the Berlin Wall collapsed, Germany was united, and the Soviet Union was subsequently dismantled. The establishment of the European Union to unite Europe brought about the objective of creating a single currency and market by 1999. In Japan, rapid financial tightening and a policy to curb overall demand led to share prices falling below 15,000 yen. The price of land continued to fall, and the bubble collapsed as financial institutions were left with massive non-performing loans.
Japan entered ten years of stagnancy known as the "Lost Decade". The collapse of the bubble was also accompanied by a major turning point in the political sphere with an alliance with the opposition.
In 1995, the Great Hanshin Earthquake struck, and the oil industry strived to maintain oil supply despite heavy damage. While Shell Japan's Tsukuba Research Institute suffered interruption of essential utilities such as power and town gas, that the function of service stations as independent energy hubs was reaffirmed. It was also during this period that effective energy usage was linked with environmental policy and reaffirmed as a business.
On the other hand, the oil industry continued to experience fierce competition, and set about improving corporate efficiency in response to long term deteriorating profits. Changes were implemented on all fronts including refining capability, distribution and human resources, and business collaboration progressed to a new level.