ROYAL DUTCH SHELL PLC

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1 ROYAL DUTCH SHELL PLC INVESTING FOR SUSTAINABLE GROWTH 2013 SRI FIELD TRIP BEIJING, CHINA DECEMBER 10, 2013 Copyright of Royal Dutch Shell plc December 10,

2 SHELL IN CHINA HUIBERT VIGEVENO EXECUTIVE CHAIRMAN SHELL CHINA Copyright of Royal Dutch Shell plc December 10,

3 DEFINITIONS AND CAUTIONARY NOTE The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation Shell, Shell group and Royal Dutch Shell are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words we, us and our are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. Subsidiaries, Shell subsidiaries and Shell companies as used in this presentation refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to joint ventures and companies over which Shell has significant influence but neither control nor joint control are referred to as associates. In this presentation, joint ventures and associates may also be referred to as equity-accounted investments. The term Shell interest is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all thirdparty interest. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as anticipate, believe, could, estimate, expect, goals, intend, may, objectives, outlook, plan, probably, project, risks, schedule, seek, should, target, will and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell s 20-F for the year ended December 31, 2012 (available at and These risk factors also expressly qualify all forward looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 10 December Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No , available on the SEC website You can also obtain these forms from the SEC by calling SEC Copyright of Royal Dutch Shell plc December 10,

4 SHELL CHINA SAFETY SHELL CHINA SAFETY DATA Per million working hours YTD LTIF TRCF Group TRCF Copyright of Royal Dutch Shell plc December 10,

5 SHELL CHINA OVERVIEW Active since 1894 Increasing footprint in China Strong downstream portfolio Upstream onshore and offshore Strong relationships with Chinese partners 4,000 staff; 20,000 including JVs Upstream exploration Upstream producing Lubricant blending plant Chemical plant Retail concentration Copyright of Royal Dutch Shell plc December 10,

6 STRATEGIC PARTNERSHIPS: CNPC 2011: Canada tight gas/lng 2010: Shell Syria Petroleum Development 2010: Qatar exploration China Upstream; 1999 Changbei 2010 Sichuan 2011: Sirius well manufacturing JV 2012: Downstream manufacturing, Taizhou Changbei Central processing facility 2013: Libra Brazil pre-salt PSC 2013: Browse LNG 2010: Arrow LNG Arrow, Australia Broad + long-term cooperation: China Downstream + LNG sales China exploration International partnerships Copyright of Royal Dutch Shell plc December 10,

7 STRATEGIC PARTNERSHIPS: CNOOC AND SINOPEC 2013: Gulf of Mexico (Nexen) 2013: Libra Brazil pre-salt PSC 2012: Deepwater Gabon exploration 2012: XEX exploration acreage 1997 Retail 2001: Dongting Coal gasification JV 2013: Singapore Lube park 2005: Nanhai Chemicals 2012: Yinggehai offshore PSC 2013: New Zealand exploration Nanhai chemical plant distribution building Sinopec Signing ceremony for the Singapore Lube Park Pte Ltd, a joint venture between Shell, Sinopec and Total CNOOC Copyright of Royal Dutch Shell plc December 10,

8 THE CASE FOR GAS ABUNDANT Abundant global gas resources, growing and geographically diverse Conventional and unconventional recoverable gas resources can supply >250 years 1 of current global gas production AFFORDABLE CCGT cheapest to build Similar total cost to coal and nuclear Wind Offshore (75 km) Wind Offshore (25km) Wind Onshore ACCEPTABLE EMISSIONS COMPARISON Nuclear Coal CCGT USD/MWh CAPITAL COST 2 TOTAL COSTS 2 Replacing coal with gas for electricity generation is the cheapest and fastest way to meet CO2 reduction targets NATURAL GAS: A DESTINATION FUEL CCGT: Combined Cycle Gas Turbine Total Cost = Capital + Fuel + Operating CCS: Carbon capture and storage 1 IEA World Energy Outlook DECC (Mott MacDonald) June 2010 Copyright of Royal Dutch Shell plc December 10,

9 GAS SUPPLY AND DEMAND PRIMARY ENERGY MIX % 2010 data GAS DEMAND GROWTH BY REGION* Million boe/d +23% +189% +29% +89% +86% Gas Oil Nuclear Other renewables North America Europe Asia Pacific Middle East Other Coal Hydro Other solid fuels CHINA GAS DEMAND Bcf/d GAS SUPPLY MIX Bcf/d Imports ~30% Domestic ~70% Residential & Commercial Industrial Transport Power Others LNG Pipeline Domestic Gas *Source: International Energy Agency; World Energy Outlook 2011 Golden Age of Gas DEMAND OUTLOOK REQUIRES BOTH DOMESTIC & IMPORT GAS GROWTH Copyright of Royal Dutch Shell plc December 10,

10 CHINA ENERGY POLICY POLICY DEMAND Energy efficiency and emission reduction CO2 emission per GDP to decrease by 17%, saving 670 million tons of standard coal by Promotion of energy system reform Environmental/resource tax Gradual establishment of carbon trade system. Energy pricing reforms Technological innovation DRIVING FORCES: ECONOMIC PROSPERITY, ENERGY SECURITY & ENVIRONMENTAL PROTECTION GOAL: A MORE SECURE, CLEAN AND EFFICIENT ENERGY SYSTEM Copyright of Royal Dutch Shell plc December 10,

11 CHINA ENERGY OPPORTUNITIES OPPORTUNITIES TIGHT GAS Non-fossil energy acceleration 9% hydroelectric and nuclear by % wind, solar and biomass by 2015 Gas development LNG Target gas to 8% by 2015 =140mln tons of CO2 emission reduction compared to using coal. Domestic tight and shale gas development Coal development - restrictions on output CONVENTIONAL GAS Copyright of Royal Dutch Shell plc December 10,

12 SHELL CHINA UPSTREAM PORTFOLIO Drilling rig, Sichuan basin Fracc spread, Sichuan basin Upstream exploration Upstream producing Your trip Onshore production 28 kboe/d Q1-Q Onshore exploration and appraisal Offshore exploration ~ $1 BILLION UPSTREAM SPEND 2013 Copyright of Royal Dutch Shell plc December 10,

13 CHINA DOWNSTREAM: LUBRICANTS + BITUMEN Shell is the number one IOC lubricants manufacturer and marketer in China Shell ventures operate: 7 lubricant blending plants 5 bitumen plants Annual supply > 500,000 tonnes 20% of the branded bitumen import market Copyright of Royal Dutch Shell plc December 10,

14 CHINA DOWNSTREAM: RETAIL Shell ventures operate: Extensive JV networks ~1000 operated retail fuel stations Active since 1997 Retail sites YTD # sites Copyright of Royal Dutch Shell plc December 10,

15 CHINA DOWNSTREAM: NANHAI PETROCHEMICALS OVERVIEW Joint venture with CNOOC (50%) Successfully started up in 2006 Debottlenecking completed in 2010 Covers an area of 2.6km2 Ethylene capacity 950 ktpa Total petrochemical production capacity 2.7 mtpa Nanhai petrochemicals plant SUSTAINABLE DEVELOPMENT Water consumption and effluent volumes throughout the complex reduced through responsible design Successful resettlement of villagers Employment and training of local resettled villagers Relocation of coral close to the construction area Minimised erosion via sediment control Nanhai resettled village Copyright of Royal Dutch Shell plc December 10,

16 CHINA OTHER ACTIVITIES LNG IMPORT Shell currently imports 2mpta of LNG Signed agreements to grow up to 6mpta 2013 Cooperation Framework Agreement with Guanghui Energy covering LNG terminal development and operation, LNG purchase, import, and marketing CONTRACTING AND PROCUREMENT Shell no.1 IOC in sourcing from China 20 to 25% savings 14 global agreements awarded in China 140 Chinese suppliers on our global list of suppliers Example: fabrication agreements demonstrate 20 to 40% savings LOW COST COUNTRY SOURCING # of suppliers (Russia, China, India, Mexico) $ billion E LNG transport Qualified suppliers Spend Copyright of Royal Dutch Shell plc December 10,

17 SIRIUS WELL MANUFACTURING SERVICES: A SHELL/CNPC JOINT VENTURE Leverages capability of both Shell and CNPC to unlock resources plays: Drilling efficiency optimization techniques Automation Low-cost sourcing Targeting resource-intensive plays to achieve ultra low-cost wells Less HSSE risk exposure; smaller footprint 3 rigs + 1 frac spread in operation (China, Australia) 2 rigs commissioning (Australia) Sirius rig, China 2 rigs under construction RIGS TAILORED TO TASKS AND PADS DRILLING AUTOMATION - SCADADRILL CENTRALLY CONTROLLED Copyright of Royal Dutch Shell plc December 10,

18 SHELL COAL GASIFICATION PROCESS PROJECTS IN CHINA 21 GASIFIERS IN OPERATION 6 STILL TO START-UP Shell technology licences 20 third party gasifiers 1 Sinopec JV gasifier Syngas for: Ammonia Methanol Hydrogen CTL Yueyang Coal Gasification Plant Copyright of Royal Dutch Shell plc December 10,

19 TECHNOLOGY PARTNERSHIPS CH INESE ACADEMY OF SCIENCES CH INESE ACADEMY OF SCIENCES Copyright of Royal Dutch Shell plc December 10,

20 INVESTING FOR SUSTAINABLE GROWTH QUESTIONS & ANSWERS Copyright of Royal Dutch Shell plc December 10,

21 ROYAL DUTCH SHELL PLC INVESTING FOR SUSTAINABLE GROWTH 2013 SRI FIELD TRIP BEIJING, CHINA DECEMBER 10, 2013 Copyright of Royal Dutch Shell plc December 10,