SRI EVENT 10 APRIL 2014 ROYAL DUTCH SHELL PLC. Copyright of Royal Dutch Shell plc 10 April, 2014

Transcription

1 SRI EVENT 1 APRIL 214 ROYAL DUTCH SHELL PLC 1 Quest construction, 213

2 DEFINITIONS & CAUTIONARY NOTE Cautionary Note Reserves: Our use of the term reserves in this presentation means SEC proved oil and gas reserves. Resources: Our use of the term resources in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions. Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact. Resources plays: our use of the term resources plays refers to tight, shale and coal bed methane oil and gas acreage. 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 third-party 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 2-F for the year ended December 31, 213 (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, 1 April, 214. 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 2-F, File No , available on the SEC website You can also obtain these forms from the SEC by calling 1-8-SEC-33. 2

3 INVESTING FOR SUSTAINABLE GROWTH BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC 3

4 ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE SRI Programme SRI annual roundtable Ongoing engagement Corporate Governance Remuneration committee roadshows Chairman roadshows Shell s approach to sustainability Helping to shape a more sustainable energy future Sharing wider benefits where we operate Running a safe, efficient, responsible and profitable business 4

5 AGENDA 9: 9:35 Ben van Beurden and Chad Holliday 9:35 9:55 9:55 1:35 Carbon management: Jeremy Bentham, Angus Gillespie and Lorraine Mitchelmore Q+A 1:35 11:5 11:5 11:1 Coffee break Orientation 11:1 13:35 Panel sessions Q&A (45 min each, 5 minute break): 13:35 14:3 Group Lunch: Panel A: North America update: Marvin Odum (Director Upstream Americas) and Lorraine Mitchelmore (EVP Heavy Oil) Panel B: Upstream International Operated assets and Nigeria: Harry Brekelmans (EVP Upstream International Operated) and Mutiu Sunmonu (Managing Director SPDC) Panel C: HSSE & SP Performance, RDS environmental policy, Water, Partnerships and CO 2 : Michiel Kool (EVP Safety, Environment & Social Performance), Rupert Thomas (VP Environment) and Angus Gillespie (VP CO 2 ) 5

6 INVESTING FOR SUSTAINABLE GROWTH CHAD HOLLIDAY NON EXECUTIVE DIRECTOR CHAIRMAN CORPORATE & SOCIAL RESPONSIBILITY BOARD COMMITTEE ROYAL DUTCH SHELL PLC 6

7 ACTIVITIES OF THE CSRC 213 Activity Alaska Safety + environment Engagement with communities + government South Africa onshore Stakeholder engagement Local content + economic development 214 Plans Western Canada Onshore oil and gas Oil sands operations Canada LNG potential Focus on how Social and Environmental considerations are incorporated through all stages of major projects Alaska, Northern slope Seismic survey, offshore Canada 7

8 PARTNERSHIPS + ENGAGEMENT Leverage outside expertise Scientific organizations NGOs Governmental bodies Long-term partnerships Renewed partnership agreements Wetlands International IUCN The Nature Conservancy EarthWatch Institute 8

9 ENGAGEMENT RESOURCES PLAYS Centre for Sustainable Shale Development (CSSD) recent developments 15 performance standards Air + climate Water + waste management Shell anticipates applying for certification and verification in 214 Environmental Defense Fund (EDF) studies Phased studies Shell participated in studies on production Further EDF studies to come on Gathering and processing Transmission and storage Local distribution Natural gas vehicles and fuelling stations Shell tight/shale oil + gas operating principles since 211 Safety Water Air Footprint Community 9

10 TRANSPARENCY Sustainability reporting Revenue transparency Nigeria Spills website Oil sands performance report Nigeria briefing notes Carbon Disclosure Project Sustainability report Investor field visit Operations briefing, Yang 23, China, 213 1

11 HUMAN RIGHTS Founding member of UN Global Compact. Collaboration with Danish Institute of Human Rights Implementing Voluntary Principles on Human Rights since 2 OBJECTIVE Due diligence to avoid infringements of rights Be able to know and show systems are effective Access to grievance mechanisms for stakeholders POLICY COMMITMENT Business Principles Shell Code of Conduct HSSE & SP Control Framework Supplier Principles Governance: HSSE SP Exec & Human Rights Working Group SHELL FOCUS AREAS Contracting & Procurement Human Resources Security Social Performance Partnerships: Danish Institute for Human Rights, Consensus Building Institute INDUSTRY COOPERATION Human Rights Due Diligence Human Rights & Impact Assessment Grievance Mechanisms 11

12 INVESTING FOR SUSTAINABLE GROWTH BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC 12

13 ENERGY SYSTEM Energy demand outlook million boe/d Technology diffusion TJ/yr 1.E+9 1.E+8 1.E+7 ~1% of energy system 1.E+6 1.E+5 1.E+4 1.E Shell activities Oil Gas Biomass Wind Coal Nuclear Other Renewables Solar Total Nuclear Biofuels 1 st Gen Wind Oil LNG Solar Photovoltaic Laws ~3 years to grow a technology to ~1% in today s energy system Source: Shell analysis 13

14 EXECUTING A CONSISTENT, LONG-TERM STRATEGY Unrelenting focus on HSSE Technology, integration and scale Disciplined capital investment by strategic theme Growth in cash flow through-cycle Competitive shareholder returns Shearwater platform North Sea, UK 14

15 PORTFOLIO MANAGEMENT RESILIENCE Risk, performance & STRATEGIC INTENT uncertainty ATTRACTIVENESS ASPIRED PORTFOLIO RESULTS & PAY-OUT Growth & returns Opportunity scale Balancing portfolio risk and reward Strict investment hurdles and price screens drive returns 15

16 INVESTMENT PRIORITIES Organic capital investment 214 $ billion 4 3 Longer term Exploration + pre-fid 25% Preparing new options 2 Growth priorities Key growth projects 3% Driving new upstream growth 1 Engines Smaller growth projects Care + maintain 45% Maintaining competitive cash generation Upstream engine Downstream (incl. Corporate) Deep-water Integrated gas Future opportunities Resources plays Credible, competitive, affordable Investment choices driven on a global thematic basis 16

17 FOCUS ON SAFETY Goal Zero on safety Injuries TRCF/million working hours 4 million working hours 8 Spills - operational Volume in thousand tonnes '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 4 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 Working hours TRCF Fatalities Process safety trend Number of incidents '4 '5 '6 '7 '8 '9 '1 '11 '12 ' Tier 1 incidents Tier 2 incidents 17

18 CONTRACTOR SAFETY + MANAGEMENT Contractors represent 75% of working hours Contractors included in: Safety day 12 life saving rules Three phases of HSSE in contracts: HSSE Assessment (prequalification) HSSE Evaluation (sourcing + award) HSSE Management (post-award) Gap closure programme for contractors who can t immediately meet requirements Assessment Evaluation Contract Management Green Amber Red Technical HSSE Commercial Monitor performance and delivery including gap closures agreed in the HSSE plan 18

19 MANAGING WATER USE Energy industry is a large industrial consumer Working with World Business Council for Sustainable Development and IPIECA New oil and gas may require increased water use New locations may be in areas of water shortage Water management plans essential Shell fresh water withdrawn Innovative solutions Million cubic metres Reed bed filtration, Oman Water treatment plant, Dawson Creek, Canada 19

20 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 NIGERIA: SPDC JOINT VENTURE OVERVIEW 213 overview Substantial increase in theft NIMASA LNG blockade Decision to sell assets in East onshore 16 kidnaps, no fatalities Illegal theft and refining Niger Delta, 213 SPDC* production (Shell share) k boe/day 3 Production impact of crude oil theft (SPDC) k boe/day *SPDC = 3% Shell, 55% NNPC, 1% Total, 5% Agip; all data on 1% basis unless stated Oil theft allocated to SPDC Theft related deferment on export lines 2

21 NIGERIA: SHELL ENVIRONMENTAL PERFORMANCE SPDC JV flare volumes Million tonnes hydrocarbon flared 1-83% Illegal tapping point at Ogidigben, 213 SPDC spills Thousand tonnes # Remediation # of spills sites* volume of operational spills volume of sabotage spills All data on 1% basis number of operational spills (RHS) number of sabotage spills (RHS) Number of spills in year (all causes) Sites requiring remediation *includes 125 sites from in Ogoniland confirmed during decommissioning in 213 All data on a Shell operated basis 21

22 NIGERIA: SPDC FOOTPRINT REFOCUS Onshore portfolio Forcados Yokri Integrated project Southern Swamp Associated Gas 2 mi 212 FIDs 213 FIDs divestments SPDC licenses Gbaran Ubie Phase 2 TNPL Portfolio development Divested 8 OMLs Proceeds $1.8bn (Shell) FID Southern Swamp Associated Gas FID Forcados Yokri Integrated Project 214+ Asset sales in Eastern Delta Potential sale of 8-1k boe/d Concentrate on gas value chain Selected growth investment 22

23 IRAQ UPSTREAM Basrah Gas Company Majnoon oil development Basrah Gas Company storage tanks Shell 44% Started up in 213 Largest flare reduction project in the world Processing capacity 5mmscf/d associated gas 2 billion scf/d potential Majnoon Central Processing Facility Shell 45% Start-up Q3 213 currently processing >2kboe/d 25 local employees Training for local well engineers Memorandum of Understanding with IUCN to conserve and restore Hawizeh marsh 23

24 BRENT DECOMMISSIONING 213 PROGRESS Contract award for 4 Brent topsides and Brent Alpha jacket awarded to Allseas Single lift mechanisms = less offshore hours Significant stakeholder engagement Invited ~ 14 bodies to engage Includes government agencies, environmental groups including NGOs, academia and fishermen s associations Working towards submission of decommissioning plan to DECC Brent Alpha platform 24

25 GRONINGEN NETHERLANDS GAS NAM JV: 5% Shell, 5% Exxon Discovered 1959 Groningen gas field operated by NAM (6%), Dutch state interest 4% (EBN) 3 wells across 2 sites Produced 53.2 bn m3 213 Government proposals: Restrict overall production (42.5bn m3 214) Reduced production around Loppersum 1.2bn made available over 5 years Includes continued preventative strengthening + repair Groningen production and profit bn bn m km Profit Profit attributable to state Profit attributable to NAM Groningen volume (RHS) Source: Letter from the Minister for Economic Affairs, 5 February 214 Locations with reduced production Other production sites 25

26 UPSTREAM AMERICAS Major OECD growth potential for Shell Managing non-technical risk Deep-water Heavy Oil Resources Plays Integrated Gas Arctic Industry leadership Mining and in-situ Portfolio repositioning Monetizing gas Long-term potential Profitable + competitive today Potential 26

27 CLIMATE CHANGE + LOW CARBON FUTURE GAS INNOVATION: LNG FOR TRANSPORT ENERGY EFFICIENCY: REFINERIES BIOFUELS: RAIZEN JV CARBON CAPTURE + STORAGE: OIL SANDS 27

28 LOW CARBON PORTFOLIO Commercial operation R&D Technology demonstration/research CCS FEED FID On stream Biofuels Solar Alternative energy carriers Virent Westhollow research centre cellulosic biofuels Future energy technologies Shell Technology Ventures Glasspoint Solar EOR 2 B Energy Peterhead (1 mtpa) H2 network (Germany) Gorgon (3-4 mtpa) Quest (>1 mtpa) Iogen cellulose ethanol (Raizen) Mongstad Otway Cansolv Raizen (sugar cane ethanol) Showa shell PV manufacture Offshore Onshore (5 MW net) (45 MW net) Wind Technology Efforts Define Execute On stream 28

29 INVESTING FOR SUSTAINABLE GROWTH BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC 29

30 CARBON MANAGEMENT JEREMY BENTHAM Vice President Global Business Environment Angus Gillespie Vice President CO 2 Lorraine Mitchelmore Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC 3

31 SHELL ENERGY SCENARIOS Energy demand/source Exajoules 1, Oil Gas Biomass/Biofuels Wind Coal Nuclear Other Renewables Solar 4 years of scenarios Designed to stretch management thinking Testing business models Contrasting plausible views of the future Are not a forecast of likely events 31

32 ENERGY-RELATED CARBON EMISSIONS: SCENARIOS Shell scenarios (213) Gt CO2 /yr IEA scenarios (212) Gt CO2 /yr Oceans Mountains Current policies New policies 2 C increase (45 ppm) Shell has to plan in a range of possible futures IEA 2 C scenarios are normative 32

33 CARBON MANAGEMENT Jeremy Bentham Vice President Global Business Environment ANGUS GILLESPIE Vice President CO 2 Lorraine Mitchelmore Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC 33

34 DEMAND OUTLOOK + RESERVES Energy demand: IEA current policies Mtoe /yr 5, Shell SEC proved reserves Resources* Energy demand: IEA 45 scenario Mtoe /yr 5, Shell SEC proved reserves Resources* 4, 4, 3, 3, 2, 2, 1, 1, Oil Coal Gas Biomass/Biofuels Nuclear Hydro Other Renewables Shell Reserves life at end 213: ~11.5 years Further 2P +2C resources Oil and gas portfolio relevant in IEA 45 scenario Coal demand is most impacted * Resources shown includes only resources in select or define phases (post feasibility study or in FEED) or are under execution or on stream. 34

35 PROJECT ECONOMICS: SCHEMATIC NPV analysis: example $ /yr $ cumulative NPV sensitivities: example Oil Price 1 4 CO2 price Capex -2 Annual cashflow -8 Opex -3 Undiscounted Cumulative cashflow Discounted Cumulative cashflow -12 Recovery factor -4 Shell project screening values impact Base NPV (inc $4/t CO2) + impact $4 / tonne CO2e $7-$11 / bbl Brent oil $3-$5 / mmbtu Henry Hub gas Future oil, gas and carbon price sensitivities are incorporated in project economics for all Shell projects 35

36 CARBON EMISSIONS Shell CO 2 emissions million tonnes / yr 1 Energy intensity Gj/tonne (energy required to produce a tonne of oil equivalent) 1 index '4 '5 '6 '7 '8 '9 '1 '11 '12 "13 85 Upstream excl. Oil sands Refining index Chemicals index Positive long term trends but future progress more difficult CCS key role in future 36

37 CARBON MANAGEMENT Jeremy Bentham Vice President Global Business Environment Angus Gillespie Vice President CO 2 LORRAINE MITCHELMORE Executive Vice President Heavy Oil ROYAL DUTCH SHELL PLC 37

38 CARBON CAPTURE AND STORAGE (CCS) QUEST CCS FID Q mln tonnes/yr CO2 capture potential Safe storage certification by DNV (1st time for a CCS project) Expected on stream 215 Quest CCS project, test injection well, Canada oil sands PETERHEAD CCS Aims to capture 1mln tonnes CO2 over 1 years Would provide enough clean energy for 5, houses FEED agreement with UK government signed February

39 CARMON CREEK: IN-SITU HEAVY OIL Development overview Transportation options Proposed and existing pipelines Proposed East Energy pipeline conversion Tankers Carmon Creek Edmonton Hardisty Central Processing Facilities Site Preparation Quebec 2 miles To USGC 213 FID on 8 kboe/d 1.5 billion barrels of resources NPV carbon price sensitivity + impact Vertical steam drive integrated with cogen 1% produced water re-cycled 1% Shell US$ 1.8/t (Current local regulation) US$ 15/t (strengthened local regulations) US$ 4/t (base) Proxy LCFS with bio-fuel blending US$ 11/t - impact 39

40 INVESTING FOR SUSTAINABLE GROWTH BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC 4

41 Q&A 1 APRIL 214 ROYAL DUTCH SHELL PLC 41

42 APPENDICES 1 APRIL 214 ROYAL DUTCH SHELL PLC 42

43 REVENUE TRANSPARENCY Commitment to transparency Voluntary country-level tax disclosure since 212 EITI board position and founder Encourage government transparency ~$24 bln taxes & royalties paid ~$81 bln excise tax collected in 213 Leadership in tax transparency 43

44 THREATS ASSET INTEGRITY AND PROCESS SAFETY PREVENTING AND MITIGATING MAJOR SAFETY INCIDENTS Goal Zero: No Harm, No Leaks Assets are safe and we know it 1 Control barriers Recovery measures 2 Leadership behaviours TOP EVENT CONSEQUENCES Effective design and application of barriers Standards and processes Motivated, competent people Continuous improvement Act Plan Check Do 44

45 NIGERIA: UNEP REPORT UPDATE SPDC specific recommendations Overhaul procedures for oil spill clean-up and remediation Improve on contracting and supervision. Review of SPDC assets in Ogoniland and develop a decommissioning programme Work with regulators to clarify the legislation governing remedial intervention and target values Government recommendations Create of an Ogoniland Environmental Restoration Authority Create an Ogoni environmental restoration fund Create a centre of excellence for environmental restoration Mount a campaign against environmental degradation/ oil theft Fire on the 24 TNP, Bodo West, April

46 SHELL ARCTIC & NEAR ARCTIC SAKHALIN Alaska, Chukchi NIGLINTGAK UNITED STATES BEAUFORT CHUKCHI Russia, Sakhalin CANADA NORTH POLE RUSSIA SALYM BAFFIN BAY Greenland, Baffin Bay GREENLAND KANUMAS KAZAKHSTAN Russia, Salym NORWAY BARENTS ORMEN LANGE NORWAY KASHAGAN Norway, Ormen Lange Kazakhstan, Kashagan 46

47 BIOFUELS Shell biofuels Sold 9 bln litres of biofuels in % of suppliers signed Shell s sustainability clauses 32% independently certified Raizen: Brazil JV formed 211, 5-5 Shell/Cosan ~4,5 retail sites 2.2 bln litres ethanol capacity/yr Bonsucro Certification of mills Bonsucro Certified Mills 47

48 Methane Emissions (Gg) Completions with HF Pneumatic Controllers Equipment Leaks Chemical Pumps Methane Emissions Difference (Gg/yr) ENVIRONMENTAL IMPACT: FUGITIVE METHANE Study by the University of Texas at Austin in collaboration with the Environmental Defense Fund and 9 operators EPA production sector methane emissions Gg/yr 7, 6, Reason for the study: Wide variation in EPA national inventories Limited measured data Data better informs scientifically sound policies and regulations Key findings: Measurements from 19 onshore natural gas sites in the US Total emissions similar to 211 EPA national inventory Well completion emissions lower than previously estimated Emissions from pneumatic controllers and equipment leaks higher than EPA national emission projections 5, 4, 3, 2, 1, 7, 6, 5, 4, 3, 2, 1, As originally reported in the National Inventory As reported in 213 using revised methods EPA (313 bcf) 211 EPA (133 bcf) UT/EDF (119 bcf) 48

49 Methane leakage rates (% of gross production) Estimate vs. threshold ENVIRONMENTAL IMPACT: LIFE CYCLE BENEFITS OF GAS OVER COAL 8% Critical methane leakage gas vs. coal (8%) based on a 1 year time-frame 7% 6% 5% 3.79% 4% 3% Critical methane leakage gas vs. coal (3%) based on a 2 year time-frame 1.4% 2% 1% % EPA NG sector total = 1.26%.79%.47%.43%.9% 1.3%.69% 1.81%.34% 1.39%.43%.87%.73% EPA 211 UT/EDF NPC NETL ANL NREL IDA Cornell (High) Cornell (Low) 1.2% 4.11% 2.2% NG Production Other NG Sector Current data supports the policy arguments on climatic benefit of gas over coal; though most research have been based on the EPA inventories with higher system-wide emissions Definitive answer once EDF series is completed for other segments of the natural gas value chain Source: US EPA, UT/EDF Study, NPC (George et al), NREL (Logal et al), IDA (Weber et al), Cornell (Howarth et al), ANL (Burnham et al), NETL (Skone et al) and IEA 49

50 CARBON CAPTURE AND STORAGE (CCS) Relative cost of CO2 mitigation $ /tonne abated Quest CCS, Canada. CCS to play an important part in low carbon options; relevant scope/scale Source: GCCSI (Oct 213, Global status of CCS ) 5

51 SHELL CCS: COMPETENCE BASED PROGRAM Shell operated Quest TCM Non operated Gorgon In FEED Peterhead Onshore storage Offshore storage Saline aquifer storage Depleted reservoir storage Pre-combustion capture Post-combustion capture Contaminated gas Heavy oil Refining Gas fired power 51

52 212 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 213 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec IMPROVE FINANCIAL PERFORMANCE IN UPSTREAM ENGINE PDO Oman kboe/day, Shell share UK North Sea kboe per day, Shell share :117kboe/d 213: 91kboe/d Actual production assumed production with continued decline Production decline halted focus on up-time reservoir development sub-surface dynamics Innovative EOR schemes impacted by high levels of maintenance 213 maintenance downtime 5 kboe per day (vs. 35 kboe per day downtime in 212) Address late life assets: fix or divest 52

53 ENHANCE CAPITAL EFFICIENCY TAKE HARD CHOICES 214 ~$8 billion capital investment ~$27 billion capital investment Low cost options + Early high-grading Increase predictability Flawless execution of major spend Explore Feasibility study FEED FID On stream Identify & Assess Select Define Execute On stream 12 billion boe 7 billion boe 11 billion boe Hard choices on growth projects: US GTL Alaska LNG FID pause in Asia Pacific AOSP debottlenecking Wheatstone Cove others 53

54 UPSTREAM AMERICAS PORTFOLIO SUBSTANTIAL UNDEVELOPED UPSTREAM RESOURCES Resources 11.7 billion boe Western Canada dry gas Carmon Creek In Situ Resources Plays Deep-water Heavy Oil LNG Canada Appalachia dry gas Gas monetization options Major undeveloped resources Gas-to-chemicals Resources plays Deep-water Heavy oil On stream Execute (under construction) Select/Define Elba LNG Stones, Appomattox, Vito Libra Production million boe per day +2% Capital investments $ billion -2% E Resources plays Deep-water Heavy oil Resources plays Deep-water Heavy oil Pre-FID/other 54

55 UPSTREAM AMERICAS PORTFOLIO FINANCIALS DIVERSE BUSINESSES & MATURITY 213 $ billion Earnings 1 CFFO Organic capital investment Capital employed ROACE DEEP-WATER HEAVY OIL % % Growing + competitive Delivering new growth 214+ RESOURCES PLAYS ARCTIC (3) () 5 24 (1)% (1) (1) 1 3 n.a. Future Potential Restructuring resources plays Growth options INTEGRATED GAS () () n.a. 1 Earnings excluding identified items; ROACE based on earnings excluding identified items 55

56 NORTH AMERICA RESOURCES PLAYS PORTFOLIO & STRATEGY Portfolio Announced divestment Established in gas plays Liquids rich shales exploration LNG Canada Groundbirch Deep Basin/Kaybob Foothills/Pembina Liquids rich shales Dry gas Gas/LRS Gas monetization options Restructuring and redefining growth Portfolio and spending reduction Exploration & appraisal in LRS sweetspots Define gas monetization opportunities Rockies LRS Permian Pinedale Eagle Ford Mississippi Lime Appalachia Haynesville Gas-to-chemicals Elba LNG Resources + potential 11.5 billion boe On stream Execute (under construction) Select/Define Future potential North Americas capital investment $ billion 1-5% 8 6-2% E LRS Dry gas Divestments Acquisitions Future potential = discovered + prospective resources 56

57 LNG CANADA PROGRESSING TO FID LNG Canada Coastal GasLink pipeline 2 x ~6 mtpa first phase Kitimat site agreement 25-year export license secured (24 mtpa) Environmental assessment process initiated Joint venture: Shell (4%), Kogas, Mitsubishi, PetroChina TransCanada Pipelines (TCPL) to build, own & operate ~7km pipeline Filed environmental assessment application Public consultation and open houses underway Access to competitive supply 57

58 UPSTREAM AMERICAS INTEGRATION & POTENTIAL End to end value chain linkage Efficient evacuation route to market Advantaged refining position LNG Canada Western Canada gas Carmon Creek AOSP LRS Puget Sound Martinez Scotford Proposed Energy East Pipeline conversion Sarnia Appalachia Gas to chemicals Upstream positions Permian Gas monetization options Refinery/ chemical plant Refinery with LTO capability Proposed midstream positions/capacity Midstream positions/capacity Permian Express Deer Park Mobile Ho-Ho Motiva refineries Elba LNG 58