SHELL LNG OUTLOOK 218 DEFINITIONS & CAUTIONARY NOTE Reserves: Our use of the term reserves in this presentation means SEC proved oil and gas reserves.

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2 SHELL LNG OUTLOOK 218 DEFINITIONS & 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 (SPE) 2P + 2C definitions. Operating costs are defined as underlying operating expenses, which are operating expenses less identified items. Organic free cash flow is defined as free cash flow excluding inorganic capital investment and divestment proceeds. Clean CCS ROACE (Return on Average Capital Employed) is defined as defined as the sum of CCS earnings attributable to shareholders excluding identified items for the current and previous three quarters, as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. Capital investment comprises capital expenditure, exploration expense excluding well write-offs, new investments in joint ventures and associates, new finance leases and investments in Integrated Gas, Upstream and Downstream securities, all of which on an accruals basis. In 216, the capital investment was impacted by the acquisition of BG Group plc. which are included in Change in non-controlling interest within Cash flow from financing (CFFF) activities. Divestments comprises proceeds from sale of property, plant and equipment and businesses, joint ventures and associates, and other Integrated Gas, Upstream and Downstream investments, reported in Cash flow from investing activities (CFFI), adjusted onto an accruals basis and for any share consideration received or contingent consideration recognised upon divestment, as well as proceeds from the sale of interests in entities while retaining control (for example, proceeds from sale of interest in Shell Midstream Partners, L.P.), This presentation contains the following forward-looking Non-GAAP measures: Organic Free Cash Flow, Free Cash Flow, Capital Investment, CCS Earnings, CCS Earnings less identified items, Gearing, Underlying Operating Expenses, ROACE, Capital Employed and Divestments. We are unable to provide a reconciliation of the above forward-looking Non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile the above Non-GAAP measure to the most comparable GAAP financial measure is dependent on future events some which are outside the control of the company, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures consistent with the company accounting policies and the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in s financial statements. The financial measures provided by strategic themes represent a notional allocation of ROACE, capital employed, capital investment, free cash flow, organic free cash flow and underlying operating expenses of Shell s strategic themes. Shell s segment reporting under IFRS 8 remains Integrated Gas, Upstream, Downstream and Corporate. The companies in which directly and indirectly owns investments are separate legal entities. In this presentation Shell, Shell group and Royal Dutch Shell are sometimes used for convenience where references are made to 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 either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to joint ventures and joint operations respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as associates. The term Shell interest is used for convenience to indicate the direct and/or indirect 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. No assurance is provided that future dividend payments will match or exceed previous dividend payments. 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, 216 (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, March 15, 218. Neither 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. This presentation may contain references to Shell s website. These references are for the readers convenience only. Shell is not incorporating by reference any information posted on 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 2

3 IEEJ:March IEEJ218 SHELL LNG OUTLOOK 218 OVERVIEW Queensland Curtis LNG Facility, Australia EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH 3

4 IEEJ:March IEEJ218 SHELL LNG OUTLOOK EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG Oman LNG facility 4

5 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG THE ENERGY CHALLENGE Growing Population Rising Demand Ongoing Supply Mitigating Climate Change Improving Air Quality According to the World Bank, global population is expected to increase from around 7 billion today to over 9 billion by 25, with 66% living in cities. Over a billion people continue to live without electricity while another billion struggle with unreliable supplies of electricity. According to the International Energy Agency (IEA) New Policies Scenario, global energy demand is expected to grow by 3% between 215 and 24. As per IEA, it is expected that renewable energy could increase significantly by 24. However, we will still need large amounts of oil and gas to provide the full range of energy products that the world needs. The world currently emits 32 billion tonnes of energy-related CO2 each year. To limit the rise in global temperature to 2 C, the IEA has calculated that energy related CO2 emissions need to fall to around 18 billion tonnes a year by 24. The World Health Organization (WHO) has found that outdoor air pollution in both cities and rural areas is estimated to cause some 3 million premature deaths a year worldwide. 5

6 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG GROWING ECONOMIES NEED MORE AND CLEANER ENERGY Air quality index 217 8, Energy demand growth vs coal share Change in energy demand ( ), KTOE 6, India China 4, Asia air quality index Extreme High 2, Medium Population size Pakistan Vietnam Bangladesh South Korea Thailand Myanmar % 25% 5% 75% 1% Coal share in electricity mix (217) Source: Shell interpretation of Wood Mackenzie and Verisk Maplecroft Q4 217 data 6

7 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG POLICY ACTIONS FOR CLEAN ENERGY SUPPORT GAS AND LNG GLOBAL REGIONAL NATIONAL LOCAL Increasing recognition of environmental benefits EU policies supporting coal phase out Policies favour gas and renewables Policymakers targeting air quality G2 endorses the role of natural gas in energy transition IEA credits levelling of global CO2 emissions to coal displacement More than 1 countries announce coal phase-out ambitions - 25% of coal power capacity in EU EU confirms reforms to strengthen EU Emissions Trading Scheme China reforms gas market to increase competitiveness of delivered gas South Korea s 8th Basic Plan for Energy prioritises renewables and gas, while not sanctioning new nuclear and coal Berlin closes local coal-fired power plants to improve air quality Beijing meets ambitious 217 air quality targets, supported by coal to gas switching 7

8 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG GAS PLAYS GROWING ROLE TO MEET ENERGY CHALLENGE Global energy demand growth by fuel BCM 2, 16, 46% 18% 14% 1% 7% 6% Global gas demand growth by sector BCM 5, 4, 2% 7% 27% 45% Global gas demand growth by region BCM 5, 4, 33% 14% 2% 13% 38% 12, 3, 3, 8, Energy demand: 1% CAGR 2, Gas demand: 2% CAGR 2, Asia gas demand: 3% CAGR 4, 1, 1, Source: Shell interpretation of Wood Mackenzie Q4 217 data CAGR - Compound Annual Growth Rate 8

9 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG GAS SUPPORTS RENEWABLES Flexible gas generation complements solar to provide reliable power generation in California Flexible LNG supply balances hydro generation to provide reliable power in Brazil Net load, MWh 3, Reservoir level 1% BCM/Month 1. 25, 75%.75 2, 5%.5 15, 25%.25 1, %. Hour of the day Mar-13 Mar-17 Net load equals total generation minus solar and wind output; 7 day sample North & South hydro reservoir levels (LHS) LNG imports (RHS) Source: Shell interpretation of Wood Mackenzie Q4 217, IHS Markit and CAISO data 9

10 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG OECD LEADING THE MOVE TO GAS AND RENEWABLES FOR POWER GENERATION Share 6% 5% 4% 3% 2% 1% OECD electricity output by source Share 6% 5% 4% 3% 2% 1% Non-OECD electricity output by source % Natural Gas Coal Nuclear Hydro Other renewables Biofuels and waste Oil % Natural gas Coal Nuclear Hydro Other renewables Biofuels and waste Oil Source: Shell interpretation of International Energy Agency (IEA) data 1

11 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG STRONG CHINA GAS DEMAND DRIVEN BY GROWTH OUTSIDE POWER China gas demand China demand growth by sector, 217 BCMA BCM BCM Gas demand (LHS) Change YoY (RHS) Electricity Industrial Res, comm & heat Transport 217 Source: Shell interpretation of IHS Markit, China National Bureau of Statistics and Chinese customs data; latest estimates for

12 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG LNG IS THE FASTEST GROWING GAS SUPPLY SOURCE Global gas supply by source LNG imports by region BCM BCM 5, 4, 3, 62% 7% 31% 1, % 16% 15% 13% 2, LNG demand: 4% CAGR 4 1, Domestic production Pipeline imports LNG imports Asia Europe Americas Middle East & Africa 235 Source: Shell interpretation of Wood Mackenzie Q4 217 data CAGR - Compound Annual Growth Rate 12

13 IEEJ:March IEEJ218 SHELL LNG OUTLOOK 218 EXTERNAL ENVIRONMENT CREATING MORE OPPORTUNITIES FOR GAS AND LNG LNG PROVIDES NEW FORM OF ENERGY SECURITY Queensland Curtis LNG Facility, Australia LNG SOLVES GAS MARKET UNCERTAINTIES: Declining domestic production Pipeline disruptions Falling nuclear utilisation and reliability Hydroelectric seasonality, renewable intermittency Weather disruptions LNG RESILIENT TO ITS OWN UNCERTAINTIES: Geopolitics Timing of new supply Existing plant output Changing trade patterns Gas supply and demand uncertainty 13

14 SHELL LNG OUTLOOK STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 LNG bunker vessel Cardissa 14

15 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 UNPRECEDENTED LNG CAPACITY EXPANSION 45% COMPLETE LNG liquefaction capacity additions LNG trade MTPA (FOB) MTPA (DES) 5 1% % % % % Nameplate capacity additions Share online (nameplate capacity) Source: Shell interpretation of IHS Markit Q4 217 data 15

16 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 GLOBAL LNG MARKET CONTINUES TO DEFY EXPECTATIONS Net exports: 217 YoY Net imports: 217 YoY Million tonnes (DES) 3 Million tonnes (DES) Total exports Australia US Africa Rest of world Previous consensus forecast (as of late 216) Actuals -1 Total imports North Asia South Europe Rest of world North West Europe Previous consensus forecast (as of late 216) Actuals Source: Shell interpretation of IHS Markit, Wood Mackenzie and Poten & Partners 216 and Q4 217 data 16

17 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN MT INCREASE IN LNG IMPORTS IN 217 Million tonnes (DES) 16 Net imports: 217 YoY Previous consensus forecast (as of late 216) Actuals UK Egypt UAE Indonesia Argentina Puerto Rico Lithuania US Norway Colombia Sweden Finland Belgium Canada Chile Japan Jamaica Jordan Dom Rep Israel Singapore Brazil Malta Netherlands Poland Malaysia Kuwait Greece Thailand Mexico India Portugal Italy Taiwan Pakistan France Spain Turkey Korea China Source: Shell interpretation of IHS Markit, Wood Mackenzie and Poten & Partners data 216 and Q

18 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 LNG ACCOMMODATES CHINA GROWTH AND SEASONAL DEMAND Million tonnes 4 China LNG imports Share of cargoes 1% Demand seasonality % 6% 4% 2% LNG imports Contracted LNG supply % Jan-16 Jul-16 Jan-17 Jul-17 China Japan, Korea, Taiwan Rest of World Other Europe North West Europe Source: Shell interpretation of IHS Markit Q4 217, S&P Global Platts, ICE data and Wood Mackenzie Q4 217 data 18

19 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 SPOT PRICES CONTINUE TO REFLECT STRONG DEMAND FOR LNG $/MMBTU 25 Global energy prices JKM as % Brent 25% Asian spot price 2 2% 15 15% 1 1% 5 5% Energy price range Henry Hub Brent NBP JKM (Platts) Japan LNG Import Coal (ARA) % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Range Source: Japanese customs data (Japan LNG import), S&P Global Platts (JKM), ICE (NBP, Brent, ARA coal), NYMEX (Henry Hub) 19

20 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 PHYSICAL AND FINANCIAL LIQUIDITY INCREASE AS MARKET EVOLVES Spot LNG supply Spot LNG deliveries ICE JKM LNG (Platts) futures Cargoes Share spot Cargoes Share spot Cargoes Lots (1, MMBTU) 12 3% 12 3% 18 54, 1 25% 1 25% 15 45, 8 2% 8 2% 12 36, 6 15% 6 15% 9 27, 4 1% 4 1% 6 18, 2 5% 2 5% 3 9, % % Australia US Qatar Other Re-exports % spot (RHS) JKT China South Asia Middle East Europe Americas % spot (RHS) Source: Shell interpretation of IHS Markit Q4 217, S&P Global Platts and the ICE data 2

21 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 FAST, FLEXIBLE FSRUs CONTINUE TO INCREASE LNG IMPORTS MTPA Deliveries to FSRUs FSRU share 14% 12% 1% 8% 6% FSRU picture to be added 1 4% FSRU moored off the port of Aqaba in Jordan % % Americas Europe ME & Africa Asia FSRU share Existing Argentina Brazil China Colombia Egypt Indonesia Israel Italy Jamaica Jordan Kuwait Lithuania FSRU importing markets Malta Pakistan Turkey UAE Under Construction & Development Bahrain Bangladesh Chile Ghana Russia Panama Proposed Croatia Cyprus El Salvador Hong Kong Ivory Coast South Africa Sri Lanka Source: Shell interpretation of IHS Markit Q4 217 data 21

22 SHELL LNG OUTLOOK 218 STRONG LNG FUNDAMENTALS EXCEEDED EXPECTATIONS IN 217 DEMAND FOR LNG IN TRANSPORT GROWS GLOBALLY Diverse marine segments choosing LNG LNG bunkering network developing globally LNG road fuelling network developing in China (2+ stations) and EU (1+ stations) Container Ship Cruise Ship Tanker LNG Fuel Station Barge Car Carrier Ferry LNG Heavy Duty Truck truck 22

23 IEEJ:March IEEJ218 SHELL LNG OUTLOOK SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH 23

24 SHELL LNG OUTLOOK 218 SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH LACK OF SUPPLY INVESTMENT RISKS FUTURE GLOBAL LNG MARKET GROWTH MTPA (DES) Emerging LNG supply-demand gap MTPA (FOB) Investment in liquefaction capacity LNG supply in operation LNG supply under construction Demand forecasts Year of investment decision Source: Shell interpretation of IHS Markit, Wood Mackenzie, FGE, BNEF and Poten & Partners Q4 217 data 24

25 SHELL LNG OUTLOOK 218 SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH LNG BUYERS AND THEIR NEEDS ARE CHANGING MTPA (DES) Drivers of LNG demand LNG buyers domestic gas competition Share of LNG deliveries 1% 8% 6% 4% 2% % Other market drivers Declining domestic gas production Traditional markets Liquid or liberalising markets Source: Shell interpretation of Wood Mackenzie Q4 217 data 25

26 SHELL LNG OUTLOOK 218 SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH LNG BUYERS SIGNING SHORTER AND SMALLER CONTRACTS Average contract length Average contract volume New long-term contract credit rating Years 2 MTPA 2.5 Share of contract volume 1% % % % 4.5 2%. % A-rated B-rated Non-investment grade Investment grade Source: Shell interpretation of IHS Markit Q4 217, Moody s and Fitch data 26

27 SHELL LNG OUTLOOK 218 SUPPLY INVESTMENT REQUIRED TO MEET LONG-TERM DEMAND GROWTH LIQUEFACTION INVESTMENT NEEDED TO MEET DEMAND GROWTH Term sales to importers by supplier type Share of total contract volume 1% STALEMATE CONSTRAINING GROWTH OF LNG SUPPLY 8% 6% 4% 2% % Supply project Portfolio Trader FINANCIERS Look to ensure revenue certainty LNG PRODUCERS Seek long-term LNG sales to secure financing MISMATCH BETWEEN BUYER AND SELLER NEEDS LNG BUYERS Seek smaller, more flexible purchases to remain competitive in downstream market END-USERS Look to avoid long-term contracts that are not in line with their competitive position Intermediaries Source: Shell interpretation of IHS Markit Q4 217 data 27

28 IEEJ:March IEEJ218 SHELL LNG OUTLOOK 218 SUMMARY External environment creating more opportunities for gas and LNG Multiple levels of policy support gas and LNG demand Gas supports renewable power generation and provides cleaner non-power energy supply Strong LNG fundamentals exceeded expectations in % increase in LNG imports Physical and financial liquidity increases as market evolves Supply investment required to meet long-term demand growth Methane Shirley Elisabeth 28

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