ROYAL DUTCH SHELL PLC BIOFUELS OUTLOOK LUIS SCOFFONE CITI CLIMATE CONFERENCE LONDON JUNE 6, 2011

Transcription

1 ROYAL DUTCH SHELL PLC BIOFUELS OUTLOOK LUIS SCOFFONE CITI CLIMATE CONFERENCE LONDON JUNE 6, Copyright of Royal Dutch Shell plc 06/06/2011

2 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 in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as associated companies or associates and companies in which Shell has joint control are referred to as jointly controlled entities. In this presentation, associates and jointly controlled entities are also 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 24% 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, intend, may, plan, objectives, outlook, probably, project, will, seek, target, risks, goals, should 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 potential litigation and regulatory measures as a result of climate changes; (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 factors that may affect future results are contained in Royal Dutch Shell s 20-F for the year ended 31 December, 2010 (available at and ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 6 June Neither Royal Dutch Shell 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. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We may use certain terms in this presentation, such as resources and oil in place, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in 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 06/06/2011

3 ROYAL DUTCH SHELL MACRO ENVIRONMENT 3 Copyright of Royal Dutch Shell plc 06/06/2011

4 ENERGY SCENARIOS THREE HARD TRUTHS I. Global energy demand is growing II. Energy supply will struggle to keep up with demand growth III. Climate change looms as a critical global issue INCREASING POPULATION: key driver of energy demand INCREASED PROSPERITY: increased energy use 400 GJ per capita (primary energy) GDP per capita (PPP, USD) USA Europe EU 15 Japan South Korea China India SOURCES: World Bank WDI, Oxford Economics, UN Population Division, Energy Balances of OECD Countries OECD/IEA 2006, Energy Balances of Non-OECD Countries OECD/IEA Copyright of Royal Dutch Shell plc 06/06/2011

5 ENERGY OUTLOOK GLOBAL ENERGY MIX Mln Boe/d 400 Industry outlook Hydrocarbons dominate outlook Growth required in all sectors of energy mix 300 Energy policy + sustained investment 200 Shell Crude oil & oil products 100 Natural gas & LNG Biofuels, wind, carbon capture + storage Petrochemicals OIL GAS SHELL ACTIVITIES BIOMASS WIND COAL NUCLEAR SOLAR OTHER RENEWABLES SHELL ESTIMATES 5 Copyright of Royal Dutch Shell plc 06/06/2011

6 SHELL: STRATEGY & CAPITAL ALLOCATION STRATEGY CAPITAL INVESTMENT $ Bln Upstream Profitable growth; price upside 150 >80% of total capital spending Sustained exploration investment 100% SOUR HEAVY OIL & EOR TIGHT GAS 100 EXPLORATION Downstream Stable capital employed UP- STREAM 50% DEEPWATER TRADITIONAL Fewer refineries; upgrade chemicals assets More concentrated marketing positions 50 INTEGRATED GAS Financial outlook Generating surplus cashflow through cycle 0 DOWN- STREAM % CHEMICALS REFINING MARKETING Downstream Investing for growth; competitive payout Substantial cashflow growth GROWTH INVESTMENT THROUGH CYCLE RETURNS 6 Copyright of Royal Dutch Shell plc 06/06/2011

7 SHELL & CO 2 NATURAL GAS BIOFUELS QatarGas 4: First Cargo arriving at Hazira terminal CARBON CAPTURE AND STORAGE Mongstad: CCS Project Raizen: Sugar cane harvesting ENERGY EFFICIENCY Shell Fuelsave: 1 liter less per tank 7 Copyright of Royal Dutch Shell plc 06/06/2011

8 ROYAL DUTCH SHELL TRANSPORTATION FUELS 8 Copyright of Royal Dutch Shell plc 06/06/2011

9 TECHNOLOGY DIFFUSION TIME TO MATERIALITY TJ/Year 1.0E E E E E E+04 "Materiality" It takes 30 years to span the 1000-fold growth to get from test scale to materiality (1-2% of total primary energy supply) Thereafter deployment rises linearly to ultimate share in the mix Focus must be on the technologies we know 1.0E Total Oil Nuclear LNG Biofuels - 1st Gen Biofuels - 2nd Gen Solar Photovoltaic Wind CCS "Laws" Haigh/Kramer Nature 462 (2009) 9 Copyright of Royal Dutch Shell plc 06/06/2011

10 TRANSPORT DEMAND GROWTH WORLD PASSENGER TRANSPORT ROAD billion vehicle km per year 40,000 WORLD FREIGHT TRANSPORT ROAD billion vehicle km per year 40,000 30,000 30,000 20,000 20,000 10,000 10, Liquid Hydrocarbon Fuels Biofuels 1 st gen Biofuels 2 nd gen Gaseous Hydrocarbon Fuels Electricity Hydrogen Oil remains dominant next two decades Strong growth in biofuels Strong efficiency improvements required Electrification making inroads next decade SOURCE: IEA, SHELL SOURCE: IEA, SHELL 10 Copyright of Royal Dutch Shell plc 06/06/2011

11 GASOLINE COMPARED TO ALTERNATIVE FUELS WELL-TO-WHEEL CO 2 INTENSITIES CONVENTIONAL GASOLINE BASELINE CONVENTIONAL DIESEL BASELINE +34% +50% +12% -11% -16% -6% -40% -33% -84%* -89%* -82%* Source: CONCAWE/JRC/EUCAR WtW report (version 3) * Biofuels numbers do not include possible indirect land use change effects 11 Copyright of Royal Dutch Shell plc 06/06/2011

12 REGULATED MARKETS FOR BIOFUELS Current Mandates Target/future mandate In discussion Pilot Mandates/Area Based Mandate Revoked/Incentives Introduced 12 Copyright of Royal Dutch Shell plc 06/06/2011

13 ROYAL DUTCH SHELL BIOFUELS 13 Copyright of Royal Dutch Shell plc 06/06/2011

14 SHELL AND BIOFUELS SHELL PORTFOLIO COMMITTED TO SUSTAINABILITY SHELL GLOBAL BIOCOMPONENT FEEDSTOCK PURCHASE Q SHELL S BIOCOMPONENT PURCHASES COVERED BY SUSTAINABILITY CLAUSES Corn Sugar Cane Rape Seed Wheat Other Fully signed up Yet to sign up World's largest biofuels distributor: 9.5 billion liters in 2010 Sustainable sourcing of 1st generation biofuels Leading technology and next generation portfolio Global research capabilities 14 Copyright of Royal Dutch Shell plc 06/06/2011

15 Diesel components Gasoline components SHELL ADVANCED BIOFUELS PORTFOLIO Cellusosic ethanol from agricultural waste Enzymes to convert biomass to transport fuels: Plant sugars directly to transport fuels Sugar Ethanol Cellulosic Ethanol Biomass to Gasoline Biomass to Diesel/Jet HVO Microbes To diesel Research & Development Demonstration Project Assessment First Commercial Plant Commercial Roll-out 15 Copyright of Royal Dutch Shell plc 06/06/2011

16 BIOFUELS GROWTH RAÍZEN JOINT VENTURE (COSAN) Brazil: harvesting sugarcane 16 Copyright of Royal Dutch Shell plc 06/06/2011

17 BIOFUELS RAIZEN: ETHANOL & SUGAR GLOBAL ETHANOL PRODUCERS BRAZILIAN SUGARCANE PRODUCERS PRODUCTION BLN LITRES PER YEAR (ESTIMATE 2010/2011) MLN 80 TONNES (ESTIMATE 2010/2011) Sugarcane crushing capacity: ~60 mtpa from 24 mills market leader in Brazil; market share ~10% 2.2 bln litres ethanol production capacity per year, growth aspiration to 4 bln litres per year Sugar production > 3 mtpa Cogeneration installed capacity 625 MW, excess electricity for sale this year: 1,200-1,500 GWh Source: data provided by Cosan, sourced from Czarnikow Group 17 Copyright of Royal Dutch Shell plc 06/06/2011

18 RAIZEN: SOCIAL PERFORMANCE COMMITMENTS Cosan contributed to and is signatory to additional commitments: National Commitment for the Improvement of Labor Conditions in Sugarcane Production Agro-Environmental Protocol for the Sugar and Ethanol Sector (Green Protocol) Bonsucro formerly the Better Sugarcane Initiative (BSI) standards COSAN INDICATORS 41,000 employees (during peak of harvest) of which 36,000 operational, of which 27,000 agri-workers Manual harvesters: workday 7hrs 20mins, wages ~60% above minimum wage Mechanization: Cosan accelerated & reached 64% in areas with slope <12% Social investment in communities: Cosan Foundation: educating ~ 600 children Other social initiatives reaching ~70,000 people Cosan foundation 18 Copyright of Royal Dutch Shell plc 06/06/2011

19 RAIZEN: ENVIRONMENT REDUCING IMPACTS, DELIVERING BENEFTIS Brazilian sugar cane ethanol best performing biofuel: European Renewable Energy Directive assigns sugar cane ethanol with a 71% GHG savings, compared to gasoline U.S. EPA designated Brazilian sugarcane ethanol as an advanced biofuel due to its 61% reduction of total life cycle GHG emissions Cogeneration of electricity from by-product bagasse: reducing emissions & generating revenues from electricity sales 625 MW installed capacity, with excess electricity for sale this year between 1,200 to 1,500 GWh Recycling of by-products: vinasse, filter cake and ash used as natural potassium-rich fertilizer Accelerated mechanization reduces emissions & water use Closed water circuits in 19 of 24 units Cosan pioneered biological pest control Satellite geo-monitoring - a unique competitive advantage 19 Copyright of Royal Dutch Shell plc 06/06/2011

20 ROYAL DUTCH SHELL SUMMARY 20 Copyright of Royal Dutch Shell plc 06/06/2011

21 TRANSPORT SECTOR: A MOSAIC OF SOLUTIONS The mobility fuel mix will continue to diversify but hydrocarbon fuels will dominate All transport solutions will face challenges of introduction and adoption. A mosaic of solutions will be adopted in different regions of the world. The most effective solutions for achieving a new low CO2 energy future are vehicle efficiency and biofuels Electrification will feature in the long term. A switch from coal to gas in power generation will be important to ensure electric vehicles can fulfil their potential. Emission Concerns Energy Security Concerns 2010 BAU 2025 Simple Mosaic 2050 Full Mosaic Cost Concerns 21 Copyright of Royal Dutch Shell plc 06/06/2011