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Copyright of Royal Dutch Shell plc December 10, 2013 1
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INVESTING FOR SUSTAINABLE GROWTH 2013 SRI FIELD TRIP
BEIJING, CHINA DECEMBER 10, 2013
ROYAL DUTCH SHELL PLC
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HUIBERT VIGEVENO EXECUTIVE CHAIRMAN SHELL CHINA
SHELL IN CHINA
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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 20-F for the year ended December 31, 2012 (available at www.shell.com/investor and www.sec.gov). 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 2013. 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 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
DEFINITIONS AND CAUTIONARY NOTE
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SHELL CHINA SAFETY DATA Per million working hours
SHELL CHINA SAFETY
0
0.5
1
1.5
2009 2010 2011 2012 2013YTD
LTIF TRCF Group TRCF
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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
SHELL CHINA OVERVIEW
Upstream exploration
Upstream producing
Lubricant blending plant
Chemical plant
Retail concentration
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Broad + long-term cooperation:
China Downstream + LNG sales
China exploration
International partnerships
STRATEGIC PARTNERSHIPS: CNPC
2011: Canada tight gas/LNG
China Upstream; 1999 Changbei 2010 Sichuan
2010: Arrow LNG
2010: Qatar exploration
2011: Sirius well manufacturing JV
2013: Libra Brazil pre-salt PSC
Changbei Central processing facility
Arrow, Australia
2013: Browse LNG
2010: Shell Syria Petroleum Development
2012: Downstream manufacturing, Taizhou
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STRATEGIC PARTNERSHIPS: CNOOC AND SINOPEC
Nanhai chemical plant distribution building 1997 Retail
2005: Nanhai Chemicals
2012: Deepwater Gabon exploration
2012: Yinggehai offshore PSC
2013: Singapore Lube park
2013: Libra Brazil pre-salt PSC
2012: XEX exploration acreage
Signing ceremony for the Singapore Lube Park Pte Ltd, a joint venture between Shell, Sinopec and Total
Sinopec
CNOOC
2013: Gulf of Mexico (Nexen)
2013: New Zealand exploration
2001: Dongting Coal gasification JV
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ABUNDANT
Abundant global gas resources, growing and geographically diverse
Conventional and unconventional recoverable gas resources can supply >250 years1 of current global gas production
ACCEPTABLE EMISSIONS COMPARISON
THE CASE FOR GAS
AFFORDABLE
CCGT cheapest to build
Similar total cost to coal and nuclear
Replacing coal with gas for electricity generation is the cheapest and fastest way to meet CO2 reduction targets
CAPITAL COST2 TOTAL COSTS2
0 100 200 300
CCGT
Coal
Nuclear
Wind Onshore
Wind Offshore (25km)
Wind Offshore (75 km)
USD/MWh
CCGT: Combined Cycle Gas Turbine Total Cost = Capital + Fuel + Operating CCS: Carbon capture and storage 1IEA World Energy Outlook 2011 2DECC (Mott MacDonald) June 2010
NATURAL GAS: A DESTINATION FUEL
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PRIMARY ENERGY MIX % 2010 data
*Source: International Energy Agency; World Energy Outlook 2011 Golden Age of Gas
CHINA GAS DEMAND Bcf/d
GAS DEMAND GROWTH BY REGION* Million boe/d
GAS SUPPLY MIX Bcf/d
GAS SUPPLY AND DEMAND
2008
2035
2008
2035
2008
2035
2008
2035
2008
2035
+29%
+23% +189%
+89% +86%
North America
Europe Asia Pacific
Middle East
Other Gas
Coal
Oil
Hydro
Nuclear
Other solid fuels
Other renewables
0 10 20 30 40 50 60
2005 2010 2015 2020 2025 2030
Residential & Commercial Industrial
Transport Power
Others LNG Pipeline Domestic Gas
Domestic ~70%
Imports ~30%
DEMAND OUTLOOK REQUIRES BOTH DOMESTIC & IMPORT GAS GROWTH
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POLICY DEMAND
Energy efficiency and emission reduction
CO2 emission per GDP to decrease by 17%, saving 670 million tons of standard coal by 2015.
Promotion of energy system reform
Environmental/resource tax
Gradual establishment of carbon trade system.
Energy pricing reforms
Technological innovation
CHINA ENERGY POLICY
DRIVING FORCES: ECONOMIC PROSPERITY, ENERGY SECURITY & ENVIRONMENTAL PROTECTION GOAL: A MORE SECURE, CLEAN AND EFFICIENT ENERGY SYSTEM
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CHINA ENERGY OPPORTUNITIES
LNG
CONVENTIONAL GAS
OPPORTUNITIES
Non-fossil energy acceleration
9% hydroelectric and nuclear by 2015
2.6% wind, solar and biomass by 2015
Gas development
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
TIGHT GAS
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SHELL CHINA UPSTREAM PORTFOLIO
Onshore production 28 kboe/d Q1-Q3 2013
Onshore exploration and appraisal
Offshore exploration
Upstream exploration Upstream producing Your trip
~ $1 BILLION UPSTREAM SPEND 2013
Drilling rig, Sichuan basin
Fracc spread, Sichuan basin
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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
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CHINA DOWNSTREAM: RETAIL
Shell ventures operate:
Extensive JV networks
~1000 operated retail fuel stations
Active since 1997
0
200
400
600
800
1000
1200
2009 2010 2011 2012 2013YTD
# sites
Retail sites
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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
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 petrochemicals plant
Nanhai resettled village
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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
LNG transport
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
# of suppliers (Russia, China, India, Mexico) $ billion
0
1
2
3
4
5
0
50
100
150
200
250
2008 2009 2010 2011 2012 2013E
Qualified suppliers Spend
LOW COST COUNTRY SOURCING
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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)
2 rigs under construction
RIGS TAILORED TO TASKS AND PADS DRILLING AUTOMATION - SCADADRILL CENTRALLY CONTROLLED
Sirius rig, China
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SHELL COAL GASIFICATION PROCESS PROJECTS IN CHINA
Ammonia
Methanol
Hydrogen
Syngas for：
13
10 8 14
5 2
1
3
7 6
15
4
12
11
17
18
16 9
19
20
CTL
21 GASIFIERS IN OPERATION 6 STILL TO START-UP
Yueyang Coal Gasification Plant
Shell technology licences
20 third party gasifiers
1 Sinopec JV gasifier
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TECHNOLOGY PARTNERSHIPS
CHINESE
ACADEMY OF SCIE
NCES
CHINESE
ACADEMY OF SCIE
NCES
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QUESTIONS & ANSWERS
INVESTING FOR SUSTAINABLE GROWTH
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INVESTING FOR SUSTAINABLE GROWTH 2013 SRI FIELD TRIP
BEIJING, CHINA DECEMBER 10, 2013
ROYAL DUTCH SHELL PLC