Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (2008)
88 slides from Shell's investor day presentation, Dec 30, 2008
Slide 1: Building New Heartlands
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS JEROEN VAN DER VEER CHIEF EXECUTIVE
Slide 2: Definitions and Cautionary Note
DEFINITIONS AND CAUTIONARY NOTE Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves and SEC proven mining reserves. Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil
Slide 3: Agenda
AGENDA INTRODUCTION Jeroen van der Veer Chief Executive OIL PRODUCTS & CHEMICALS Rob Routs Executive Director - Downstream EXPLORATION & PRODUCTION Malcolm Brinded Executive Director – Exploration & Production GAS & POWER Linda Cook Executive Director – Gas & Power OIL SANDS Rob Routs Executive Dire
Slide 4: Financial Performance
FINANCIAL PERFORMANCE EARNINGS INVESTMENT $ Bln $ Bln 30 40 35 25 30 20 25 15 20 10 15 5 10 5 0 2004 2005 2006 2007 0 -5 2004 2005 2006 2007 UPSTREAM (INCL. OIL SANDS) CORPORATE NET CAPITAL INVESTMENT SHARE BUY-BACKS DOWNSTREAM DIVESTMENTS/OTHER DIVIDENDS CCS earnings 3
Slide 5: Building New Heartlands
BUILDING NEW HEARTLANDS STRATEGY ON TRACK • Unchanged view of industry landscape • More upstream, profitable downstream • Capital discipline, portfolio approach PRIORITIES • Process + personal safety • Operational excellence + top quartile assets • Project management • Technology 4
Slide 6: Energy Landscape
ENERGY LANDSCAPE ENERGY USE CAPITAL INTENSITY IS INCREASING Millions barrels oil equivalent/day Capex per boe oil & gas production ($) 350 15 300 10 5 250 0 200 91-93 94-96 97-99 00-02 03-05 06-07 AVERAGE OF OIL MAJORS 150 IHS-CERA UPSTREAM CAPITAL COSTS INDEX 100 2000 = 100 200 50 0 150 1975 2000 2
Slide 7: Building New Heartlands
BUILDING NEW HEARTLANDS INDUSTRY LANDSCAPE SHELL STRATEGY HIGHER PRICES & COSTS PORTFOLIO SHIFT • NEW LEGACY ASSETS • UPSTREAM + SELECTIVE DOWNSTREAM NEW ENERGY COMPETITORS CHALLENGE TECHNOLOGY • NEW HYDROCARBON RESOURCES • CLEANER FUELS, CO2 SOLUTIONS COMPLEX PROJECTS PORTFOLIO MANAGEMENT SUSTAINED
Slide 8: Investing in Technology
INVESTING IN TECHNOLOGY R&D SPENDING INNOVATION In $mln Operations today 1200 • Safety + reliability • Production performance • Margin optimization 1000 • Product differentiation Delivering growth 800 • Exploration • Deepwater • LNG 600 • GTL • Oil Sands 400 Shaping the future • EOR & Heavy Oil 200
Slide 9: Project Management & Operational Performance
PROJECT MANAGEMENT & OPERATIONAL PERFORMANCE STANDARDISED PROJECT MANAGMENT APPROACH ‘TARGET ZERO’ ON SAFETY Injuries - TRCF per million working hours 4 3 Assess Select Define FID Execute 2 Feasibility Concept Project Design& Study Selection Specifications Construction 1 98 99 00 01 02 03 04 05 06 0
Slide 10: New Legacy Assets Under Construction
NEW LEGACY ASSETS UNDER CONSTRUCTION KEY PROJECTS UNDER CONSTRUCTION CHANGING BUSINESS MIX Capital Employed 100% Gjoa 90% AOSP Kashagan Sakhalin II Corrib 80% N America Port Arthur 70% Qatargas 4 Tight Gas Pearl GTL 60% Nigeria Gumusut Perdido 50% Oman Singapore Chemicals 40% BC-10 30% NWS/Pluto 20%
Slide 11: Rejuvenating the Portfolio
REJUVENATING THE PORTFOLIO Capacity/production growth Oil & Gas production mix 2006 to 2013-15 kboe/d/d 0 50 100 150 200 250 300 350 GTL Upstream LNG upstream 2004 2013-15 Tight/Sour Deepwater Heavy Oil & EOR TRADITIONAL TIGHT/SOUR LNG GTL DEEP WATER HEAVY OIL & EOR Refining GTL Products Refining ca
Slide 12: New Production Options 2012+
NEW PRODUCTION OPTIONS 2012+ ALBERTA KAZAKHSTAN HEAVY OIL N. AMERICA TIGHT GAS & OIL SHALE NIGERIA AUSTRALIA PRE-FID POTENTIAL FOCUS EXPLORATION BASIN • Designing ~20 new projects MAJOR RESOURCE POSITIONS • ~6 billion barrels discovered resources • ~800 kboe/d production potential 11
Slide 13: Low Carbon Opportunities
LOW CARBON OPPORTUNITIES ACTIVITIES TODAY DEVELOPING NEW TECHNOLOGIES Shell greenhouse gas emissions Choren plant 120 110 100 Mln. tonnes of CO2 equivalent 90 97 98 99 00 01 02 03 04 05 06 07 • Voluntary emissions targets • Next generation biofuels • Energy efficiency • CO2 capture and storage • Fla
Slide 14: Businesses Presentations
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS BUSINESSES PRESENTATIONS
Slide 15: Oil Products & Chemicals
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS ROB ROUTS EXECUTIVE DIRECTOR OIL PRODUCTS & CHEMICALS
Slide 16: Oil Products and Chemicals
OIL PRODUCTS AND CHEMICALS DOWNSTREAM EARNINGS 2007 RESULTS & MILESTONES $ bln CCS EARNINGS $8.6 BLN 10 • Refinery availability 91% • Chemical asset availability 93% 8 NET CAPEX $2.8 BLN 6 • $2.5 bln disposals 4 FID ON PORT ARTHUR EXPANSION 2 RETAIL GROWTH INVESTMENT • Malaysia and Ukraine 0 -2 2003
Slide 17: Reshaping the Manufacturing Portfolio
RESHAPING THE MANUFACTURING PORTFOLIO MANUFACTURING 2004-2007 AVERAGE REFINERY CAPACITY Kbbl/d 180 160 140 Nanhai Port Arthur 120 Singapore 100 80 2004 Projection 2010 • Global refiner ~4mln bbl/d • Refinery capacity reduction of 11% since 2004 • >20% increase in average refinery REFINERY CHEMICALS
Slide 18: Manufacturing Projects Under Construction
MANUFACTURING PROJECTS UNDER CONSTRUCTION PORT ARTHUR REFINERY SINGAPORE CHEMICALS • Integrated with Bukom refinery • Expansion of 325 to ~600 kbbls/d • 800 Kta Ethylene cracker • Flexible crude slate, including Oil Sands Bitumen • 750 Kta MEG plant • 155 Kta Butadiene extraction plant Integration &
Slide 19: West to East Marketing Portfolio
WEST TO EAST MARKETING PORTFOLIO MARKETING 2004-2007 SHELL MARKETING SALES % per region 2004 Projection 2010 Russia Nordics Ukraine Turkey China Malaysia India USA EAST Indonesia EUROPE OTHER • #1 global branded fuels retailer – number of sites, market share and brand preference • Improving retail c
Slide 20: Strengthening Heartlands – Germany Integration
STRENGTHENING HEARTLANDS – GERMANY INTEGRATION RETAIL MARKET SHARE* OPERATIONAL EXCELLENCE Indexed Unplanned refinery downtime 115 3% 110 105 2% 100 1% 95 90 0% 2004 2005 2006 2007 2004 2005 2006 2007 RETAIL THROUGHPUT* Volumes per site (indexed) • Largest refiner in Germany • Leader in Retail marke
Slide 21: Operational Excellence: Manufacturing
OPERATIONAL EXCELLENCE: MANUFACTURING PROCESS SAFETY INCIDENTS REFINERY AVAILABILITY % relative to 2005 base year % of EDC 100 94 80 92 60 90 40 20 88 0 86 2005 2006 2007 2004 2005 2006 2007 COSTS* (EXCLUDING ENERGY) % compared to industry refining average • Reliability led strategy • Process safety
Slide 22: Operational Excellence: Retail
OPERATIONAL EXCELLENCE: RETAIL BRAND PREFERENCE RETAIL COMPETITOR EARNINGS % $ mln 20% 2006 15% 2007 10% 5% 0% Shell Competitors (Majors) Shell Competitors (Majors) Source: Global Brand Tracker, Q4.07 Source: Shell estimates THROUGHPUT INCREASE RETAIL GASOLINE VOLUME Per Retail Outlet, Indexed Kbbl/
Slide 23: Operational Excellence: Lubricants
OPERATIONAL EXCELLENCE: LUBRICANTS BLENDING PLANTS GLOBAL MARKET SHARE No. of sites % 80 20 75 15 70 10 65 5 60 0 2004 2005 2006 2007 Shell Competitors (Majors) Source: 2006 Kline; internal analysis (brand) UNIT COSTS NET MARGIN Indexed Indexed 105 200 100 175 95 150 90 125 85 100 80 75 2004 2005 20
Slide 24: Operational Excellence: B2B Marketing
OPERATIONAL EXCELLENCE: B2B MARKETING MARKETING VOLUME MIX • World’s Best International Jet Fuel B2B Marketer for 2007 - Armbrust Aviation Awards Retail • Airbus A380 was the first commercial aircraft to fly with Shell GTL jet fuel COMMERCIAL FUELS MARINE FUEL BITUMEN AVIATION LPG • A leading Europe
Slide 25: Operational Excellence: Chemicals
OPERATIONAL EXCELLENCE: CHEMICALS CHEMICALS PORTFOLIO PLANT AVAILABILITY % Base First line Derivatives Polyolefins/ 100 Chemicals Polymers (*) 95 Solvents/ Phenol 90 85 PDO PTT PTT 2004 2005 2006 2007 EO/G ROACE HODer % Poly- propylene Refinery Refinery Lower Olefins Poly- ethylene Aromatics SM/PO*
Slide 26: World Class Trading Operations
WORLD CLASS TRADING OPERATIONS DOWNSTREAM TRADING EARNINGS Indexed • Track record of profitability and growth • Global coverage – offices in 10 cities, 24/7 Trading 400 • Global integrated portfolio 300 • Feedstock optimisation • Top quartile shipping operations 200 • #1 in global freight tonnage 10
Slide 27: Shell Is an Industry Leader in Biofuels
SHELL IS AN INDUSTRY LEADER IN BIOFUELS Cellulosic OVER 5 BILLION LITRES BLENDED IN 2007 ethanol using enzymes from Ethanol/Biodiesel wheat straw ~1 billion litres blended into gasoline/diesel High quality synthetic biofuel (BTL) from wood residue Cooperation Agreement on Enzyme Technology Ethanol S
Slide 28: Downstream: Key Messages
DOWNSTREAM: KEY MESSAGES COMPETITIVE EARNINGS ONGOING PORTFOLIO OPTIMISATION CONTINUED FOCUS ON COST AND EFFICIENCY MARKETING LEADERSHIP • Strengthening robust Heartlands position • Focusing on strategic growth markets in East • Selective investment in manufacturing to support marketing OPERATIONAL
Slide 29: Exploration & Production
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS MALCOLM BRINDED EXECUTIVE DIRECTOR EXPLORATION & PRODUCTION
Slide 30: Exploration & Production
EXPLORATION & PRODUCTION EP EARNINGS 2007 RESULTS & MILESTONES $ Bln EARNINGS $14.7 Bln 16 • Oil & gas production 3.2 mln boe/d • Organic reserves additions 1.5 Bln boe 14 NET CAPEX $10.2 Bln 12 • Disposals $5.4 Bln • 11 notable discoveries 10 • FID on 8 projects 8 6 KEY PROJECTS ~1 MLN BOE/D UNDER
Slide 31: Strategy Roadmap
STRATEGY STRATEGY ROADMAP •Sustain Heartlands Safety Takes Priority Upside Higher •Integrated Gas •Technology Plays 1. Production •Grow Unconventionals 2. Project Delivery 3. Competitive Cost Portfolio 4. Operational Excellence today 5. Reserves Replacement 6. Grow Resource Base Technology – Integra
Slide 32: 2007 Reserves Update
2007 RESERVES* UPDATE 2007 RESERVES ADDITIONS Norway END 2007 RESERVES 11.9 BLN BOE Kashagan • 2007 organic** additions ~1.5 billion USA boe Qatargas IV • 2007 production ~1.2 billion boe Pearl • Organic reserves replacement 124% Australia • Reserves life ~10 years MAJOR RESERVES ADDITION RESERVES R
Slide 33: Resource Update
RESOURCE UPDATE END 2007 RESOURCES ~66 BLN BOE* RESOURCES TO PRODUCTION (2005-07) Bln boe • Resources life: 55 years 66 Bln boe* • Major progress in Alberta • Exploration replaces production 2005-07 2005-07 performance: ~6 Bln boe taken FID • Pearl GTL, • Qatargas 4 • AOSP Exp. 1 • BC 10 RESOURCE MO
Slide 34: Exploration
EXPLORATION PORTFOLIO 2007-08 PERFORMANCE • Continued to grow and high-grade our Chukchi exploration portfolio • 1.4 Bln boe resources discovered in 2007 • 3 Yr avg. unit finding cost $1.50- GoM $2.0/boe • > 43,000 square kms of new acreage • GoM, Chukchi & Beaufort access • Unique geological insigh
Slide 35: 2007 Exploration Success
2007 EXPLORATION SUCCESS AUSTRALIA – BROWSE BASIN KAZAKHSTAN – NORTH CASPIAN Kashagan Kairan Aktote Crux Kalamkas Prelude Kashagan SW Torosa Khazar F13 F13 F13 Brecknock E11 E11 E11 Calliance • Equity in 18 of the top 25 gas discoveries in • Four discoveries in North Caspian adding Greater North Wes
Slide 36: Major Potential in Alberta Heavy Oil
MAJOR POTENTIAL IN ALBERTA HEAVY OIL HEAVY OIL IN ALBERTA GROWTH POTENTIAL Mining – AOSP (60% Shell) • 90 kbbl/d on stream • 60 kbbl/d in construction Grosmont Athabasca • 300+ kbbl/d expansion potential Peace River Fort McMurray ALBERTA In Situ – Thermal and Cold Edmonton Cold Lake • 25 kbbl/d on s
Slide 37: Cost Management – Drilling Rigs
COST MANAGEMENT – DRILLING RIGS DEEPWATER RIG CONTRACTS BEFORE MARKET UPSWING • Rig requirements covered through 2009 with extensions to 2013 • Over $500 mln saved relative to market rates for 08/09 period BULLY RIG • Deployable across entire offshore portfolio (from Deepwater to Arctic) Bully rig s
Slide 38: 2006 - 2007 Start Ups
2006 - 2007 START UPS Ormen Lange 20% UK GAS SUPPLY PRODUCTION IMPACT 420 kboe/d SHELL 17% KBOE/d Asia Pacific Gas 300 CHANGBEI/ POHOKURA 250 Statfjord L Life 90 kboe/d SHELL 50%/48% 200 GAS EXPORT 150 145 kboe/d SHELL 9.7% 100 N. American Gas Soku 50 ONSHORE TIGHT GAS NLNG GAS SUPPLY 0 135 kboe/d 6
Slide 39: Ormen Lange
ORMEN LANGE TECHNOLOGY - INTEGRATION - SCALE ORMEN LANGE • 850-1,100m water depth • Shell industry first: large diameter deepwater gas wells • World’s longest offshore pipeline • 20% of UK gas supply • 3 wells drilled and operational, planned SAKHALIN LNG PLANT to grow to 24 wells by 2013 Ormen Orme
Slide 40: 2008 - 2009 Start Ups
2008 - 2009 START UPS PRODUCTION IMPACT Sakhalin II KBOE/d FIRST RUSSIAN LNG Ursa Princess 395 kboe/d 500 SHELL 27.5% Waterflood 400 INCREASED RECOVERY 30 kboe/d 300 SHELL 45.4% 200 100 Perdido 0 ULTRA DEEPWATER 130 kboe/d 06-07 08-09 10-12 13-15 SHELL 35.4% Afam 06-07 KEY START UPS INTEGRATED POWER
Slide 41: New Production Hubs
NEW PRODUCTION HUBS 3 NEW DEEPWATER HUBS PEARL GTL UPSTREAM- QATAR OMAN EOR • BC-10 and Perdido • Jackets in place • Major EOR projects under construction - Ultra deepwater • Topsides on schedule • 25% of Shell’s production in Oman - Susbsea boosting: 10-20% recovery • Top quartile drilling through
Slide 42: 2010 - 2012 Start Ups
2010 - 2012 START UPS AOSP Gjoa Kashagan PRODUCTION IMPACT Expansion I RICH GAS PHASE 1 MINE + UPGRADER Corrib 107 kboe/d 300 kboe/d KBOE/d SHELL 12% SHELL 16.8% 100 kboe/d ATLANTIC MARGIN SHELL 60% 58 kboe/d 1000 SHELL 45% Pearl 800 GTL Qatargas 4 320 kboe/d 600 SHELL 100% LNG 400 280 kboe/d Gbaran
Slide 43: Shifting the Portfolio
SHIFTING THE PORTFOLIO CHANGING PRODUCTION MIX DEVELOPING LONGLIFE ASSETS KBOE/d 100% 1000 90% 900 80% 800 70% 700 60% 600 50% 500 40% 400 30% 300 20% 200 10% 100 0% 0 2004 2013-15 2007 08-09 10-12 13-15 Key post FID projects; Shell share TRADITIONAL TIGHT/SOUR OTHERS LNG GTL LONG LIFE DEEPWATER HEA
Slide 44: Strategy to Performance
STRATEGY TO PERFORMANCE STRATEGY ROADMAP GLOBAL MUST WINS Safety Takes Priority • Asset Integrity Upside Higher Where we want to be • Contractor Management Where we 1. Production • Workplace Hazards want to be 2. Project Delivery • Road Safety Portfolio today 3. Competitive Cost Portfolio 4. Operati
Slide 45: Delivery
DELIVERY UPSTREAM UNIT CASH $/BOE • Unit cash ahead of competitors 26 • Projects under construction average 22 unit cash flows stronger than existing portfolio today 18 14 10 2004 2005 2006 2007 COMPETITOR RANGE SHELL Upstream earnings plus depreciation plus exploration expense divided by oil and ga
Slide 46: Exploration & Production: Key Messages
EXPLORATION & PRODUCTION: KEY MESSAGES Consistent strategy delivering results Leading in exploration performance Growing, diverse resource base Long term growth potential Top quartile operations Leading unit cash generation 45
Slide 47: Handout
HANDOUT as @
Slide 48: Competitive Hydrocarbon Resources
COMPETITIVE HYDROCARBON RESOURCES RESOURCES STRONG AND DIVERSE PORTFOLIO Bln Boe Region Segment 70 2007 60 50 40 30 20 10 0 ONSTREAM ME, RUSSIA, CIS HEAVY OIL & EOR UNDER CONSTRUCTION ASIA PACIFIC TIGHT/ SOUR IN DESIGN AFRICA LNG DEVELOPMENT OPTIONS EUROPE GTL LONGER TERM AMERICAS DEEPWATER * Total
Slide 49: 2005-2007 Reserves Summary
2005-2007 RESERVES1 SUMMARY RESERVES IN MLN BOE Movements 2005 2006 2007 Organic2 reserves additions 1,044 1,991 1,504 Year end price effect -60 -59 -183 Production -1,287 -1,268 -1,210 Acquisition & divestment 18 65 -1,115 Total subsidiaries and affiliates movements 1,002 1,997 206 Year end positio
Slide 50: Gas & Power
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS LINDA COOK EXECUTIVE DIRECTOR GAS & POWER
Slide 51: Gas & Power 2007 Financial Results
GAS & POWER 2007 FINANCIAL RESULTS GAS & POWER NIBIAT 2007 RESULTS (vs. 2006) $ Bln EARNINGS $2.8 bln (+ 6%) 3.0 • LNG Earnings $2.2 bln (+15%) 2.5 CASH FROM OPERATIONS $1.4 bln 2.0 CAPITAL INVESTMENT $3.5 bln (+50%) 1.5 1.0 0.5 0.0 -0.5 2003 2004 2005 2006 2007 LNG OTHER BUSINESSES DIVESTMENTS/OTHE
Slide 52: Growth and Active Portfolio Management
GROWTH AND ACTIVE PORTFOLIO MANAGEMENT CAPITAL EMPLOYED CHANGES IN THE PORTFOLIO (2003-07) $Bln, year end • LNG Supply Start Ups 20 • Malaysia Tiga 7 & 8 18 • Nigeria Trains 4 & 5 • NWS Train 4 16 • Oman Train 3 (Qalhat) 14 • LNG Import Terminal Start Ups 12 • Cove Point and Elba Island (US East Coa
Slide 53: Integrated Natural Gas Leadership
INTEGRATED NATURAL GAS LEADERSHIP EXPLORATION & LIQUEFACTION LNG SHIPPING REGAS, MARKETING & TECHNOLOGY PRODUCTION PIPELINES, TRADING STORAGE World’s 2nd Largest LNG Largest ship Strategic Global Leader in LNG largest gas supplier operator positions… positions & & conversion producer active capabili
Slide 54: LNG Volume Growth
LNG VOLUME GROWTH LNG SALES 2007 HIGHLIGHTS Shell Share, mtpa • Sales up 9% vs 2006 14 • Average reliability 98% 12 • 1st quartile performance 10 • Value through optimisation • Hazira and Altamira 8 • Shipping 6 • Marketing and diversions 4 • Growing demand and improved pricing outlook 2 0 2003 2004
Slide 55: Shell's Global LNG Portfolio
SHELL’S GLOBAL LNG PORTFOLIO LEADING POSITION … AND 5 NEW TRAINS UNDER CONSTRUCTION NLNG T6 Sakhalin T1 & 2 Start Up 2008 Start Up 2008-09 Qatargas 4 NWS T5 Pluto Start Up 2010+ Start Up 2008 OPERATION CONSTRUCTION LNG SUPPLY: IMPORT CAPACITY: Start Up 2010+ 54
Slide 56: Nigeria: Continuing Delivery
NIGERIA: CONTINUING DELIVERY NIGERIA LNG (SHELL 26%) • Total plant capacity 21.6 mtpa • World’s 3rd largest LNG venture • Train 6 construction complete • Within budget and schedule … and safe! • Sales to ramp up as gas supply increases NLNG PLANT • Shell is largest customer: 4.4 mtpa (incl T6) PLANT
Slide 57: North West Shelf LNG: Continued Growth
NORTH WEST SHELF LNG: CONTINUED GROWTH AUSTRALIA NWS (SHELL 22%) • Total plant capacity 11.9 mtpa • Train 5 proceeding well • ~95% complete • Start up expected 2008 • First LNG sales to China TRAIN 5 CONSTRUCTION • Japan sales contract negotiations PLANT CAPACITY & SALES • Extension from 2009 to 201
Slide 58: Sakhalin: A New LNG Frontier
SAKHALIN: A NEW LNG FRONTIER SAKHALIN II LNG (SHELL 28%) • LNG plant construction near completion • > 90% complete • 2 Trains, 9.6 mtpa total capacity • Commissioning underway • 2 LNG cargoes imported in 2007 • Strong customer demand SAKHALIN LNG PLANT • Over 98% LNG capacity sold • Mitigating impac
Slide 59: Qatargas 4: Middle East LNG Growth
QATARGAS 4: MIDDLE EAST LNG GROWTH QATARGAS 4 (SHELL 30%) • Single train…7.8 mtpa • ~65% complete • Market optimisation • ~2 mtpa Far East • ~5 mtpa Elba (US)….flexible • ~1 mtpa uncommitted • Shipping services to “Nakilat” QATARGAS 4 CONSTRUCTION (Qatari LNG shipping company) QATARGAS 4 CONSTRUCTIO
Slide 60: LNG: Maintaining IOC Leadership
LNG: MAINTAINING IOC LEADERSHIP CAPACITY GROWTH LEADERSHIP Shell share, year end, mtpa LNG capacity, year end, mtpa 25 25 20 20 15 15 10 10 5 5 0 0 2005 2006 2007 2008-9 2010+ Shell Exxon BP Total Chevron AUSTRALIA BRUNEI MALAYSIA NIGERIA 2007 2012 OMAN SAKHALIN QATARGAS 4 PLUTO Includes only projec
Slide 61: NW Australia: Driver for Future LNG Growth
NW AUSTRALIA: DRIVER FOR FUTURE LNG GROWTH CAPACITY GROWTH Shell share, mtpa 20 Sunrise: 38% 15 Prelude: 100% Browse (BCT): 25% 10 Possible NWS: 22% future capacity 5 Pluto: 31% Gorgon Gorgon: 25% Pluto T1 T1-3 NWS T5 0 NWS T1-4 OPERATION CONSTRUCTION OPERATION CONSTRUCTION DESIGN BUSINESS DEVELOPME
Slide 62: Shell's LNG Portfolio: Asia Pacific
SHELL’S LNG PORTFOLIO: ASIA PACIFIC SHELL LNG SALES PORTFOLIO* ASIA PACIFIC LNG PRICING 2012 est LNG Price ($/mmbtu) 14 12 New Contracts in 2007 10 8 ASIA PACIFIC NORTH AMERICA EUROPE 6 Shell 2007 Sales • Pricing reflects contractual terms • Current strong market to be reflected in future 4 Shell sa
Slide 63: Pearl: A World Class Integrated GTL Project
PEARL: A WORLD CLASS INTEGRATED GTL PROJECT DRY GAS Offshore Gas GTL plant production processing Qatar North Field 1.6 bcf/d 120 kboe/d 140 kbbl/d Products Other GTL Gasoil (indicative) LPG Naphtha Ethane >1 mtpa Kerosene Gasoil >2 mtpa Synthetic Base Oil Condensate Base Oil >1 mtpa Exploration & Pr
Slide 64: Qatar Pearl GTL: World Scale Plant
QATAR PEARL GTL: WORLD SCALE PLANT PEARL GTL • Progress in line with expectations • ~35% complete • ~20,000 workers on site (> 35,000 by year end) • First 4 GTL reactors on site REACTORS INSTALLATION PEARL CONTRUCTION POTABLE WATER TANKS 63
Slide 65: A Growing Wind Energy Business
A GROWING WIND ENERGY BUSINESS WIND ENERGY • Leverage Shell capabilities • Project management and operations • Power marketing and risk management • Financing • Focus on North America CABAZON INSTALLED CAPACITY GROWTH MW, Shell share 600 400 Mt Storm Phase I & II 200 0 2005 2006 2007 2008-9 est UNIT
Slide 66: Gas & Power
GAS & POWER STRONG FINANCIAL PERFORMANCE ACTIVE PORTFOLIO MANAGEMENT LNG LEADERSHIP • Operating excellence • Volume growth • Exposure to strengthening Asian market PEARL GTL UNDER CONSTRUCTION COAL AND WIND OPPORTUNITIES FOR LONG TERM TRACK RECORD OF DELIVERY 65
Slide 67: Handout
HANDOUT 66
Slide 68: Clean Coal Technology for the Future
CLEAN COAL TECHNOLOGY FOR THE FUTURE COAL GASIFICATION • 16 licenses in China • Five plants in operation • Dongting (Shell 50%) • Four licenses awarded in 2007 • China, UK, US and Vietnam DONGTING CLEAN COAL TO POWER • Buggenum (250 MW, NL) license since 1994 • Nuon license 2006 (600 MW, NL) • Power
Slide 69: Libya: Positioning in the Gas Sector
LIBYA: POSITIONING IN THE GAS SECTOR INTEGRATED UPSTREAM AGREEMENT PROGRESS • Signed May 2005 • ~20,000 sq km exploration acreage • ~11,000 km 2D seismic acquired • ~ 6,000 sq km 3D seismic acquired • Rig on site • Rejuvenation of Brega LNG plant (0.7 mtpa) MARSA EL BREGA PLANT • Addressing safety a
Slide 70: Oil Sands - Mining and Upgrading
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS ROB ROUTS EXECUTIVE DIRECTOR OIL SANDS - MINING AND UPGRADING
Slide 71: Athabasca Oil Sands - Mining & Upgrading
ATHABASCA OIL SANDS - MINING & UPGRADING AOSP PROCESS STEPS MAP Muskeg River Mine Scotford Scotford ATHABASCA Muskeg River Mine Mine & Froth Pipeline FORT MCMURRAY Extraction Treatment (3rd party) Upgrader Refinery Pipeline Alberta Oil Sands Diluted Vacuum Oil Products Scotford Upgrader & Refinery B
Slide 72: Oil Sands
OIL SANDS OIL SANDS EARNINGS 2007 RESULTS & MILESTONES $ Bln • Earnings $0.6 bln 0.7 • Net Bitumen production 81 kboe/d • Mine availability continues to improve 0.6 • Net Capex $1.9 bln 0.5 • Expansion 1 under construction • 60 kboe/d capacity under construction 0.4 • Regulatory filings 0.3 • Jackpi
Slide 73: Oil Sands: Mining Portfolio
OIL SANDS: MINING PORTFOLIO SHELL ACREAGE POSITION AOSP (100%) • 125,000 total hectares • Recoverable resource estimate ~ 6.5 bln barrels • Bitumen mining status: Kbbl/d Muskeg River Mine – operational 155 Jackpine mine – under construction 100 Additional approved development 215 Pending approval 30
Slide 74: AOSP Expansion 1: +100 kboe/d
AOSP EXPANSION 1: +100 kboe/d CONSTRUCTION Jackpine Mine Froth treatment Pipeline Scotford Truck and Shovel Mine Froth Treatment 42” Fully Atmospheric & Crusher & Rotary Breaker Solvent Recovery Looped Diluted Vacuum Distillation Conditioning Pipeline Tailings Solvent Bitumen RHC/IHT Extraction Reco
Slide 75: Building a Portfolio of Downstream Options
BUILDING A PORTFOLIO OF DOWNSTREAM OPTIONS • Maximizing value through an integrated North American supply chain from Oil Sands to refining • Leveraging existing assets • Multiple options to match production growth Alberta Upgrading SCOTFORD PERMITTING STATUS Export to Capacity in kbbl/d Pacific Basi
Slide 76: Oil Sands: Key Messages
OIL SANDS: KEY MESSAGES SAFETY LEADER INTEGRATED OILS SANDS OPERATION – MINE THROUGH UPGRADING AOSP EXPANSION 1 UNDER CONSTRUCTION INTEGRATED NORTH AMERICAN GROWTH STRATEGY POTENTIAL FOR MORE THAN 450 KBOE/D PRODUCTION WORK ONGOING REGARDING CO2 EMISSION MITIGATION 75
Slide 77: Financial Framework
ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS PETER VOSER CHIEF FINANCIAL OFFICER
Slide 78: Financial Strategy Unchanged and on Track
FINANCIAL STRATEGY UNCHANGED AND ON TRACK Global portfolio Financing capacity ranking Through-cycle Selective deals flexibility Competitive Returns Operating Dividend growth performance Non-core asset Share buy-back sales 77
Slide 79: Financial Performance
FINANCIAL PERFORMANCE COMPETITIVE CASH FLOW CAPITAL DISCIPLINE Cash flow per share growth % Cumulative divestments $bln 250 30 200 20 150 10 100 0 2003 2004 2005 2006 2007 2004 2005 2006 2007 EP, GP OP, CHEMICALS OTHER COMPETITIVE PAY-OUT PRUDENT BALANCE SHEET Dividend/EPS % Debt ratios % 60% 20% 15
Slide 80: Strong Project Funnel
STRONG PROJECT FUNNEL PROJECT PORTFOLIO COMPETITIVE RETURNS No. of projects $ Bln Return % 250 35 35% 30 30% 200 25 25% 150 20 20% 15 15% 100 10 10% 50 5 5% 0 0 0% 2004 2005 2006 2007 2003 2004 2005 2006 2007 ASSESS DEFINE ROACE CAPITAL UNDER SELECT EXECUTE RETURN ON CAPITAL IN SERVICE CONSTRUCTION
Slide 81: Capital Discipline and Track Record
CAPITAL DISCIPLINE AND TRACK RECORD NET CAPITAL SPENDING COMPETITIVE REINVESTMENT RATIO $bln Capex % cash flow 100% 2007 2008E ORGANIC 25.5 ~28-29 ACQUISITIONS 8.2 ~2.1 50% DISPOSALS (9.9) ~ (4) NET CAPITAL SPENDING 23.8 ~26-27 0% BP CVX RDS TOT XOM 2008 capital spending forecast % 2007 cash from op
Slide 82: Changing Cost Landscape
CHANGING COST LANDSCAPE INDUSTRY COST LANDSCAPE Cost index % Offshore rigs • Industry inflation ~20% Offshore installation vessesls • Strong segmentation of inflation impact Land rigs • Not restricted to the traditional oil & gas sector €/$ Oil Price • Shell portfolio and self-help Engineering & pro
Slide 83: Costs & Portfolio
COSTS & PORTFOLIO COMPETITIVE PROJECT COSTS SPENDING ON LONG-LIFE PROJECTS Integrated development costs $/BOE Years of plateau production 30 25 20 20 15 ~55% of Capex >50% of capex Average development cost on long-life 10 on long-life ~$7/BOE production 10 production 5 0 0 0% 25% 50% 75% 100% 0% 25%
Slide 84: Financial Outlook of Key Projects
FINANCIAL OUTLOOK OF KEY PROJECTS CAPITAL ALLOCATION & PROFITABILITY PROJECT LIFE AND RETURNS Profitability Index IRR <5 5 – 15 >15 <5 5 – 15 >15 Project life (years) 2004-05 environment: ~$50/bbl crude and ~$10/bbl USGC 2005-06 environment ~$70/bbl crude and ~$15/bbl USGC Post-FID incl. 2007 start-
Slide 85: Upstream Cashflow Outlook
UPSTREAM CASHFLOW OUTLOOK INCREASED WEIGHTING TO PRICE UPSIDE; BALANCING COUNTRY RISK % of upstream cash flow 2013-15 2006-07 High margin High margin 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Medium Medium margin margin Low 0% 20% 40% 60% 80% 100% Low margin margin 0% 20% 40% 60% 80% 100% 0% 2
Slide 86: Established Track Record
ESTABLISHED TRACK RECORD PERFORMANCE CULTURE CAPITAL DISCIPLINE PORTFOLIO & CHOICES • Simpler structure • Prudent balance sheet • Major project decisions • Operating performance • Payout • Exit from non-core and profitability assets • Sustained investment • Investment capability • Re-phasing of marg
Slide 87: Handout
HANDOUT 86
Slide 88: Key Projects
KEY PROJECTS START UP PROJECT COUNTRY SHELL PEAK LNG 100% PRODUCTS CATEGORY SHELL SHARE PRODUCTION CAPACITY OPERATED % kboe/d mtpa 2006-2007 CHANGBEI CHINA 50 50 DEIMOS PH 1 USA 71.5 30 ERHA NIGERIA 43.75 210 NIGERIA LNG T5 NIGERIA 25.6 4.0 NIGERIA LNG T6 NIGERIA 25.6 4.0 ORMEN L ANGE NORWAY 17 420