Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (November 2017)
98 slides from Shell's investor day presentation, Nov 28, 2017
Slide 1: Management Day: Delivering a world-class investment case
Management Day Delivering a world-class investment case Royal Dutch Shell plc November 28-29, 2017 #makethefuture Royal Dutch Shell November 28-29, 2017
Slide 2: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Bangkok – Thailand Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 3: 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 Definitions & classified as SEC proved oil and gas reserves. Resources are consistent with t
Slide 4: Agenda
Agenda PLENARY I Ben van Beurden – company update Jessica Uhl – financial framework PLENARY II Maarten Wetselaar – Integrated Gas Andy Brown – Upstream John Abbott – Downstream Maarten Wetselaar – New Energies Q&A BREAK-OUT PANELS Upstream Andy Brown – Upstream Director Shell’s carbon
Slide 5: Summary
Summary Key messages Thrive in the energy Cancel scrip dividend programme from Q4 2017 dividend transition Confirming the plans for share buybacks* Organic free cash flow by 2020**: $25-30 billion per year World-class Grow free cash flow per share from 2020 to 2025 investment case Resilien
Slide 6: Significant changes delivered since early 2016
Significant changes BG delivered since ~$27 billion 13,000 early ‘16 Acquisition Free cash flow* at Fewer staff Completed and fully integrated $51 per barrel 11 ~$9 billion ~$23 billion Major project start-ups Free cash flow* and >500 Divestments completed and ~17% ROACE in kboe/d avg. production in
Slide 7: Transformation: Clarity of purpose
World-class investment case Transformation 2013-15 17Q3 2019-21 average 4Q rolling average Clarity of ROACE 8% 4.6% ~10% purpose Organic free cash flow $5 billion p.a. ~$17 billion $25-30 billion p.a. Differentiated strategy Gearing 14% 25.4% <20% end ’20 Portfolio $8.7 billion at least $25 bi
Slide 8: Transformation: ways of working
World-class investment case FTE reductions Culture change Transformation: # of FTE (thousands) Shell Performance unit management Credible, competitive and affordable ways of working BG Accountable leadership ‘Fit for the future’ Digitalisation – benefiting cost and availability Shell emp
Slide 9: Four powerful levers
Four powerful $ billion 2017E 2018-20 expectation levers <38 Further reduction Operating costs (underlying) potential Capital investment 25 25 – 30 30 over >5 p.a. Divestments 2016 – 2018 2019 – 2020 Projects start-up post- ~10 ~5 2014 incremental* over Relentless portfolio high- 2017 (CFFO) 2018 –
Slide 10: HSSE performance
HSSE Goal zero on safety Spills – operational performance Injuries – TRCF/million working hours million working hours Volume in thousand tonnes Number of spills TRCF Working hours (RHS) Volume Spills (RHS) Upstream flaring Process safety Million tonnes CO2e Number of incidents HSSE priority Perf
Slide 11: World class investment case
Competitive performance ROACE Free cash flow – 4 quarters rolling World class % $ billion investment case Thrive in the energy transition World-class investment Gearing Total shareholder return case % % Since Jan 2015 Since Jan 2016 Since Jan 2017 Strong license to operate Shell Peer group Shell Pee
Slide 12: Investment priorities & strategic intent
Today by 2020 Investment priorities & Cash engines (FCF >0) strategic intent Funds dividends and balance sheet Competitive and resilient OIL INTEGRATED CONVENTIONAL Strong free cash and returns PRODUCTS GAS OIL + GAS Growth priorities (FCF ~0) Emerging cash engines Affordable growth in adv
Slide 13: Capital discipline, supporting growth
Capital Capital investment Capital investment Capital employed discipline, $ billion (p.a.) 2018 – 2020 $ billion $ billion % supporting Oil products 4-5 growth Conventional oil + gas 4-5 Integrated gas 4-5 Deep water 5-6 Chemicals 3-4 Shales 2-3 New energies 1-2 Total 25-30 Capital investment Mor
Slide 14: Delivering cash flow growth
2016 – 2019+ Delivering Schiehallion redevelopment (2017) Pernis – Solvent cash flow Clair Ph2 (2018) deasphalting (2018) growth Kashagan (2016) Pennsylvania Chemicals (2019+) Fox Creek (2016-19+) Scotford HCU debottleneck Nanhai China Chemicals (2019+) (2016) Tempa Rossa (2018) Malikai (2016) Permi
Slide 15: Financial performance: On-track
Previous Update** Financial 2019-21 ~$60 June 2016 CMD 17Q3 – 4Q rolling ~$51 2019-21 ~$60 performance: On-track Free cash flow* ROACE Capital employed Free cash flow ROACE Capital employed Free cash flow* ROACE ($ bln end ($ bln p.a) (%) ($ bln p.a) (%) ($ bln) ($ bln p.a) (%) ’17Q3) Cash engines 1
Slide 16: Societal challenge
Thrive in the energy transition Societal 2015 2070 challenge Increasing population 7 billion >10 billion Increasing energy demand 570 Exajoules 1000 Exajoules Challenge for more Need to reduce CO2 emissions and cleaner energy 32 gt CO2e CO 2 Net Zero Reduction required in the 2040 Emissions carb
Slide 17: Driving to resilience
Thrive in the energy transition Driving to resilience: Annual bonus scorecard Driving to Short-term operational targets resilience GHG metrics 10% of annual bonus scorecard 10% GHG management (Scope 1 and 2) Emissions management focussed on areas 5% Process safety we can take operational action
Slide 18: Ambition – Net Carbon Footprint
Thrive in the energy transition Ambition to reduce Net Carbon Footprint 1 of our energy Ambition for Net Carbon Footprint 1 Ambition – Net products by around 20% by 2035 WtW gCO2e/MJ1 Carbon Footprint Covers full range of emissions from energy products Shell “business as usual” Emissions in the
Slide 19: Summary
Summary Key messages Thrive in the energy Cancel scrip dividend programme from Q4 2017 dividend transition Confirming the plans for share buybacks* Organic free cash flow by 2020**: $25-30 billion per year World-class Grow free cash flow per share from 2020 to 2025 investment case Resilien
Slide 20: Jessica Uhl, Chief Financial Officer
Jessica Uhl Chief Financial Officer Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 21: Foundation of the world-class investment case
Financial framework Foundation of the world-class Thrive in Key features investment case the energy transition Maximising value for shareholders through cycle Multi-year timescales World-class Surplus free cash flow in up-cycle and dividends fully covered inv estment case in down-cycle Geari
Slide 22: BG acquisition and shareholder distributions
Financial framework BG post-offer intention statements Growing shareholder distributions BG acquisition at the time of the acquisition and shareholder Surplus Buybacks distributions Pay at least dividends of $1.88 per CFFO Shell share for 2016 Capital investment Subject to progress with debt r
Slide 23: Free cash flow performance and payout
Free cash flow Distributions from free cash flow performance and $ billion payout $99/bbl $51/bbl $60/bbl* Financial transformation 2014-2017 2014 17Q3 2019-2021 4Q rolling average 2019-2021 average: FCF $30-35 billion Divestment proceeds less acquisitions Scrip dividend Interest paid Organic FC
Slide 24: Achieving divestment and debt reduction objectives
Achieving Divestment proceeds Net debt & gearing divestment and $ billion $ billion % debt reduction objectives Visibility on lower gearing through progress on Integrated Gas Net debt divestments Upstream Gearing (RHS) Downstream/Corporate Gearing with impact of divestments completed since Q3 2017 A
Slide 25: Deliver new projects: CFFO growth
Deliver new Shell project start-ups 2014 through 2020 Selected key projects projects: Thousand boe per day $ billion p.a. CFFO growth Appomattox Brazil FPSO 7-10 2014 – 2020 Brazil FPSO 11-14 Stones Gorgon Prelude Kashagan Schiehallion redevelopment Clair Ph2 Permian & Fox Creek ~$10 b
Slide 26: Reduce operating costs: lower forever
Reduce Underlying operating expenses Cost management framework operating costs: $ billion > -20% “lower forever” Ambitious goals based on full potential Ambition Common view of fully loaded cost and value drivers Transparency Apply competitive lens to drive competitive performance Competitiveness
Slide 27: Higher capital efficiency and more consistent capital investment
Higher capital Capital investment efficiency and $ billion > -40% more consistent capital investment Increased capital efficiency $25-30 billion Resilient projects $30 billion per year ceiling Options to reduce capital investment below $25 billion if warranted Sustain current cash flow at
Slide 28: Cash flow priorities
World-class investment case Cash flow priorities 1 2 3 Priorities Buybacks Debt reduction Dividends & capital for cash investment Continue to reduce Cancel scrip dividend Buy back shares gearing to 20% Progress towards a world-class investment case Increase shareholder distributions Royal Dutc
Slide 29: Maarten Wetselaar, Integrated Gas & New Energies Director
Maarten Wetselaar Integrated Gas & New Energies Director Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 30: Integrated Gas
Integrated Gas Cash engine Creating & securing demand Optimisation Managing supply LNG Marketing and trading Gas and liquids production Gas and power Shipping and transport Liquefaction Gas-to-liquids premium products Regasification Gas-to-liquids Capital employed: $90 billion Wo
Slide 31: Integrated Gas financial performance
Integrated Gas Cash flow from operations Capital employed Financial $ billion $ per barrel $62 billion as of Q3 2015 $90 billion as of Q3 2017 performance In service Under construction CFFO excl. working capital Brent (RHS) LNG liquefaction and sales volumes Earnings and ROACE Million tonnes $ billi
Slide 32: Gas-to-liquids value chain
Integrated Gas Record-breaking offshore performance Pearl - the world’s largest gas-to-liquids plant Gas-to-liquids value chain North Field Pearl GTL Plant Continuous innovation Marketing integration Jane.Adam: replace with piucture of Helix Ultra only Integrated value chain Differentiated produ
Slide 33: Policy and economics driving gas
Integrated Gas OECD - Electricity output by source Beijing gas demand Policy and % bcm Decree on PM 2.5 economics coal-to-gas switch in non-power sector driving gas UK carbon growth floor price US shale Action plan growth for air pollution prevention Enhanced plan for tackling air pollution Rapid in
Slide 34: LNG supply and demand
Integrated Gas LNG supply/demand gap Capacity additions – 2015 to 2020 LNG supply Million tonnes Million tonnes % and demand LNG supply under construction Annualized capacity additions under construction LNG supply in operation Annualized capacity additions in operation Demand forecasts Cumulative s
Slide 35: LNG – Global integrated value chain
Integrated Gas LNG – Global C R E AT I N G A N D MANAGING O P T I M I S AT I O N integrated value SECURING DEMAND SUPPLY chain Leverage portfolio flexibility and arbitrage opportunities Largest LNG marketer Deliveries to 25+ countries Production: 1 million boe/d Largest supplier to China & J
Slide 36: LNG portfolio
Integrated Gas LNG sales – sources and deliveries LNG portfolio Million tonnes Balanced portfolio: Liquefaction mostly matched by third-party purchases Spot deliveries mostly matched by spot purchases Deliveries: 80% term contracts 60% oil-linked Balanced and resilient Spot purchase Shor
Slide 37: Create and secure demand
Integrated Gas Gasnor Create and Canada Dragon Rotterdam Europe secure demand USA Cove Point Barcelona China Elba Attiki Lake Charles Hangzhou Costa Azul Hazira Qatar ` Mahanagar Gas Altamira` India LNG Import terminals (incl. capacity rights) Singapore Natural Gas Distribution Brazil Indonesia LNG
Slide 38: World-class LNG supply portfolio
Integrated Gas Gasnor World-class LNG Sakhalin supply portfolio Egypt LNG Qatar Gas 4 Oman LNG Atlantic LNG Nigeria LNG Brunei LNG Malaysia LNG Peru LNG Prelude North West Shelf Existing Gorgon Under construction QCLNG Liquefaction capacity by independent company Leading portfolio Million tonnes per
Slide 39: Selective growth: pre-FID portfolio
Integrated Gas Baltic LNG Selective growth: Sakhalin expansion pre-FID portfolio Abadi LNG Canada Tanzania Mozambique GTL Nigeria LNG Lake Charles expansion Browse In-/Post-FEED Pre-FEED LNG pre-FID unit cost of supply Cost of supply is key $/mmBtu North American projects set new market benchmark
Slide 40: Integrated Gas
Integrated Gas Cash engine Creating & securing demand Optimisation Managing supply LNG Marketing and trading Gas and liquids production Gas and power Shipping and transport Liquefaction Gas-to-liquids premium products Regasification Gas-to-liquids Capital employed: $90 billion Wo
Slide 41: Andrew Brown, Upstream Director
Andrew Brown Upstream Director Appomattox hull arrival in Ingleside Texas – USA Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 42: Upstream
Upstream Cash engines Growth priorities Emerging opportunities Conventional oil & gas Deep water Shales Gbaran Ubie - Nigeria Perdido – USA Gulf of Mexico Permian - USA High-grading position Advantaged portfolio Enhance position Operational excellence focus Delivery track record Improved
Slide 43: Upstream financial performance
Upstream Cash flow from operations Organic free cash flow financial $ billion $ per barrel $ billion $ billion performance 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 CFFO Brent (RHS) Quarterly 4 quarter rolling (RHS) Unit cash flow Earnings by strategic theme & ROACE $ CFFO per boe $ billion % +$10 per barr
Slide 44: Improving results
“Fit for the future” 2018 aspirations Improving results Process safety Production Availability Total cost 50% fewer tier 1 & 2 Unlock 150 kboe/d >90% Competitive unit incidents from optimization operating costs Production & availability Upstream operating costs Million boe per day % $ billion Gap
Slide 45: Scoping & executing for resilience
Scoping & Replication & standardisation Competitive scoping Project execution executing for resilience SK408 - Malaysia Vito – USA Gulf of Mexico Fox Creek Kaybob plant - Canada 3 platform tiebacks with a Vito project re-scoped to reduce New processing plant in Fox Creek standard design in Mal
Slide 46: Key Upstream start-ups & under construction
Clair Ph2 ▪ 100 kboe/d Project delivery 2016+ ▪ Shell 28% Key Upstream Schiehallion redevelopment ▪ 125 kboe/d ✓ start-ups & under ▪ Shell 45% construction Permian & Fox Creek ▪ 200 kboe/d incremental Shell share by 2020 Kashagan ▪ 370 kboe/d ▪ Shell 17% ✓ Coulomb Ph2 Tempa Rossa Stones ▪ 10 kboe/d
Slide 47: Conventional oil & gas: Portfolio & priorities
Conventional oil & gas Norway Portfolio & Kazakhstan Divesting the non-core assets priorities UK Improving existing operations – fit for the future Negotiating to more resilient positions Nigeria Selective growth to offset decline Production & availability Operating costs Unit cash flow Mill
Slide 48: Sustaining the engine
Conventional oil & gas Project break-even prices Sustaining the Pre-FID funnel break-even price $ per barrel engine Robust project funnel Sustaining the engine with disciplined investment Large portfolio of low break-even price projects 0% 50% 100% Percentage of capital investment Production O
Slide 49: A leading IOC position
Deep water Advantaged portfolio Competitive growth Production excellence A leading IOC Thousand boe per day Pre-FID funnel break-even price $ per barrel $ per boe % position Percentage of capital investment Shell Peer group range 2014 2017 Unit costs Availability (RHS) Deep water pioneer Pre-FID
Slide 50: World class delivery
Deep water Progressing to >900 kboe/d by 2020 World class Maintain production through mid-2020s with discovered volumes & defined projects delivery Upside growth with exploration Capital discipline – doing more with less Accelerating and increasing organic free cash flow by lowering costs
Slide 51: Enhancing competitiveness
Shales Direct field costs - Permian Drill & complete - Permian Capabilities & technology Enhancing $ per boe 2017 YTD $ million 2017 YTD (normalized to 7500’ lateral) competitiveness Remote drilling center - Canada Basin Basin Shell Shell co-ventures co-ventures Drill Complete Reduced direct field
Slide 52: Building a growth business
Shales Near-term selective acceleration of Permian & Fox Western Canada Gas Building a Creek Duvernay Western Canada LTO Growth of ~200 kboe/d by 2020 growth business Fox Creek Duvernay Dry gas Liquids rich Average break-even price ~$40 per barrel Appalachia Accelerating free cash flow break
Slide 53: Exploration track record & strategy
Norway Exploration Build on heartland success UK Russia Netherlands Track record to sustain future growth Albania Targeting emerging opportunities & strategy to supplement Heartlands USA Algeria Egypt Oman Myanmar Value maximized through Trinidad &Tobago Nigeria Malaysia Brunei int
Slide 54: Robust development potential
Robust Reserves & resources Deep water unit development costs development Billion boe $ per boe potential -45% COG operated unit development costs $ per boe Conventional Deep water Shales oil & gas -45% Discovered resources Reserves (SEC proved) (2P+2C development pending) Significant discovered r
Slide 55: Pre-FID Options
Jackdaw Pierce Depressurisation Troll Ph3 ▪ 40 kboe/d ▪ 25 kboe/d KGK expansion Ph1 Kashagan CC01 ▪ 255 kboe/d ▪ 40 kboe/d ▪ 100 kboe/d 2018-2022 ▪ Shell 70% ▪ Shell 92.52% ▪ Shell 8.1% ▪ Shell 29% ▪ Shell 17% Ormen Lange recovery Pre-FID Options Clair South ▪ 60 kboe/d Penguins redevelopment ▪ 45 k
Slide 56: Upstream
Upstream Cash engines Growth priorities Emerging opportunities Conventional oil & gas Deep water Shales Gbaran Ubie - Nigeria Perdido – USA Gulf of Mexico Permian - USA High-grading position Advantaged portfolio Enhance position Operational excellence focus Delivery track record Improved
Slide 57: John Abbott, Downstream Director
John Abbott Downstream Director Bangkok – Thailand Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 58: Downstream
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Customer offer + brand leverage Full integration with trading Advantaged feedstock Further strengthen our Differentiated products Improve retained assets Strong product portfolio financial performance Globa
Slide 59: Downstream financial performance
Downstream Cash flow Capital employed financial $ billion $ billion $56 billion at end Q3’17 performance CFFO excluding working capital Working capital movement Free cash flow (RHS) Refining & Trading Marketing Chemicals Global brand preference Earnings by sub-segments + ROACE % $ billion % Strong
Slide 60: Refining and Trading
Investing in selective growth Refining 1,050,000 bpd 875,000 bpd 460,000 bpd and Trading Fredericia Scotford (100%) (100%) Calgary Sarnia (100%) London Rotterdam Puget Sound (100%) Pernis (100%) Miro (32%) Beijing Retain competitive sites Rheinland (100%) Karachi (30%) Schwedt (38%) Martinez Houston
Slide 61: Downstream asset integration: Rhine envelope
Downstream Rhine envelope Integration of Motiva assets to the DS portfolio asset integration: Global trading Rhine envelope options Rostock & Eastern US Harburg PCK Schwedt portfolio Pernis Arnhem Seefeld RRP Moerdijk Rheinland RMR Bertrange Flörsheim Ludwigshafen Würzburg MiRO Karlsruhe Linz Lobau
Slide 62: Shell Oil Products – marketing
Investing in selective growth Marketing – ROACE Marketing – free cash flow Shell Oil Products % $ billion – marketing Retail country entry - Mexico Shell Recharge - UK Mexico – Retail country entry Royal Dutch Shell November 28-29, 2017 62
Slide 63: Retail's 5 ambitions for 2025
Oil Products Retail’s 5 ambitions for 2025 1 2 3 4 5 50% 20% LOWER EVERY 100% CARBON CUSTOMER Increase margin Fuels margin from Reduce carbon Treated like a Sites committed to share from non- low-emission intensity of our guest on site & in local communities fuels retail to 50% energy solutions reta
Slide 64: Digitalisation
Digitalisation Connected customer Innovation New business models Shell App Connected car FitCar powered by Jiffy lube >3 million downloads World’s first in car cashless payment Provides customers with maintenance 715,000 active users in >35 markets system alerts, trip info and more Quick,
Slide 65: Chemicals growth projects
Growth projects Ethylene capacity Under construction Chemicals Million metric tonnes Pennsylvania 425,000 metric tonnes per chemicals annum additional Alpha Olefins Bukom capacity start-up Nanhai I USGC Nanhai II restructuring Geismar, USA SADAF exit New liquids cracker and derivatives units C
Slide 66: Chemicals
Organic growth Earnings + ROACE Chemicals $ billion % Improve base business Expand current base portfolio Adding to portfolio – growth Targets aspiration per year mid-’20s: Earnings: ~$3.5 - 4 billion Cash flow: ~$5 - 6 billion Base capex: ~$1 - 1.5 billion Earnings ROACE (RHS) Earnings
Slide 67: Downstream
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Customer offer + brand leverage Full integration with trading Advantaged feedstock Further strengthen our Differentiated products Improve retained assets Strong product portfolio financial performance Globa
Slide 68: Maarten Wetselaar, Integrated Gas & New Energies Director
Maarten Wetselaar Integrated Gas & New Energies Director Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 69: New Energies
New Energies Emerging Opportunities New Fuels Power Build integrated value Groundbirch, Canada chains Exploit adjacencies to Focus areas: Focus areas: existing businesses Biofuels Trading, marketing and customer access Discipline and Hydrogen Low-carbon generation and storage commercia
Slide 70: Market drivers and differentiators
New Energies Energy transition Market development Shell differentiators Market drivers and differentiators World needs more and cleaner Power markets expected to Experience, global footprint, energy grow faster than the overall adjacencies Commercial technologies and energy system Trading,
Slide 71: New Fuels
New Fuels Biofuels Hydrogen Raízen - Brazil Hamburg -Germany First generation experience through Raízen joint Existing sites in Germany, UK, and USA venture Working with partners to develop around One of the largest blenders and traders of biofuels 400 sites by 2023 in Germany Developing a
Slide 72: Power value chain
Portfolio resilience through a Power value chain S UPPLY & CUSTOMERS O P T I M I S AT I O N G E N E R AT I O N Multiple parties are active on Leverage portfolio flexibility and Not all products are supplied by Shell; the demand side arbitrage opportunities some are purchased from third parties Adj
Slide 73: Capital and returns
New Energies New Fuels Power Capital and returns Wuppertal, Germany NoordzeeWind, The Netherlands New Fuels looks for capital light opportunities Investment in customer access Selective an opportunity Work in partnerships and consortia Selective asset ownership driven investment Target d
Slide 74: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 75: Summary
Summary 2014-2020 2020+ T R A N S F O R M AT I O N CONTINUE TO IMPROVE IN SHELL OUR METRICS PER SHARE 2014 - 2020 2020+ Portfolio re-shape Growing per share metrics More free cash flow from a stronger basis Higher returns Royal Dutch Shell November 28-29, 2017 75
Slide 76: Questions & Answers
Questions & Answers Ben van Beurden Jessica Uhl Chief Executive Officer Chief Financial Officer Royal Dutch Shell November 28-29, 2017 76
Slide 77: Management Day – Break-out panels
Management Day – Break-out panels Delivering a world-class investment case Royal Dutch Shell plc November 28-29, 2017 #makethefuture Royal Dutch Shell November 28-29, 2017
Slide 78: Integrated Gas break-out panel
Break-out Panel Key messages Cash flow from operations Integrated Gas $ billion $ per barrel 20 100 World leader Maarten Wetselaar Growing markets 15 75 Differentiated portfolio 10 50 Market-driven value chain 5 25 Cash engine 0 0 2014 2015 2016 17Q3 4Q rolling CFFO excl. working capital B
Slide 79: New Energies break-out panel
Break-out Panel Key messages New Energies Emerging opportunity with focus on Maarten Wetselaar New Fuels and Power Selective, disciplined and commercial investments Leverage adjacencies and competitive Volume Spills advantages NoordzeeWind , The Netherlands Build a new value chain that will
Slide 80: Upstream break-out panel
Break-out Panel Key messages Cash flow from operations Upstream Financial and operational Andrew Brown performance improving Delivering on levers – divestments, costs and project start-ups Upgrading 2016 Capital Markets Day organic FCF $5-6 billion conventional oil & gas $6-7 billion deep
Slide 81: Downstream
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Customer offer + brand leverage Full integration with trading Advantaged feedstock Further strengthen our Differentiated products Improve retained assets Strong product portfolio financial performance Globa
Slide 82: Harry Brekelmans, Projects and Technology Director
Harry Brekelmans Projects and Technology Director Royal Dutch Shell Royal Dutch Shell November 28-29, 2017
Slide 83: Driving to resilience and ambition
Thrive in the energy transition Demonstrating Shell’s approach across multiple time horizons Driving to TIME HORIZON resilience and ambition 1-3 YEARS 5-10 YEARS >10 YEARS SHORT TERM MEDIUM TERM LONG TERM GHG Strategic positioning and Net Carbon Footprint management portfolio resilience methodology
Slide 84: Net Carbon Footprint
Thrive in the energy transition Net Carbon Footprint END-USE Shell oil production Oil transport Shell refinery Distribution Transportation Oil products Upstream assets Shipping or pipeline Downstream assets 3rd party crude supply 3rd party oil products Country average Regional average Shell gas prod
Slide 85: Ambition – Net Carbon Footprint
Thrive in the energy transition Ambition to reduce Net Carbon Ambition for Net Carbon Footprint 1 Ambition – Net Footprint 1 of our energy products by WtW gCO2e/MJ1 around 20% by 2035 Carbon Footprint Covers full range of emissions from Shell “business as usual” energy products Aim to reduce ove
Slide 86: Ambition – Net Carbon Footprint
Thrive in the energy transition Flexibility and mix of options to Potential tools to achieve our 2035 Net Carbon Footprint 1 ambition Ambition – Net achieve ambition WtW gCO2e/MJ1 Carbon Footprint Allows for oil and gas production growth offset by evolving product mix Changing product mix give
Slide 87: Examples of CO2 abatement
Thrive in the energy transition Pearl GTL Bukom refinery Examples of CO2 abatement Flare in utilities area, Pearl GTL, Qatar Bukom refinery, Singapore Shell reduced heavy paraffin synthesis off-gas (HOG) Bukom refinery Singapore operational flaring at the plant to zero ~68 MW cogeneration unit
Slide 88: Management Day – Appendices
Management Day – Appendices Delivering a world-class investment case Royal Dutch Shell plc November 28-29, 2017 #makethefuture Royal Dutch Shell November 28-29, 2017
Slide 89: LNG supply and demand
Integrated Gas Supply development Demand development LNG supply Million tonnes (DES) Million tonnes (DES) and demand Supply growth matched by solid demand Source: IHS Markit LNG Waterborne Trade, November 2017. January to October (inclusive) 2017 – JKT: Japan Korea Taiwan - Exports & imports are bas
Slide 90: Shell premium products
Investing in selective growth Global retail – premium product penetration Global lubes - premium products penetration Shell premium % % products Shell V-Power is the world’s most widely sold Leveraging GTL base oil with Pureplus® premium fuel (68 markets) Global #1 for 11 years (including in C
Slide 91: Downstream competitive landscape
Downstream Downstream ROACE Oil Products ROACE competitive % % landscape Shell Peers Chemicals ROACE Brand % Global brand preference 14Q1 15Q1 16Q1 17Q1 17Q3 Shell Chemicals peer group 4Q rolling Shell Other majors Downstream: Earnings on local GAAP basis adjusted for inventory valuation differences
Slide 92: Building scale with high quality midstream assets
Resilient framework Shell Midstream Partners Building scale Diversified portfolio with high quality midstream Sustainable growth assets Distribution growth since IPO $ct/LP unitholder 31.8 +96% 16.25 Strategic portfolio linking Shell’s integrated footprint 14Q4 17Q3 Royal Dutch Shell November
Slide 93: Emissions example: passenger vehicles
Thrive in the energy transition Gasoline / Diesel chain Emissions example: passenger vehicles Illustrative size of emission Well to tank 15% 85% Tank to wheel Well to Wheels CO2 emissions Electric chain Electrification moves end-use emissions to power generation Power generation is in turn decar
Slide 94: Shell scenarios and modelling
Shell scenarios Societal scenarios explore “how Mountains/Oceans and modelling the world might work” in the future, and is an essential front- end input in energy modelling Different parts of the world will develop in their own Resources ways and at different paces Demand Technology innovation
Slide 95: Net-zero emissions by 2070
Shell scenarios analysis Shell is working on a scenario that achieves net-zero emissions by 2070, required for a 2°C pathway. This is plausible Net-zero in the medium term, and becomes normative1 in the long term emissions by 2070 What one has to believe 2: ▪ China CO2 peaks before 2030, India in 20
Slide 96: IEA World Energy Outlook 2017 scenarios
IEA World The IEA Current Policies (CPS) and New Policies (NPS) scenarios start with assumptions about policies and see Energy Outlook where they lead. The Sustainable Development Scenario (SDS) sets the end-goal (Paris goal) and works back to the present 2017 scenarios IEA assumptions: ▪ Energy dem
Slide 97: Engagement with TCFD
Energy transition Shell’s response to TCFD recommendations 1 Engagement with TCFD Governance Strategy Risk Management Metrics & Targets Primary source2 Annual Report Energy Transition Annual Report Sustainability Report Report Comment Climate change We consider Tools and processes in Metrics reporte
Slide 98: Management Day: Delivering a world-class investment case
Management Day Delivering a world-class investment case Royal Dutch Shell plc November 28-29, 2017 #makethefuture Royal Dutch Shell November 28-29, 2017