Annual roundtable - Shell Global | Shell Global · 4/24/2017 · Annual roundtable Socially...
Transcript of Annual roundtable - Shell Global | Shell Global · 4/24/2017 · Annual roundtable Socially...
Royal Dutch Shell April 24, 2017
Royal Dutch Shell plcApril 24, 2017
Annual roundtableSocially Responsible Investors
#makethefuture
Royal Dutch Shell April 24, 2017
Ben van BeurdenChief Executive OfficerRoyal Dutch Shell
Royal Dutch Shell April 24, 2017 3
Cautionary note This presentation contains data from Shell’s New Lens Scenarios. The New Lens Scenarios are a part of an ongoing process used in Shell for 40 years to challenge executives’ perspectives on the future business environment. We base them on plausible assumptions and quantifications, and they are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.
It is important to note that Shell’s existing portfolio has been decades in development. While we believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario, it includes assets across a spectrum of energy intensities including some with above-average intensity. While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years.
The companies in which Royal Dutch Shell plc 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 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. 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 20-F for the year ended December 31, 2016 (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, April 24, 2017. 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. 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 www.shell.com. 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.
Royal Dutch Shell April 24, 2017
Agenda 09:30 – 10:45 Presentation
Ben van Beurden
Donny Ching
Hans Wijers
Guy Outen
10:45 – 11:30 Q&A
11:30 – 12:00 Coffee break
12:00 – 14:00 Panel sessions Q&A (35 minutes each, 5 minutes to rotate)
14:00 – 14:45 Lunch
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Royal Dutch Shell April 24, 2017
Panels
Projects and Technology, Joint Ventures
Upstream Safety and Environment
Strategy including New Energies, climate change and CO2 management
Harry Brekelmans Director Projects and Technology
Sami Iskander EVP Joint Ventures
Babs Omotowa VP Safety & Environment Upstream
Osagie Okunbor Managing Director SPDC
Rupert Thomas VP Environment
Guy Outen EVP Strategy & Portfolio
Angus Gillespie VP CO2
David Hone Chief Climate Change Advisor
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PANEL A PANEL B PANEL C
Royal Dutch Shell April 24, 2017
Donny ChingLegal DirectorRoyal Dutch Shell
Royal Dutch Shell April 24, 2017 7
OPL 245Chronology of Events (1)
Phase 1
1998 - Malabu awarded licence for OPL 245
March 2001 - Shell Nigeria Ultra Deep (“SNUD”) farms in
Representations and warranties were provided on ownership of Malabu
Federal Government Nigeria (“FGN”) consented
Phase 2
July 2001 - FGN revokes the Malabu Licence
May 2002:
SNUD bids for and is awarded OPL 245 by FGN and later signs a PSC with Nigerian National Petroleum
Corporation (“NNPC”)
Signature bonus ($209 million) is placed in escrow pending outstanding disputes with Malabu
SNUD conducts exploration and appraisal work programme
Royal Dutch Shell April 24, 2017 8
OPL 245Chronology of Events (2)
Phase 2 (continued)
Various litigations follow:
May 2002 - SNUD commenced International Chamber of Commerce arbitration proceedings against
Malabu.
August 2002 - Malabu commenced proceedings against FGN, Shell Nigeria Exploration and Production
Company (“SNEPCO”), SNUD and other Shell parties in New York federal court
May 2003 - (following a petition by Malabu), the Nigerian House of Representatives issued a report
concluding: (i) OPL 245 was legally awarded to Malabu, (ii) the revocation of Malabu’s licence should be
set aside, (iii) SNUD should pay $550 million compensation to Malabu. SNUD appeals
September 2003 - Malabu commenced proceedings in Nigeria against FGN, NNPC and SNUD for a
declaration that the award of OPL 245 to Malabu was valid, a declaration that the award to SNUD was
invalid, and damages of $100 million
Royal Dutch Shell April 24, 2017 9
OPL 245
Chronology of Events (3)
Phase 3
December 2006 - FGN settles litigation with Malabu and reallocates the licence to Malabu
Malabu and SNUD now have competing legal rights to the Block
April 2007 - SNUD commences Bilateral Investment Treaty arbitration against the FGN for wrongful
expropriation
2008 - FGN seeks resolution, negotiations commence
Royal Dutch Shell April 24, 2017 10
OPL 245Chronology of Events (4)
Phase 4
2010 - negotiations now include ENI
Settlement with FGN - negotiations are conducted with Attorney General of FGN, the Minister of Petroleum
Resources, the Minister of Finance and senior NNPC officials
April 2011 - settlement is achieved. FGN receives $1.3bln:
Signature bonus ($207.96 million) is released by SNUD to FGN from 2003 escrow funds in return for the
licence
SNEPCO pays $110.40 million to ENI (Nigerian Agip Exploration (“NAE”) ) ($25.40 million interest on
the escrow, plus $85 million)
NAE pays $1,092.04 million to FGN for settling all outstanding claims on the Block
FGN agrees to indemnify SNEPCO and NAE from any other claims on the Block
SNEPCO and NAE hold the licence 50/50. NAE is operator
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OPL 245Agreements of April 2011
Heads of Agreement between NAE and SNUD and SNEPCO: allocation of the payments due to FGN
Block 245 Resolution Agreement: FGN, NNPC, SNUD, SNEPCO and NAE
Payments to FGN and award of the licence
FGN indemnifies SNEPCO and NAE against competing claims
Key fiscal terms of future PSC
Block 245 Resolution Agreement: FGN and Malabu. Payment to Malabu; settlement of claims
Block 245 Resolution Agreement: FGN and SNUD. Settlement of claims
Settlement submission to Court of Appeal, Abuja: SNUD, SNEPCO, Malabu and Nigerian House of
Representatives (“NHR”). Withdrawing SNUD and SNEPCO appeals against a 2003 NHR report in favour of
Malabu
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OPL 245Shell Review
Debevoise & Plimpton LLP, an international law firm, was retained by the Shell Group
Debevoise conducted and led an investigation which included staff from the law firm and Shell’s Business
Integrity Department
Periodic updates to senior management, Audit Committee and RDS Board
Final report to RDS Board in July 2016
Findings shared with authorities during 2016
Royal Dutch Shell April 24, 2017 13
OPL 245Shell response
“Given this matter is currently under investigation, it would be inappropriate to comment on specifics. However,
based on our review of the Prosecutor of Milan's file and all of the information and facts available to Shell, we
do not believe that there is a basis to prosecute Shell. Furthermore, we are not aware of any evidence to support
a case against any former or current Shell employee. If the evidence ultimately proves that improper payments
were made by Malabu or others to then current government officials in exchange for improper conduct relating
to the 2011 settlement of the long standing legal disputes, it is Shell’s position that none of those payments were
made with its knowledge, authorization or on its behalf.
We are taking this matter seriously and are fully co-operating with the relevant authorities. This includes when
appropriate having shared the key findings of an investigation led by Debevoise & Plimpton LLP, an independent
international law firm. We have also accurately reported on OPL 245 in our annual reports.
Shell attaches the greatest importance to business integrity. It’s one of our core values and is a central tenet of
the Business Principles that govern the way we do business.”
Royal Dutch Shell April 24, 2017
Ben van BeurdenChief Executive OfficerRoyal Dutch Shell
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ESG Programme SRI programme
SRI annual roundtable
Ongoing engagement + roadshows
SRI themed site visits
Governance programme
Remuneration committee roadshows
Chairman roadshows
AGM
2016: ESG Board engagement day
www.shell.com/esg
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Transition 2016 + delivery 2017+
Continued drive to re-shape Shell
Consolidated BG into Shell
Progressing 4 levers: cost reductions, capital
spend, divestments and project start-ups
From 8 towards 7 strategic themesLeader: value +
influence
Reducing our carbon
intensity
Shared value with society
World-class investment case
FCF + ROCE growth
Conservative financial
management
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Leading in transparencyRDS Reporting
2017 update
A- in 2016 CDP
Inclusion in the Dow Jones Sustainability Index
Increased disclosure on Human Rights
Revenue transparency reporting (June 2017)
Engagement with Taskforce on Climate-related Financial Disclosures (TCFD)
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Health, Safety, Security & Environment
Process safety is central in achieving Shell’s goal of zero harm to
people and the environment
Managed by combining asset integrity principles with a risk
management approach, supported by visible safety leadership
Asset Integrity Principles Risk Management Approach Process Safety Performance
Royal Dutch Shell April 24, 2017
Goal Zero on safety
Energy intensity - refineries
Spills - operational
Process safety
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HSSE Performance Injuries – TRCF/million working hours
Energy Intensity Index (EEITM)
Volume in thousand tonnes
Number of incidents
HSSE Priority Performance +
transparency BG included from February
1, 2016
million working hours Number of spills
Working hours (RHS)TRCF
Tier 1 incidents Tier 2 incidents
NumberVolume
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Embedding a safety cultureSafety Leadership
Our Commitment
Visible leadership commitment at all levels
Collaboration with peers, partners,
contractors, communities, and regulators
Emphasis on care
Responsible Partner
Brazil: Shell + Petrobras
Pro-active sharing of learnings
Joint support to implement well control assurance
tool and integrity management system
Royal Dutch Shell April 24, 2017
Permian
Infrastructure investment reduces
truck hauling
Formation of Permian road
safety coalition
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Committed to reducing exposureRoad Transport
Petroleum Development Oman
Introduced centralized journey
control room
Better able to monitor
performance and adherence
Ensuring employees and drivers have the best safety skills possible
Investment in community road safety programmes
Our Approach
Reduce number of journeys
Road safety requirements
Learn and share from incidents
PDO, OmanDrones in Australia Permian Central Processing Facility
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Contractor Safety Management
Number of fatalities
Injuries per million working hours
Total recordable case frequency (TRCF)
Contractors are critical to achieve Goal Zero
> 190,000 contractors
Represent 65% of total exposure hours
Perform most high risk activities
Evolving contractor management strategy
EmployeesContractors Contractors Employees
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Royal Dutch Shell April 24, 2017 23
Ongoing emissions management
Data on a 100% operated basis unless otherwise specified1 Energy required to produce a tonne of oil equivalent. 2 Indirect emissions were not recorded before 2009
GJ/tonne1
Energy intensity
Million tonnes hydrocarbon flared
Million tonnes CO2 equivalent
Emissions
"Zero Routine Flaring by 2030“ initiative
Start-up gas capturing at Majnoon, Iraq and
gas reinjection in Malaysia in 2016
2016 numbers include BG from February 1, 2016
www.shell.com/ghg
Upstream excl. oil sands, LNG, GTL Refining Chemicals
Index
-34%
Flaring performance
Rest of WorldNigeria
Indirect (scope 2)2Direct (scope 1)
Royal Dutch Shell April 24, 2017 24
NigeriaHSSE performance
Improved operational oil spill numbers and safety
performance over 2016
Lower oil theft volumes and sabotage related spills
despite resurgence in militant activity
Progress on Nigerian government-led multi-
stakeholder UNEP clean-up efforts
Reduced onshore footprint
Targeted investments: domestic gas
Widespread oil theft + sabotage remains a challenge
2016 beneficiaries ‘Cradle to Career’ Scholarship
Workers inspecting Koroama Non Associated Gas Facility
Royal Dutch Shell April 24, 2017
Hans WijersChairman of the Corporate Social Responsibility CommitteeRoyal Dutch Shell
Royal Dutch Shell April 24, 2017 26
CSRC topics
Nigeria
Greenhouse gas metrics in remuneration
Asset integrity and process safety
Induced seismicity
Kazakhstan
2016 areas of focus
Nigeria
Process safety (including BG assets)
CO2-related trends and developments
Post-COP21 landscape
Shared value
Security
2017 areas of focus
Lula FPSO Cidade de Saquarema, Brazil (NOV)A Shell technician conducting integrity checks on Shearwater, Aberdeen, Scotland
Royal Dutch Shell April 24, 2017
Strategy drives change
Remuneration follows and supports strategy
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Rewarding performance in line with delivery of strategy GHG metrics in Remuneration
* Solomon’s utilised equivalent distillation capacity
CSRC input into updated Remuneration policy
Bonus reflects progress in reducing GHG in 3 key businesses
CEO personal performance agreement includes progress in New Energies
Scorecard aligned for staff and Directors
Annual bonus scorecard design
Cash flow from operating activities Operational excellence Sustainable development
2016 2017
2% Water use
4% Oil spill volumes
4% Energy intensity
5% Process safety
5% Process safety
5% Personal safety
5% Personal safety
10% GHG management
10% Environment
10% Safety
Upstream flaring in million tonnes CO2e
Refining GHG intensity measured in tonne CO2e per UEDC *
Chemicals GHG Intensity measured in tonne CO2e per tonne of chemicals production
Royal Dutch Shell April 24, 2017
Ener
gy T
rans
ition
Board and future business environment
Diverse input in Board meetings to stretch thinking and inform decision making
Beliefs Uncertainties
Mega Trends Macroeconomics
Market
Dig
italis
atio
nIndustry
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Example:
Sustained era of transition & volatility
Emerging markets drive Global GDP increases
Example:
Political tensions & regional instability
Impact of digital technology
Example:
Hydrocarbon demand growth + supply required
Renewables contribution increases significantly
Example:
Key pricing mechanisms
Energy transitions impact
Example:
Technology & scale alone insufficient
Example:
Winning business models & capabilities
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Shell sustainability in action
Safety and environmental performance in
Karachaganak, Kazakhstan
Shell Biofuels business and 2G biofuels
technologies
Shell Hydrogen projects in core markets in North
West Europe and North America
Karachaganak Processing Complex, KPO, Kazakhstan Retail station offering hydrogen, Germany
IH2 advanced biofuels demonstration facility, India
Royal Dutch Shell April 24, 2017
Ben van BeurdenChief Executive OfficerRoyal Dutch Shell
Royal Dutch Shell April 24, 2017 31
Energy challenge
Source: UN Population Fund; UN World population Prospects (2015 revision); World Urbanisation Prospects (2014 revision); IEA, Energy Technology Perspectives 2015; Shell New Lens Scenarios
Growing populationGlobal population will increase from around 7.4 billion today to nearly 10 billion by 2050, with 67% living in cities
Rising demandGlobal energy demand will likely be almost 60% higher in 2060than today, with 2 billion vehicles on the road (800 million today)
Ongoing supplyRenewable energy could triple by 2050, but we will still need large amounts of oil and gas to provide the full range of energy products we need
Mitigating climate changeNet-zero emissions is a potentially achievable societal ambition
Growing global demand for energy as population and living standards increase
Royal Dutch Shell April 24, 2017 32
Shell’s activities in the energy transitionWorld-class investment case Developing our gas business Biofuels business
Advocate CO2 pricing Scenarios thought leadership Coalitions & government advisory
New Energies business
Developing CCS R&D in low carbon technologies Shell Technology Ventures
Royal Dutch Shell April 24, 2017
Not considered in best interests
of Company
Engaged with Follow This on
timeline for energy transition
ahead of resolution filing
Majority of shareholders voting
voted against
Resolution ignored timescale
and impact for profitability
Unwise to tie Shell to any single
mandate
Shareholder resolutions
* Notice of Meeting for the 2017 AGM with full response to the Shareholder Resolution published on www.shell.com/agm on April 20, 2017
“Strategic resilience for
2035 and beyond”
2015 “Aiming For A”
“Shell will become a renewable
energy company”
2016 “Follow-this.org”
“Shell will set targets to reduce
scope 1, 2 + 3 GHG emissions”
2017 “Follow-this.org”
Supported by Board +
shareholders
Builds on previous Shell
disclosures
Report-out in full in 2016
Ongoing engagement with
IIGCC resolution sub-group
Not considered in best interests
of Company *
Shell supports the aspiration of
transitioning towards a net-
zero emissions world by 2050
Shell’s strategy is resilient to the
envisaged implementation of
the Paris agreement
Participating in the energy
transition e.g. through gas
Targeting a single supplier will
not accelerate transition
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Royal Dutch Shell April 24, 2017 34
Supporting the Paris agreement
Supplying LNG to Pakistan, displacing liquid fuels used for power generation increases
Shell’s Scope 3 emissions, but reduces the emissions from power generation with a net
saving of an estimated 2 mt CO2 equivalents per annum per 1mt of LNG sold
Supplying 60 kt LNG per annum as a power source for two cruise ships, replacing
liquid fuels, increases Shell’s Scope 3 emissions, but saves emissions of an estimated
48 kt CO2 equivalents per annum
Basrah Gas Company, by gathering and processing gas otherwise flared by other
producers, increases Shell’s Scope 1 and Scope 3 emissions, but reduces Scope 1
emissions from gas flaring by other producers by up to an estimated 10 mt CO2
equivalents per annum
Examples how Shell’s activities can help work with others towards meeting the aspiration of the Paris agreement
We will work together with governments and stakeholders towards meeting this aspiration
We commit to report on steps taken
Royal Dutch Shell April 24, 2017
Portfolio resilience to energy transition
Global energy demand, million boe per day
IEA ‘450’ scenario
GHG and energy management plans at asset level
Oil products:By 2025, significantly increase low-emission fuels Shell offers to customers
Conventional oil and gas:Drive for top quartile CO2 efficiency and lowest cost per barrel
Integrated gas:Working across the value chain to unlock demand for cleaner and cost-competitive fuel
Deep water:Target lowest break-even price projects for resilient production
Chemicals:Shell's output could be used in products that enable CO2 savings
Shales:An advantaged asset base with short cycle investment
New energies:Exploring, de-risking and establishing portfolio positions with a clear path to profitability
Gas
Oil
Coal
Bio-energy
Hydro
Other renewables
Nuclear
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Examples of resilience in strategic themes
Source: World Energy Outlook 2016
After the Oil Sands divestment the number of strategic themes will be reduced from 8 to 7IEA 450
Royal Dutch Shell April 24, 2017 36
Supporting energy transitionIntegrated Gas
http://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook.html
OCGT: Open cycle gas turbine. CCGT: Closed cycle gas turbine.
Average time required to come online, minutes
Gas emits around 50% less CO2 than coal
LNG emits around 40% less CO2 than coal
Air pollution benefits by using gas over coal
Supporting renewable generation growth
lb/MWh gross
Addressing local air quality concerns
Shell published LNG outlook February 2017
Negligible emissions from gas
Coal Emissions, Supercritical Pulverized Coal Boiler
Natural Gas CCGT
Negligible emissions from gas
Royal Dutch Shell April 24, 2017
Retail’s 5 ambitions for 2025Oil Products
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50%
Increase margin share from
convenience retail to 50%
20%
Fuels margin from low-emission
energy solutions
LOWER CARBON
Reduce carbon intensity of our
retail outlets by at least 50%
EVERY CUSTOMER
Treated like a guest on site & in the digital world
100%
Sites committed to local communities
unified by a global social
cause
1 2 3 4 5
Royal Dutch Shell April 24, 2017
Chemicals
Petrochemicals are the key ingredients for thousands of essential products
Faster growth than GDP
Shell produces important petrochemical building blocks
Some products made from petrochemicals can enable CO2 savings over their lifetime
Increasing standards of living driving growth Innovative solutions that support a lower carbon future
Petrochemicals play a vital role in meeting the growing population’s demands
Cold wash laundry detergents
Modern home insulation
Lightweight plastics in cars
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Royal Dutch Shell April 24, 2017
Delivering resilient production Upstream
CO2 efficient production with the lowest unit cost, from an advantaged asset base
Drive top quartile operational performance
“Fit for the Future” drive for top quartile CO2 intensity and cost
competitiveness
Target low break-even price projects for future development
New projects to deliver top quartile CO2 intensity and zero
flared/vented associated gas
De-prioritise developments with high CO2 intensity
GHG energy management plans to be in place for all assets
Deliver energy optimisation
Reduce methane contribution and fugitive emissions
Examples
Flaring reduction projects in Nigeria, Malaysia and Iraq
Investments in venting reduction for EOR in Bokor Malaysia
Gumusut-Kakap, Malaysia
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Royal Dutch Shell April 24, 2017 40
Methane emissions
Advocate for policies to support economy-wide methane reduction
Staff using Infrared camera to check for methane leaks
Shell methane management:
Working to better detect methane emissions
Range of initiatives to reduce methane emissions
Detect and repair programmes
Flaring and venting reduction
Methane <5% of Shell’s emissions
Collaborating on methane:
Climate and Clean Air Coalition (CCAC)
EPA Natural Gas STAR programme
Eurogas
Natural and bio Gas Vehicle Association
Oil and Gas Climate Initiative (OGCI)
Royal Dutch Shell April 24, 2017
Guy OutenEVP Strategy & Portfolio Royal Dutch Shell
Royal Dutch Shell April 24, 2017
Shell scenariosIdentifying emerging challenges to guide us through change
Scenarios stretch our perspectives and help us to make crucial choices in uncertain times
‘13: New Lens
Scenarios ‘13 New Lenses on Future
Cities ‘14
A Better Life with a
Healthy Planet:
Pathways to Net-Zero
Emissions ‘16
Changing sources of
influence & decision
making power
Era of volatile
energy
transitions
Social fragmentation &
cohesion dilemmas; re-
emergence of State impact
‘01: Energy Needs,
Choices and Possibilities:
Scenarios to 2050
‘08: Shell energy
scenarios to 2050
‘92: Global Scenarios ‘92-’20
‘95: Global Scenarios ‘96-’20
‘95: Long Term Energy Scenarios
‘98: Global Scenarios ‘98-’20
‘02: People and
Connections Scenarios
‘05: Global
Scenarios to 2025
1965-1980
First scenarios
Trends
‘07: Signals &
Signposts
Globalisation, liberalisation,
technology diffusion; environmental
pressures; Asian growth
‘11: Signals &
Signposts
Publications
Internal unpublished scenarios focused on specific developments and challenges
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Royal Dutch Shell April 24, 2017
Beliefs and uncertainties
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Ener
gy T
rans
ition
Beliefs Uncertainties
Mega Trends Macroeconomics
Market
Dig
italis
atio
n Industry
Example:
Sustained era of transition & volatility
Emerging markets drive Global GDP increases
Example:
Political tensions & regional instability
Impact of digital technology
Example:
Hydrocarbon demand growth + supply required
Renewables contribution increases significantly
Example:
Key pricing mechanisms
Energy transitions impact
Example:
Technology & scale alone insufficient
Example:
Winning business models & capabilities
Scenarios influence beliefs that inform strategy and business decisions
Royal Dutch Shell April 24, 2017
Leverage brand, reach and core competencesShell strongly positioned
Changing landscape
Energy Transition & Mobility Shifts
Digitalization & other disruptors
Shifts in Demographics & Consumer behaviours
Global Retail
Global #1 Retailer
One of the largest B2B payment player
Global Commercial
Global #1 Lubricants marketer
Strong OEM relationships
Trading and New Energies
Leading, global energy & carbon trader
Biofuels and Hydrogen mobility
Brand, capability and scale
#1 energy brand
Financial capability
Innovation and partnering
Global footprint and local experience
Key trends potentially re-shape several industries
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Royal Dutch Shell April 24, 2017
Leader: value +
influence
Reducing our carbon intensity
Shared value with
society
World-class investment case
Shell’s strategy#makethefuture
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People and safety
Winning Capabilities
AspiredFuture
AspiredPortfolio
World-class investment case Leader: value + influence Reducing our carbon intensity Shared value with society
Customer Centricity Commercial Value Delivery Technology Commercialisation Project Delivery Operational Excellence
CashEngines
FutureOpportunities
GrowthPriorities
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New energies strategyEmerging strategy
Advanced Biofuels
Renewable Power
Hydrogen
Customer Solutions
Opportunity dependent Aim to grow investment to
up to $1 bln by 2020
Royal Dutch Shell April 24, 2017
Ben van BeurdenChief Executive OfficerRoyal Dutch Shell
Royal Dutch Shell April 24, 2017 48
Questions & Answers
Ben van BeurdenChief Executive Officer
Hans WijersChair of the CSRC
Royal Dutch Shell April 24, 2017
Royal Dutch Shell April 24, 2017
Additional information
Royal Dutch Shell April 24, 2017 50
Low carbon opportunities
Royal Dutch Shell April 24, 2017 51
Nigeria environmental performance
*SPDC JV = 30% Shell, 55% NNPC, 10% Total, 5% Agip; all data on 100% basis unless stated
Thousand tonnes
Clean-up + UNEP progress:
Niger-delta kick-off event
Governance structure progress and initial SPDC JV
payment for restoration fund done
Cooperation with ICUN on remediation
Oil spill prevention + remediation:
Theft protection mechanisms improved
Daily overflights + surveillance via GMoUs
Remediation and certification efforts ongoing (92
sites remediated in 2016)
Social performance initiatives to address
underlying cause (Livewire training programmes,
alternative livelihood initiatives)
SPDC JV* spills
k boe/day
Shell share of SPDC production
2016 vs 2015
52% decline in number sabotage-related spills
56% reduction in number operational spills
volume of operational spills number of operational spills >100kg (RHS)
volume of sabotage spills number of sabotage spills >100kg (RHS)
#
Royal Dutch Shell April 24, 2017
NAMA 50:50 JV with Shell & ExxonMobil
2017 progress:
Damage claims handling now managed by the
“Nationaal Coordinator Groningen”. NAM at arm’s
length and focusing on its core activities
NAM is working hard to ensure safe gas production,
mitigate the impacts of gas production and offering
new perspective to the residents of the region
www.nam.nl
Government decisions
Current cap: 24 bcm per year. The government
will review production on an annual basis
The Minister of Economic Affairs announced on
April 19, 2017 that he will prepare measures to
reduce gas production by a further 10% for the
gas-year 2017/2018
NAM must submit a new production plan before
1 Oct 2020
Opening of earthquake proof school in Loppersum
Damage repair in Westeremden
52
Royal Dutch Shell April 24, 2017 53
Brent decommissioning
* In today’s money
10 year stakeholder engagement, plans shared
with 180 organisations, including environmental
groups and NGOs
Brent Delta Topside plan approved:
Target date single lift: May 2017
Over 97% planned to be recycled
Full Brent Field Decommissioning Programme:
60 day public consultation closed April 10,
2017
Next steps: review and respond to the
comments received
The science that underpins Shell’s conclusions
has been validated by an Independent Review
Group
Brent has created and sustained thousands of jobs, contributed more than £20bn in tax revenue* and provided the UK with a substantial amount of its oil and gas.
Royal Dutch Shell April 24, 2017 54
Water management
Water management plans in water scarce areas
Describing the long-term risks to water
availability
Describe and define measures to minimise use of
fresh water or recommend alternatives
Involved in working groups with organisations such
as the World Business Council for Sustainable
Development and IPIECA
Million cubic metres
Fresh water withdrawn by Shell
Agriculture remains the primary source of global
water demand
In 2014, primary energy production and power
generation were responsible for:
Around 10% of total water withdrawal
Less than 4% of total water consumption
Source: IEA World Energy Outlook 2016 figure 9.1 and table 9.1.
Global water use
Nimr Reed waterplant, Oman
Royal Dutch Shell April 24, 2017 55
Connected carExample
Pay for fuel from your Jaguar or Land Rover
dashboard
True world first (scale) amongst super majors.
OEMs are reaching out to Shell as a preferred
partner due to our digital capability and 43,000
retail outlets globally
Launched February 2017 at 600 stations in UK
Royal Dutch Shell April 24, 2017