SCENARIOS NEW LENS

A SHIFT IN PERSPECTIVE FOR A WORLD IN TRANSITION J.P. Jepp, Shell Canada May 29, 2014

WARNING: UNCERTAINTIES AHEAD This scenarios book contains forward-looking statements that may affect Shell’s 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’’, ‘‘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 scenarios book, 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 addressingclimate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects, and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this book are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2012 which is available at www.shell.com/investor and www.sec.gov. These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this scenarios material, May 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forwardlooking 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 scenarios book.

Agenda 1) What are the Shell Scenarios? 2)  The New Lens Scenarios- Introduction 3) Mountains vs. Oceans- comparison 4)  Primary Energy Demand- Regional

Scenarios 5)  Primary Energy Demand- Road Transport 6) Mountains vs. Oceans- Cumulative CO2 7) Conclusion

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WHAT ARE THE SHELL SCENARIOS?   In the 1960s, Shell economists and engineers began to

look at the political, social, and economic forces affecting Shell

  The initial work allowed Shell management to better manage the 1973 oil crisis. This was the start of Shell Scenarios.

  Since then, generations of Shell analysts have looked into the future to identify uncertainties, challenges and opportunities.

  Summaries of some of these have been regularly shared outside Shell, contributing to important public debates.

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WHAT ARE THE SHELL SCENARIOS?

Current Realities Multiple Paths Plausible Future Scenarios

Scenarios

The Present The Path The Future Forecasting

MOUNTAINS OCEANS

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  USA   China   Russia   Japan   India   Germany

  France   Canada   UK   South Korea   …etc

  Heavy Industry   Agriculture   Services   Transport

(passenger)

  Transport (freight)   Residential (heating)   Residential

(appliances)   Non-energy use

  Solid Hydrocarbon   Liquid Fuels   Oil derived   Gas derived   Coal derived

  Biofules (1st gen)

  Biofuels (2nd gen)   Gaseous

Hydrocarbon   Electricity   Heat   Solar   Hydrogen

  Total Final Consumption   Conversion technologies   Total primary energy demand   Supply/Demand

  N. America   Latin America   Asia developed   Asia developing   Middle East & N.

Africa   Sub Saharan Africa

  Europe   EU15   EU New 12   East other   West other

  Crude Oil   Unconventional oil   Natural Gas   Unconventional

gas   Coal   Nuclear   Hydroelectricity

  Biomass   New renewables:

  Wind   Solar   Tidal   Wave   Geothermal   Waste

NEW LENS SCENARIOS WORLD ENERGY MODEL Comprehensive country and sector analysis

NEW LENS SCENARIOS AN ERA OF VOLATILITY & TRANSITIONS

Growing Emphasis on Mini-Lateral

Social Unrest Demographic

Transitions

Challenged Environmental Boundaries

Surging Energy

Demand

Economic Stress and Growing Disparity

Political Unrest

Shift from West to East

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MOUNTAINS SCENARIO A VIEW FROM THE TOP

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Political -  Influence remains concentrated in the hands of the currently powerful -  Leaders create stability via methods that promote the status quo

Economic

-  Rigid power structures and institutions hampers overall economic development -  Some emerging economies see middle class grow, and then stagnate

Social -  Inequalities continue to rise and expand in many societies -  Young people lead increasing rebellion over social injustice

Energy -  Slowed economic growth and compact cities alleviate demand pressures -  Shale gas reaches widespread success; Gas becomes energy backbone -  Slowing demand for liquid fuels limits growth

Climate -  Sluggish economy and displacement of coal by gas = lower CO2 emissions -  CCS becomes success as a way to maintain “our way of life”

MOUNTAINS TOTAL PRIMARY ENERGY BY SOURCE

1200

1000 800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricty

Geothermal Solar Wind

Other renewables

Year

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OCEANS SCENARIO A VIEW OF THE HORIZON

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Political -  The current elite recognize their continued success requires compromise -  Volatility and multiple constituencies impede policy development (e.g. sprawl)

Economic

-  Steady reform of economic structures keeps pace with emerging nations -  Reform unleashes new economic productivity of broader sectors

Social -  Focus on nation-state issues (rather than multi-lateral) -  Increased connectivity enables profound shifts in opinion quickly = volatility

Energy -  Growth in emerging nations boosts energy demand, squeezes supply -  Shale gas does not meet expectations– especially outside North America -  With limited growth in gas, coal maintains strong role– especially outside NA -  Periods of high prices unlock new oil resources– long oil game -  High prices for energy also unlocks expensive sources, and drives end-user EE

Climate -  Emphasis on renewables and efficiency is not enough -  GHG emissions continue to rise; need for significant adaptation

OCEANS TOTAL PRIMARY ENERGY BY SOURCE

1200

1000 800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricty

Geothermal Solar Wind

Other renewables

Year

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PRIMARY ENERGY DEMAND- REGIONAL

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PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS (OCEANS)

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OECD Non-OECD

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

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2000 2010 2020 2030 2040 2050 2060 Year

0 20 40 60 80

100 120 140 160 180 200

EJ/Y

ear

(ene

rgy

Sour

ce)

2000 2010 2020 2030 2040 2050 2060 Year

0 20 40 60 80

100 120 140 160 180 200

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

Year

PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS (OCEANS)

USA China

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

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Mountains Oceans

PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS- CANADA

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PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR

Mountains Oceans

Electricity and Hydrogen

2000 2010 2020 2030 2040 2050 2060 Year

0

10,000

20,000

30,000

40,000

50,000

60,000

Billi

on v

ehic

le k

m

2000 2010 2020 2030 2040 2050 2060 0

10,000

20,000

30,000

40,000

50,000

60,000

Year

PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR- SCENARIO CONTRAST

Gaseous Hydrocarbon Fuels Liquid Hydrocarbon Fuels & Biofuels

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Electricity Hydrogen Gaseous Fuels Liquid Fuels

Mountains Oceans

PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR- CANADA

EMISSIONS CONTRAST: WORLD CUMULATIVE ENERGY-RELATED CO2 EMISSIONS

Mountains

3,500

3,000

2,500

2,000

1500

1000

500

0

Oceans

21st C

entu

ry c

umul

ativ

e G

t C

O2

2061 - 2100 2031 – 2060 2013 - 2030 2000 - 2012

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2ºC Pathway

GLOBAL ENERGY-RELATED CO2 EMISSIONS – The battle with time

IF WE WANT THINGS TO STAY AS THEY ARE, THINGS WILL HAVE TO CHANGE.”

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GIUSEPPE TOMASI DI LAMPEDUSA The Leopard

QUESTIONS & ANSWERS

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