SHELL LNG FOR TRANSPORT Alexander Marczewski

LNG Business Development Manager Europe

Bremerhaven, 17.09.2014

9 BILLION people, 75% living in cities (2 BILLION more than today)

2 BILLION vehicles (800 MILLION at the moment)

Many MILLIONS of people will rise out of energy poverty; with higher living standards energy use rises

Energy demand could DOUBLE from its level in 2000… while CO2 emissions must be HALF today’s to avoid serious climate change

Twice as efficient, using HALF the energy to produce each dollar of wealth

Renewables could supply up to 30% of the world’s energy

ENERGY OUTLOOK BY 2050

2

ENERGY LANDSCAPE

3

Energy demand outlook in million boe/d

0

100

200

300

400

1980 1990 2000 2010 2020 2030 2050 2040

SHELL SCENARIO ESTIMATES

OIL

GAS

COAL

BIOMASS

WIND

SOLAR

OTHER RENEWABLES

NUCLEAR

SHELL ACTIVITIES

ROBUST LONGER TERM FUNDAMENTALS

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THE CASE FOR GAS

AFFORDABLE Gas as a source for power generation is a lower cost alternative.

0 100 200 300

CCGT

Coal

Nuclear

Wind Onshore

Wind Offshore (25km)

Wind Offshore (75 km)

ABUNDANT

Gas resources can supply >230 years of current global gas production

LNG supplies could meet one-fifth of global gas needs by 2020

Source: IEA World Energy Outlook, WoodMackenzie, Shell Interpretation

ACCEPTABLE Replacing coal with gas for electricity generation is the cheapest and fastest way to meet CO2 reduction targets

Gas fired power plants emit around 50% less CO2 than coal fired plants.

Capital Cost Total Cost

CCGT: Combined Cycle Gas Turbine Total Cost = Capital + Fuel + Operating Source: DECC (Mott MacDonald) June 2010

AVAILABLE SMARTER PLANNING

JOBS LOWER CO2 AIR QUALITY

BENEFITS OF GAS

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6

Natural Gas production and separation from oil and water (when present)

PRODUCTION

WHAT IS LNG?

Natural Gas cooled to liquid state at -162oC at atmospheric pressure

Volume reduced 600 fold

LIQUEFACTION

LNG in marine, road, mining, power, and industrial applications

TRANSPORT FUEL

LNG returned to gas state and injected into the transport pipeline network for distribution and sales

REGASIFICATION

LNG transported over long distances in purpose built carriers

SHIPPING

WORLD LNG PRODUCTION IN 2012 = 236 MTPA

COST EFFECTIVE ALTERNATIVE TO PIPELINE FOR DISTANCE > ~3000 KM

Source: Gas Matters

INTEGRATED VALUE CHAIN

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Road Transport

Mining

Deep sea Marine

Gas production

Rail

MMLS - Small scale liquefaction

Coastal Marine

Retail (CRT) Site

Bunker Vessel

Storage Tank + Loading Facilities

LNG carrier

LNG SUPPLY & DEMAND

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LNG DEMAND LNG SUPPLY*

-

100

200

300

400

500

2000 2005 2010 2015 2020 2025

Japan/Korea/Taiwan Europe

India SE Asia

China Other

0

100

200

300

400

500

2000 2005 2010 2015 2020 2025

Australia Asia Russia

Qatar ME Africa

North Americas Others

Mtpa Mtpa

Impact of limited supplies (existing supplier issues, deferred projects) Results in 2012 supply to be lower than 2011

* Risked view of all LNG supply projects Source: Shell analysis, 2013 IEA New Policies Scenario

NO SINGLE SOLUTION FOR OIL BASED TRANSPORT

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THERE IS NO “SILVER BULLET”

LNG IS ONE OPTION IN AN EVOLVING FUEL MIX

AVAILABLE ACCEPTABLE AFFORDABLE

MOSAIC OF FUEL OPTIONS

GTL

LNG

BIOFUELS

CONVENTIONAL FUEL

H2 MOBILITY E-MOBILITY

LNG IS AT THE HEART OF OUR BUSINESS

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SHELL GLNG SUPPLY PORTFOLIO

NEW INNOVATIONS

Nigeria LNG

Qatargas Oman LNG

Sakhalin LNG

Malaysia LNG Brunei LNG

Prelude LNG Gorgon

Pluto (Woodside)

North West Shelf

Wheatstone LNG

LNG operation

LNG construction

Harvey Gulf

Greenstream Barge

LNG bunker vessel

Floating Liquefaction

SHELL LNG LEADERSHIP

2013 2017

30

20

10

0 Shell XOM CVX TOT BG BP

Repsol acquisition (2014+)

Year end equity liquefaction capacity in mtpa

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GAS TO TRANSPORT OPTIONS

Asia-Europe

KEY Existing ECAs Possible future ECA Phase I Phase II

Transatlantic

Transpacific

Transpacific

DEVELOPING A GLOBAL MARINE BUNKER SUPPLY NETWORK

Around-the-World Route

GATE: LONG-TERM LNG FOR TRANSPORT

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In July 2014, Shell was announced as the launching customer of new, dedicated liquefied natural gas (LNG) for transport infrastructure at the GATE (Gas Access To Europe) terminal. To serve marine customers in the port of Rotterdam, Shell intends to charter a LNG bunker vessel facilitate ship to ship transfer operations, and also deliver LNG to secondary distribution terminals outside the port area. In addition, LNG will be loaded onto trucks and delivered to road customers. Shell is also planning to provide LNG to an initial network of LNG refuelling truck stops at several locations in the Netherlands.

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BUNKER FROM SEMITRAILER

BUNKER FROM TERMINAL

SHIP TO SHIP BUNKERING

GASNOR BUNKERING EXPERIENCE

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OEM TECHNOLOGY AVAILABILITY

MARINE SEGMENTS OEM OFFERINGS MARINE SEGMENTS

CRUISES

CONTAINER

PLATFORM SUPPLY VESSEL

FERRIES

RO-RO

INLAND WATERWAYS

4 Stroke DF – Current Offer 2 Stroke – 2017 Retrofit – No Plans

4 Stroke DF – Current Offer 2 Stroke – Current Offer Retrofit – 2015

4 Stroke SI – Current Offer 2 Stroke DF – Current Offer

INFRASTRUCTURE Increasing infrastructure development in conjunction with demand

LNG AS A TRANSPORT FUEL

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SUPPLY Abundant global gas reserves

ENVIRONMENT Lower emissions NOx, SOx and particulate matter

VEHICLE TECHNOLOGY Developing technology

COST Lower cost alternative to diesel

REGULATORY Requires framework that facilitates infrastructure and market development

DRIVERS CHALLENGES

PRICING GUIDANCE IN PRACTICE

MGO is regarded as the base case fuel, HFO + Scrubber and LNG are the compliance alternatives. LNG will provide a payback to the MGO base case and can be competitive with the HFO + Scrubber option.

1

LNG pricing will be oil linked, de-risking the customers exposure to other commodities.

2

As with oil products, every step in the supply chain will cause a cost increase. This means that the closer to hub (e.g. Rotterdam) product is delivered, the lower will be the LNG fuel cost.

3

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COST COMPETITIVENESS

Operational Urea costs for SCR

Waste management Wash Water Regulations

Maintenance (potential corrosion)

…

Assessment is vessel specific

Capex (annualized) is small percentage of OPEX

HFO + Scrubber can have operational burden costs

INSIGHTS

MGO HFO LNG

Add Opex cost/risk

Opex Risks Fuel Costs Capex Annualised

TOTAL ANNUAL COSTS

1

2

3

CONCRETE STEPS TAKEN TO DATE

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Gasnor, 100% Shell subsidiary

2012 2014

US TA site opened in May 2014 and 2 sites to be opened in NL end of this year

Shell time charters Greenstream World’s 1st 100% LNG propelled barge

2013

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PRESENT ECA FUTURE ECA (UNCONFIRMED)

Source: IMO

0,1%

0,5%

1,0%

1,5%

3,5%

4,5%

Ports Ports & Inland

REGULATION OF SOx EMISSIONS

SUBJECT TO IMO REVIEW

GLOBAL ECA BALTIC & NORTH SEA

Shell LNG fuel can help reduce well-to-wheel GHG emissions by up to 20%, compared to High Sulphur Fuel Oil.

Virtually zero SOx emissions Virtually zero Particulate matter Reduced NOx depending on tier 1/2/3 engine

EMISSION CONTROL AREAS (ECAS)

LNG CAN OFFER A COMPELLING VALUE PROPOSITION

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Regulatory and advocacy collaboration WtW, local and GHG emissions and comparison to other fuels Gas quality impact on engine performance and range Maintenance and Lubricants Technical design, HSE, Operations

EXAMPLE ACTIVITIES WITH PARTNERS

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PARTNERSHIP APPROACH

SHELL HAS ANNOUNCED KEY PARTNERSHIPS ACROSS SECTORS

PARTNERSHIPS

INFRASTRUCTURE

INNOVATION

ECONOMICS

STANDARDS

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TIPPING THE BALANCE

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SUMMARY

Collaborative partnerships

Bunkering infrastructure

Regulations

Jan, 2014