royal dutch shell plc investing for sustainable … · the companies in which royal dutch shell plc...

1Copyright of Royal Dutch Shell plc 18 April, 2012

ROYAL DUTCH SHELL PLCINVESTING FOR SUSTAINABLE GROWTHAnnual SRI EventLondonApril 18, 2012


DEFINITIONS AND CAUTIONARY NOTE

Resources: Our use of the term “resources” in this announcement includes quantities of oil and gas not yet classified as Securities and Exchange Commission of theUnited States ("SEC") proved oil and gas reserves or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2Cdefinitions.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "RoyalDutch 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 byidentifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in whichShell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in whichShell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred toas "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shellinterest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent shareholding in Woodside Petroleum Ltd.) ownershipinterest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. Allstatements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of futureexpectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actualresults, 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 Shell and the Shell Group 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 andphrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from thoseexpressed in the forward looking statements included in this announcement, 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 industrycompetition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successfulnegotiation 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 andregions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in theapproval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward looking statements contained in thisannouncement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance onforward looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2011 (available atwww.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 thisannouncement, 18 April 2012. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward lookingstatement 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 inferredfrom the forward looking statements contained in this announcement.

Shell may have used certain terms, such as resources, in this announcement that the SEC strictly prohibits Shell from including in its filings with the SEC. U.S. investorsare urged to consider closely the disclosure in Shell's Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms fromthe SEC by calling 1-800-SEC-0330.


ROYAL DUTCH SHELL PLCINVESTING FOR SUSTAINABLE GROWTH

PETER VOSERCHIEF EXECUTIVE OFFICER


ROYAL DUTCH SHELL PLCINVESTING FOR SUSTAINABLE GROWTHCHAD HOLLIDAYNON EXECUTIVE DIRECTORCHAIRMAN CORPORATE & SOCIALRESPONSIBILITY BOARD COMMITTEE


ACTIVITIES OF THE CSRC

2011 FOCUSField trips: Marcellus, China, Oil Sands

Personal safety, environmental performance

Asset integrity

2012 PRIORITIESField trips: North Sea, Nigeria

Sustained focus on Nigeria

Process safety/asset integrity

Arctic and deepwater development

USA: MARCELLUS TIGHT GAS

NIGERIA: AFAM VI POWER PLANT


PARTNERSHIPS & BEST PRACTICE

Danish Institute for Human Rights

Institute for Human Rights & Business

Global Business Initiative

IPIECA

Professor Ruggie case study

WORKING WITH SUPPLIERSHUMAN RIGHTS

Wetlands International

IUCN

The Nature Conservancy

EarthWatch Institute

ENVIRONMENTAL


ROYAL DUTCH SHELL PLCINVESTING FOR SUSTAINABLE GROWTH

PETER VOSERCHIEF EXECUTIVE OFFICER


ENERGY OUTLOOK

ROBUST DEMAND GROWTH

Energy demand outlook in million boe/d

Shell estimates

Shell activities

INDUSTRY OUTLOOK Hydrocarbons dominate outlook

Growth required in all sectors of energy mix

Renewable growth particularly strong

Energy policy + sustained investment

SHELLCrude oil & oil products

Natural gas & LNG

Biofuels, wind, carbon capture + storage

Petrochemicals

0

100

200

300

400

1980 1990 2000 2010 2020 2030 2040 2050

Oil Natural Gas Biomass Wind Coal Nuclear Solar Other renewables


LEADER IN A GLOBAL GROWING GAS MARKET

GAS DEMAND GROWTH: REGIONAL OVERVIEW SHELL PRODUCTION

0

5

10

15

20

25

30

OTHER

HENRY HUB

OIL

GAS

0

1

2

3

Million boe/d Million boe/d

Production Split

Price Exposure

North America

Europe Asia Pacific

Middle East

Other

2008

2035

2008

2035

2008

2035

2008

2035

2008

2035

+29%

+23%+189%

+89%

+86%~75% oil linked

~25% hub priced/ spot

2011


BIOFUELS GROWTH

Hydrogen from Coal

Conventional Gasoline

Conventional Diesel

Electricity-Coal

Hydrogen from Natural Gas

Sugar Cane Ethanol

Cellulosic Ethanol (Iogen)

LOW CARBON TRANSPORT FUELSWell to wheel CO2 intensity

-89%

-84%

-40%

-16%

-11%

+34%

Source: CONCAWE/JRC/EUCAR wtw report (version 3)

RAIZEN JOINT VENTURE (COSAN)

Leading Brazil ethanol player

(Top 5 globally)

Sugar cane capacity ~60 mtpa from 24 mills

~ 2 bln litres ethanol production per year

Prioritising sustainability issues

RESEARCHING ADVANCED BIOFUELS


WATER-ENERGY-FOOD

ENERGY is needed to clean and transport water

WATER is needed to generate energy

FOOD transports (virtual) water

WATER is needed to grow food

ENERGY is needed to produce food

FOOD can be used to produce energy

WATER+30% DEMAND

FOOD+50% DEMAND

ENERGY+40% DEMAND

% Increase in demand by 2030


WATER USE FOR ENERGY

SHELL ANALYSIS OF WATER USE IN ENERGY PRODUCTION

1

10

100

1,000

10,000

100,000

1,000,000

Purely rain fed(Biofuels)

Typical average

Global rangeConsumption Consumption

Withdrawals Withdrawals

<

Typical average

Freshwater intensity (litres/GJ Low heating value)

Loga

rithm

ic s

cale


SAFETY IN SHELL

2012 HSSE PRIORITIES AND FOCUSInjuries - TRCF

Fatalities per 100 million working hours (employees and contractors)

SAFETY PERFORMANCE

0

2

4

6

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

IOC Range Shell

400

500

600

700

800

900

0

2

4

6

8

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Working Hours (RHS) Shell

SIMPLIFY & COMPLYOne HSSE & SP Control Framework Shell wide

Life-Saving Rules

FOCUS AREASProcess Safety

Road Safety

Contractor HSSE Performance

Cap & contain systems: global initiatives

SUSTAINStrong safety culture and leadership

Employees and contractors per million working hours; Shell operated facilities


ENVIRONMENTAL PERFORMANCE MEASUREMENT

EMISSIONS

65

75

85

95

105

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Million tonnes CO2 equivalentENERGY INTENSITY

85

90

95

100

105

0

0.5

1

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Upstream excl. Oil Sands & GTLRefining IndexChemicals Index

Upstream – gigajoules/tonnes production Index

0

2

4

6

8

10

0

200

400

600

800

1000

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Number of SpillsVolume of Spills (RHS)

5

10

15

20

25

30

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11

Million tonnes CO2 equivalent No. of Operational spills Volume: thousand tonnesFLARING OPERATIONAL SPILLS

Data 100% basis for companies and joint venture where Shell is the operator


PROCESS SAFETY + ASSET INTEGRITY

STANDARD ASSET INTEGRITY MANAGEMENT SAFETY CASE ‘BOW TIE’ MODEL: PREVENTION AND RECOVERY - INDUSTRY

Integrity Leadership

Technical Integrity

Design Integrity

Operating Integrity

Promoting a culture of Chronic Unease among leaders to avoid complacency

Established technical process safety discipline team

Improving worksite hazard awareness to combat risk normalization

Response & Recovery

Control & Barriers Incident

Haz

ard

Cons

eque

nces

Mitigate consequences

Minimize likelihood

A safety case approach to risk identification and mitigation

Shell integrated the bow tie methodology in the 1990s

Systematic approach to risk management

Involve contracting companies

Full alignment & clear accountabilities between parties


2011 SPILL AND REMEDIATION PERFORMANCE

30% drop in operational spill volume

351 sites remediated (272 in 2010)

Reduction in remediation backlog from 400 end 2010to 274 sites end 2011

NIGERIA: SPDC

PIPELINE REPLACEMENT

NEMBE CREEK TRUNK LINE: COMPLETE 2010

97 km; $1.1 billion

TRANS NIGER PIPELINE LOOP PROJECT

Around Ogoniland; major area of crude theft

Pending approval by government partner

0

50

100

150

200

0

5

10

15

2006 2007 2008 2009 2010 2011

SabotageOperationalOperationalSabotage

Oil spills, thousand tonnesENVIRONMENT: SPILLS

Volume of Spills:

Number of Spills (RHS):

SPDC = 30% Shell, 55% NNPC , 10% Total, 5% Agip ; all data on 100% basis

NEMBE CREEK TRUNK LINE REPLACEMENT


NIGERIA: SPDC FLARING

ASSESSING NEW INVESTMENT FOR GAS UTILIZATION

Forcados Yokri & Southern Swamp AGG

Completion in 2014/2015; ~ $4 billion investment

Gas gathering, facility upgrades and new oil production

After completion, SPDC flaring intensity will be below the current worldwide industry average

FORKADOS YOKRI - SOUTH BANK

Boe gas flared per barrel produced (2010 data)

0.0

0.1

Nigeria Industry

SPDC Nigeria Industry

SNEPCO

ENVIRONMENT: FLARINGMtpa CO2e flaring SPDC production kboe/d

0

200

400

600

800

1000

0

5

10

15

2005 2006 2007 2008 2009 2010 2011Gas Flared Production

PERFORMANCE

SPDC = 30% Shell, 55% NNPC , 10% Total, 5% Agip ; all data on 100% basis

OffshoreOnshore


NIGERIA: OIL THEFT + ILLEGAL REFINING

IMO RIVER – SEPTEMBER 2011


AOSP-1 ramp-up

Debottlenecking opportunities

Quest CCS project FID expected in 2012

NORTH AMERICA – SUSTAINABLE DEVELOPMENT

ALASKA OIL SANDSTIGHT GAS

Drilling plans for 2012

Extensive preparations:

Community engagements

Science program

Oil spill response

Global tight gas operating principles launched in 2011

Working with industry & regulators on consistent/robust standards

DISCOVERER DRILL SHIP

NANUK OIL SPILL RESPONSE VESSEL

QUEST CARBON CAPTURE & STORAGE


SHELL

CUSTOMER AND PARTNER FOCUS

PROFITABILITY & PERFORMANCE

SUSTAINABILITY & GROWTH

VALUE ADDED TECHNOLOGY

“As part of the Shell Business Principles, we commit to contribute to sustainable development. This requires balancing short and long term interests, integrating economic, environmental and social considerations into business decision-making.”

Shell General Business Principles


INVESTING FOR SUSTAINABLE GROWTHQUESTIONS & ANSWERS


INVESTING FOR SUSTAINABLE GROWTHAPPENDICES


NIGERIA

Completed

Ongoing

ERHA/BOSI

GBARAN UBIE

OPL245

BONGA AFAM POWER STATION

NIGERIA LNG

OGONILAND

OML 4/38/41

2642 34

40

30

BONNY TERMINAL

Security situation still tenuous

2 Fatalities YTD 2012

Attack on an environmental survey

Increase in oil theft and illegal refining

Estimates of 150 kboe/d of oil theft

SPDC ASSET SALE ONGOINGOver 2010 and 2011, 8 onshore blocks were put up for sale

5 completed, 3 ongoing

Part of a normal portfolio optimization

Shell is committed to the onshore and near shore in Nigeria


WATER USE FOR ENERGY

FRESH WATER WITHDRAWAL FOR ENERGY

Billion m3/year

FRESH WATER CONSUMPTION FOR ENERGY

Billion m3/year

0

100

200

300

1980 1990 2000 2010 2020 2030 2040 2050

Fossils production Biofuels productionRefining, GTL & CTL Elec. & Heat - CoalElec. & Heat - Oil Elec. & Heat - GasElec. & Heat - Biomass Elec. & Heat - NuclearElec. & Heat - CSP

0

100

200

300

400

500

600

700

800

1980 1990 2000 2010 2020 2030 2040 2050

Fossils production Biofuels productionRefining, GTL & CTL Elec. & Heat - CoalElec. & Heat - Oil Elec. & Heat - GasElec. & Heat - Biomass Elec. & Heat - NuclearElec. & Heat - CSP

Shell estimates


CANADA: ATHABASCA OIL SANDS PROJECT

ORE HAULING AT AOSP

2011 PROGRESSRamping up of production from Jackpine mine + Upgrader started (+100 kbbl/d)

Joined new Canadian Oil Sands Innovation Alliance

Industry tailings collaboration

QUEST CCS PROJECTCapture CO2 at the Scotford Upgrader from 3 Hydrogen Units - >1 mtpa CO2

Government of Alberta and Government of Canada funding for ~C$865 million

Regulatory applications and project scoping progressing - FID target in 2012

DNV certification of Quest storage reservoir


SHELL & TIGHT GAS: 5 CORE PRINCIPLES


ALASKA OFFSHORE DRILLING PLANS

NANUK OIL SPILL RESPONSE VESSEL

KULLUK CONICAL RIG

SHELL PREPAREDNESS~100 offshore wells drilled by industry

Low pressure reservoirs; shallow water

Shell unique response preparations:

Arctic specific rig

Oil spill response vessels

Cap and contain system

Redundant rig capability

Backup BOP

Over 450 community engagements since 2006

Extensive science program

2012 ACTIVITIESPermitting on track

Drilling expected mid 2012

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