Downstream Open House

Transcription

1 Downstream Open House Delivering a world-class investment case Royal Dutch Shell plc March 21, 218 #makethefuture Royal Dutch Shell March 21, 218

2 John Abbott Downstream Director Royal Dutch Shell Royal Dutch Shell March 21, 218

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 classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers (SPE) 2P + 2C definitions. The Mountains and Oceans scenarios are based on plausible assumptions and quantification, and they are designed to stretch management thinking and even to consider events that may only be remotely possible. Scenarios therefore, are not intended to be prediction of likely future events or outcomes. Accordingly, investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Operating costs are defined as underlying operating expenses, which are operating expenses less identified items. Organic free cash flow is defined as free cash flow excluding inorganic capital investment and divestment proceeds. Unit costs for Refining and Trading are defined as operating expenses divided by refinery intake volumes. Yield on costs for Marketing are defined as CCS earnings excluding identified items divided by operating expenses. Integrated indicative margin is defined as a theoretical margin available to be captured by our integrated portfolio of Refining and Trading assets excluding portfolio impact. Breakeven margin is defined as minimum integrated margin required for zero earnings in Refining and Trading.. Gross margin is defined as net proceeds less cost of goods sold, on a CCS basis, and primary transport expenses. Income per site is defined as ratio of CCS earnings excluding identified items to the total number of Retail branded sites. Sales by region is defined as sales volumes across each of the regions Americas, East and Europe & Africa. Earnings per FTE is defined as ratio of CCS earnings excluding identified items to the number of employees in Lubricants, Aviation and Specialties. Clean CCS ROACE (Return on Average Capital Employed) is defined as defined as the sum of CCS earnings attributable to shareholders excluding identified items for the current and previous three quarters, as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. Capital investment comprises capital expenditure, exploration expense excluding well write-offs, new investments in joint ventures and associates, new finance leases and investments in Integrated Gas, Upstream and Downstream securities, all of which on an accruals basis.. Divestments comprises proceeds from sale of property, plant and equipment and businesses, joint ventures and associates, and other Integrated Gas, Upstream and Downstream investments, reported in Cash flow from investing activities (CFFI), adjusted onto an accruals basis and for any share consideration received or contingent consideration recognised upon divestment, as well as proceeds from the sale of interests in entities while retaining control (for example, proceeds from sale of interest in Shell Midstream Partners, L.P.), This presentation contains the following forward-looking Non-GAAP measures: Organic Free Cash Flow, Free Cash Flow, Capital Investment, CCS Earnings less identified items, Operating Expenses, ROACE, Capital Employed and Divestments. We are unable to provide a reconciliation of the above forward-looking Non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile the above Non-GAAP measure to the most comparable GAAP financial measure is dependent on future events some which are outside the control of the company, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures consistent with the company accounting policies and the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Royal Dutch Shell plc s financial statements. The financial measures provided by strategic themes represent a notional allocation of ROACE, capital employed, capital investment, free cash flow, organic free cash flow and underlying operating expenses of Shell s strategic themes. Shell s segment reporting under IFRS 8 remains Integrated Gas, Upstream, Downstream and Corporate. 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 Royal Dutch Shell plc and subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. Subsidiaries, Shell subsidiaries and Shell companies as used in this presentation refer to entities 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 as 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 an entity or unincorporated joint arrangement, after exclusion of all third-party interest. This presentation contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) 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. Forwardlooking 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 aim, ambition, 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 2-F for the year ended December 31, 217 (available at and ). 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, March 21, 218. 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. 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 2-F, File No , available on the SEC website Royal Dutch Shell March 21, 218 3

4 Summary Key messages Significant and increasing cash and returns to support world-class investment case Thrive in the energy transition World-class investment case Strong license to operate Increasing portfolio resilience, leveraging technology, digitalisation and new business models Transformational and profitable growth Organic free cash flow per annum: by 22: $6-7 billion by 225: $9-12 billion Capital employed by 225: Oil Products: %; Chemicals: +>5% ROACE >15% Leading through the Energy Transition Royal Dutch Shell March 21, 218 4

5 Strategic themes delivery: on track Strategic themes Cash engines Capital employed ($ bln end 217) 217 ~$54 Free cash flow ($ bln p.a) ROACE (%) ~59% ~14 ~9 Capital employed ($ bln) ** ~$6 Free cash flow* ($ bln p.a) ROACE (%) ~7% 25-3 >1 Growth priorities ~27% ~2 ~4 ~2% 1-2 ~5 Emerging opportunities ~6% ~(1) ~(4) ~5% (2) - (1) ~5 Organic FCF ~ Price sensitivity: +/- $1 Brent = +/- ~$6 billion CFFO Divestments & acquisitions Total (incl. Corporate) ~ ~28 ~6 >5 ~ ~1 * : 216 RT $6 per barrel, mid-cycle Downstream ** Includes Deep water in cash engines and Shales in growth priorities by 22 Royal Dutch Shell March 21, 218 5

6 Downstream: Leadership Team John Abbott Downstream Director Huibert Vigeveno EVP Global Commercial István Kapitány EVP Retail Lori Ryerkerk EVP Manufacturing Andrew Smith EVP Trading & Supply Graham van t Hoff EVP Chemicals Bjorn Fermin EVP Downstream Finance Gerard Penning EVP Downstream Human Resources John Hollowell* EVP Pipelines Martin Bambridge* Downstream General Counsel Fabian Ziegler* EVP Contracting & Procurement * Not present today Royal Dutch Shell March 21, 218 6

7 Downstream: An integrated story Chemicals Refining Global Commercial Supply & Trading Customers Retail Upstream & Integrated Gas Royal Dutch Shell March 21, 218 7

8 Downstream: Business environment Oil and liquid demand outlook Million barrels per day Chemicals demand outlook Petrochemicals* demand in kt per annum Asia 37% Asia 52% Shell Oceans scenario IEA Current Policy scenario Shell Mountains scenario IEA New Policy scenario N. America S. America Europe Middle East Asia Others Demand for Oil Products and petrochemicals is still growing in the 23s Demand still expands well into the 23s Passenger vehicles consumption represents ~25% of overall liquid hydrocarbon demand Major growth in demand, in excess of GDP growth Chemicals enabling CO 2 reduction * Cracker base chemicals (Aromatics, derivatives, Ethylene, Propylene and Isobutylene). Source HIS/Shell analysis Royal Dutch Shell March 21, 218 8

9 Oil Products: Business environment Global vehicle sales Million vehicles/year Global vehicle fleet Million vehicles Internal combustion engine (ICE) Plug-in hybrid EV (PHEV) Battery EV (BEV) An aggressive EV scenario not a forecast: one example Company analysis Royal Dutch Shell March 21, 218 9

10 Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Further strengthen our financial performance Capital employed: $17 billion Capital employed: $24 billion Capital employed: $15 billion Upgrading our portfolio Sales volumes: 6.6 mboe/d Refinery processing: Capital investment: $4-5 billion 2.6 mboe/d Sales volumes: Capital Investment: ~18 mtpa $3-4 billion Chemicals growth priority Capital employed and volumes based as per end Q Capital investment is in period Royal Dutch Shell March 21, 218 1

11 Downstream strategy: A reminder Cash engine Growth priority Marketing Refining & Trading Chemicals Global #1 Brand Large, complex integrated sites Advantaged and flexible Differentiated Fuels & Lubricants in Trading hubs feedstocks Growth Competitiveness Strong product portfolio HSSE a core value Non-fuels retailing Low Carbon Fuels Rationalization nearing completion Proprietary technology Enabling CO 2 reduction Driven through new business models, customer connectivity, innovation and digitalisation Source brand preference: Ipsos Global Customer Tracker (covering 3+ markets) Royal Dutch Shell March 21,

12 Safe + reliable operations Operational excellence Process safety/environment Downstream Personal safety Downstream # Tier 1 & 2 Process Safety Incidents TRCF/million working hours Tier 1 Tier 2 TRCF/million working hours TRCF trendline Refining & Trading Unit costs (Index 213) 1 Marketing Yield on costs (Index 213) 225 Refining - Asset utilisation % E E Asset utilisation Asset utilisation - 4-year average Royal Dutch Shell March 21,

13 Downstream Financial performance Cash flow $ billion 15 1 $ billion 15 1 Capital employed $56 billion at end CFFO excluding working capital Working capital movement Free cash flow (RHS) Refining & Trading Marketing Chemicals Earnings Earnings by sub-segment + ROACE $ billion % $ billion % Strong cash generation Competitive returns Earnings and ROACE on CCS basis, excluding identified items Downstream Upstream Integrated Gas Corporate DS as of % RDS (RHS) Marketing Refining & Trading Chemicals ROACE (RHS) Royal Dutch Shell March 21,

14 Competitive performance World-class investment case Oil Products ROACE % 2% 1% % Downstream Cash flow from operations $ billion Shell Peer group Shell Peer group range Chemicals ROACE Global brand preference % 3% % 25 2% % 1 5 % Shell Peer group Shell Peer group Royal Dutch Shell March 21, 218 Company analysis of competitors cash flow from operations; Earnings on local GAAP basis adjusted for inventory valuation differences and excluding identified items. 216 Capital Employed is used as proxy for calculating 217 ROACE. Oil products peer group excludes Total: no separate oil products disclosure. Source brand preference: Ipsos Global Customer Tracker (covering 3+markets) 14

15 Exposure and resilience Resilient today and tomorrow Geographical exposure Earnings per region Chemicals feedstock exposure % of feedstock East Europe & Africa Americas Oil Gas Marketing earnings growth to 225 $ billion 3 Refining & Trading Breakeven margin $ per barrel 1 Capital employed 225: Oil Products: +3-35% Chemicals: +>5% Base growth New customers Resilient sectors New revenues E Earnings on CCS basis, excluding identified items Retail Global commercial Royal Dutch Shell March 21,

16 Offering more and cleaner energy solutions Transport Lighter vehicles, Mobility efficiency Construction Insulation and energy efficiency Electronics Digitalisaton Energy & water Fuel additives, Low temperature detergents Biofuels Conventional and advanced CNG/LNG Light & Heavy Duty Vehicles and Marine Hydrogen Network development Electricity Smart and fast charging offer for EVs New businesses CCS, Emissions Trading, District heating, Solar Nature-based and technology solutions to offset CO 2 emissions Royal Dutch Shell March 21,

17 Innovation & Customer Shell is developing and adapting the technology of the future, building on our customer connectivity Technology Chemicals technology R&D Improvement to refining technologies New fuels and lubes development Digitising the core Data analytics Technology use in monitoring and operation of plants, terminals and vessels New business models LubeChat Pilots: Fitcar, TapUp, AccuPort Connected customers (e.g. Jaguar Land Rover, Shell app) Royal Dutch Shell March 21,

18 Summary Key messages Significant and increasing cash and returns to support world-class investment case Thrive in the energy transition World-class investment case Strong license to operate Increasing portfolio resilience, leveraging technology, digitalisation and new business models Transformational and profitable growth Organic free cash flow per annum: by 22: $6-7 billion by 225: $9-12 billion Capital employed by 225: Oil Products: %; Chemicals: +>5% ROACE >15% Leading through the Energy Transition Royal Dutch Shell March 21,

19 Marketing István Kapitány EVP Retail Royal Dutch Shell Royal Dutch Shell March 21, 218

20 Shell has the most profitable Marketing businesses in the industry Earnings: Marketing $ billion 4 2 ROACE 26% Chemicals Earnings split (217) EU + Africa Balanced portfolio 2 Americas East Refining & Trading Shell Peer group Others +$1.4 billion 217 vs 213 earnings growth Customers first Top line growth through differentiation Active portfolio management Simplification & Offshoring Marketing Global commercial Retail Downstream Earnings and ROACE on CCS basis, excluding identified items; Peer group: BP and Total, published annual reports, Shell analysis 2 - Geographic distribution of Marketing earnings in 217. Retail includes Raizen Combustiveis Royal Dutch Shell March 21, 218 2

21 Shell retail is the #1 mobility retailer # of sites worldwide of selected retailers 1 GAP ZARA Carrefour Total Aslam Khoso Global Service Champion Winner 216 Shell Starbucks BP 3M+ Customers per day Shell Reference industry IOCs 1 Source: Latest published company annual reports: 7+ Markets 44K+ Locations Sites (in thousands): BP: ~18; Total: ~16.5; Gap: ~1.6; Zara: ~2.2; Carrefour: ~12; Starbucks: ~27 Royal Dutch Shell March 21, 218 Retail includes Raizen Combustiveis 21

22 Shell retail has grown strongly since 213 Earnings: retail $ billion 2 >7% ROACE 24% Gross margin contribution Main-grade fuel CAGR % Convenience retail V-Power Fleet solutions Loyalty Differentiated Programmes Active Portfolio Management Simplification & Offshoring +~$6 million 217 vs 213 earnings growth Yield on cost Income per site Index (213=1) Index (213=1) Selected retailers Source: Latest published company annual reports for Carrefour, Couche Tard, Sainsbury s, Starbucks, Tesco and Walmart. Earnings and ROACE on CCS basis, excluding identified items; Retail includes Raizen Combustiveis. CAGR: compound annual growth rate Royal Dutch Shell March 21,

23 Shell retail success is built upon brand and differentiation Brand value 1 Preferred IOC across 62 countries 2 $ billion 39 Total Coca-Cola Nike BP Esso 21 2 Chevron Total BP Mobil 1 - Source: Brand Finance Global 5 (218) 2 - Source: IPSOS, Global Customer Tracker Shell analysis based on GCT, an independent survey conducted by Ipsos across 62 markets in 217 Royal Dutch Shell March 21,

24 V-Power is the best selling premium fuel in the world V-Power penetration: branded sales % Iconic partners 2% 1% % E US street price for premium fuels 2 $ per gallon Market share: premium fuels in the UK 3 Shell Esso BP Sainsburys Tesco Morrisons Others Shell Major Minor Regional Hypermarket 1 Source: Shell estimate based on number of markets and sites selling Shell V-Power and extrapolated from public data where available 2 - Source 16M+ transactions. Period: 21 st Feb Feb 218. Source: OPIS Oil Price Information Service (218) 3 - Source: Kantar Worldpanel Petrol Service report (217) based on 2K UK Motorists surveyed across a 12-month period Royal Dutch Shell March 21,

25 Shell is the largest global provider of solutions for business fleets #1 Network Shell cards are accepted in >2, roadside locations worldwide >7 Million Active Shell cards 2 Million Customers served every day Fleet of trucks $2 + billion road services turnover Quality and low emission fuels Management information, advanced controls & security Fleet of cars/vans Digital offers & Mobility Services CO 2 offsetting & electric mobility Growing through car-sharing, ride-sharing and leasing Royal Dutch Shell March 21,

26 Securing our position as the leading global mobility retailer Our 5 Ambitions by % Share of margin from non-fuels retail at company sites 2% Of our fuels margin from low emission energy solutions at company sites >5% Reduction in carbon intensity of Shell service stations at company sites Every customer Treated like a guest at Shell service stations and in the digital world 1% Of Shell service stations committed to reduce waste & benefit local communities Royal Dutch Shell March 21,

27 Significantly growing our convenience retail business Growth in # of stores Shell convenience store - Singapore Broaden our range of coffee and food offers >5, Basket check out in 5 seconds (pilot with IBM) United Kingdom Developing unmanned cashier with Bingo Box Technology - China Royal Dutch Shell March 21,

28 Leading through the energy transition with tangible actions Hydrogen network development USA & Germany 2+ recharge locations UK & The Netherlands 5 ultra-fast charge posts with IONITY in next 2 years Europe Integrated charging solutions Royal Dutch Shell March 21,

29 Innovating with award winning digital solutions for our customers Shell Motorist App active in 36 markets and voted the Best Mobile App 1 In-car payments with Jaguar Land Rover and General Motors Mobile payment in UK, Turkey, Germany, China and US available to customers 2 Fuel delivery to your door in NL with a Tap on your phone 1- Shell App: Gold Award for Best Mobile App experience in EMEA in Dec 217 by Mobile Marketing Association; GLOMO Award Winner for Best use of mobile for Retail, Brands & Commerce in Feb 217 by Mobile World Congress - GSMA. 2- Available from UK 215, Turkey 216, DE & China 217 and US 218 Royal Dutch Shell March 21,

30 Outlook to 225 aiming for significant growth in retail New revenues Grow convenience retail 5, new stores New offers Earnings: retail $ billion 4 ROACE 24% >2% >2% Resilient sectors Grow fleet solutions 2 New customers 5, new sites: China, India, Indonesia, Mexico and Russia Growth levers 22 Growth levers 225 +>$1.5 billion 225 vs 217 earnings growth Grow Base V-Power 5, new sites 4M+ 9+ Customers Markets 55K+ Locations Earnings and ROACE on CCS basis, excluding identified items Royal Dutch Shell March 21, 218 3

31 Marketing Huibert Vigeveno EVP Global Commercial Royal Dutch Shell Royal Dutch Shell March 21, 218

32 Global commercial: the B2B arm of Shell Lubricants - global lubricants market share 1 % 1% 5% Aviation - sales by region (in 217) Europe & Africa East Americas % Exxon Mobil Supplier BP TOTAL Attractive industries Fully integrated Resilient Specialties - sales by region (in 217) Europe & Africa East Americas 15 B2B customers Markets #1 in Lubricants 1M+ 1 Source: Kline & Company (217) Royal Dutch Shell March 21,

33 Global commercial delivered exceptional returns Earnings: global commercial $ billion 2 1 > 6% CAGR ROACE 26% Premium & organic growth Supply chain footprint Simplification & Offshoring Yield on cost 1 Earnings per FTE Index (213=1) Index (213=1) +>$3 million 217 vs 213 earnings growth Selected retailers Source: Latest published company annual reports - Akzo Nobel, Fuchs, Valeo, Valvoline & World Fuel Services. Earnings and ROACE on CCS basis, excluding identified items. CAGR: compound annual growth rate Royal Dutch Shell March 21,

34 Shell lubricants success is built on technology, brand and people Brand share of preference 1 - markets worldwide* Exxon Mobil BP 2% 16% 14% Volume share 2 comparison with BP and Total Resilient Sectors Consumer Commercial Industrial Passenger Car Motor Oils Shell Peer Group Exxon 1 in 9 engine or equipment, worldwide, is protected by Shell lubricants 36% Mobil 21% BP 1% Heavy Duty Engine Oils 1 Source: Kantar Millward Brown (H1 17) PCMO (22K respondents), HDEO (9K respondents) *- PCMO: USA, China, India, Russia, Brazil, Germany, Indonesia, Canada, Thailand, Egypt Royal Dutch Shell March 21, and Malaysia; HDEO: USA, China, India, Russia, Brazil, Thailand, Egypt, Pakistan, Vietnam, Argentina and Colombia. 2 Source: Kline & Company (217)

35 Shell lubricants is the IOC market leader in China PCMO market: brand preference in China 1 4 Supply chain footprint in China NGG Tianjin Zhapu MOBIL 2 CASTROL Preference SINOPEC TOTAL Awareness Operation Unit Lube Oil Plant Grease Plant Distributor Center GTL Terminal Flavex Process Oil Terminal CN, HK North West South East TsingYi Zhuhai Exceptional local team Digital leadership Shell market share 2 in China in 216: 8,5% Retail integration 1 Source: Millward Brown (217 Q3) Motorist Loyalty Tracker 中国市场品牌调研 respondents annually in 33 cities in China 2 Source: Kline & Company (217) Royal Dutch Shell March 21,

36 Our unique global customers footprint can grow further DEEP TECHNICAL EXPERTS, Passenger Car Motor Oil 1 Premium volume development % 7 out of 1 largest car manufacturers choose Shell lubricants 1 5 Base oil manufacturing plants Lubricants & grease blending plants Market Shell Customer operations R&D Centre 1 Source: Kline & Company Passenger Car Motor Oils with a viscosity of W and 5W, Compound Annual Growth Rate ( ) Royal Dutch Shell March 21,

37 Strengthening our position as a world class B2B business % Industrial Production 1 LubeChat +25% ICE Vehicles 2 Fitcar +36% Aircrafts 3 Skypad +27% Ship capacity 4 AccuPort 1 Source: Oxford Economics (218); 2 Source: Shell analysis based on aggressive EV scenario; 3 Source: Shell analysis; 4 Source: Shell analysis Ship capacity - Dead weight tonnage Royal Dutch Shell March 21,

38 Outlook to 22 is very strong with exceptional returns New revenues Accelerate digital and services growth Earnings: global commercial $ billion 3 ROACE 26% >25% >25% 2 Resilient sectors $1 billion investment in technology 1 New customers Grow market share in China, India, Indonesia, Mexico and Russia Growth levers 22 Growth levers 225 +>$1 billion 225 vs 217 earnings growth Grow Base 2x market growth in premium Expand airport presence 1M+ 15 B2B customers Markets #1 In lubricants Earnings and ROACE on CCS basis, excluding identified items Royal Dutch Shell March 21,

39 Retail and global commercial are exceptional performers Strongest business performance in peer group Attractive industries, superior returns Resilient in the 22s Earnings: retail + global commercial $ billion 6 4 ROACE 25% >2% >2% >7% CAGR Growth 22 Growth 225 Global Commercial Retail +>$2.5 billion 225 vs 217 earnings growth 4M+ 15+ Customers/day Markets #1 In the industry Earnings and ROACE on CCS basis, excluding identified items; CAGR: compound annual growth rate Royal Dutch Shell March 21,

40 Refining & Trading Lori Ryerkerk & Andrew Smith EVP Manufacturing & EVP Trading & Supply Royal Dutch Shell Royal Dutch Shell March 21, 218

41 Refining & Trading: Fully integrated and highly dynamic global system Royal Dutch Shell March 21,

42 average refining complexity Chemicals, Refining & Trading Portfolio Scotford Puget Sound Martinez CALGARY Deer Park (JV) HOUSTON Sarnia Mobile Geismar Norco Convent SHELL WEST Pennsylvania Fredericia FEP/Stanlow (JV) MOSCOW LONDON ROTTERDAM Pernis Schwedt (JV) Moerdijk Rheinland Miro (JV) Karachi Al Jubail (JV) DUBAI BEIJING Nanhai (JV) Tabangao (JV) Legend Refinery Chemical plant Pulau Bukom SINGAPORE Jurong Island Chemicals & integrated refining site Crude & product trading hub Durban XYZ Trading offices Chemical Site under construction Buenos Aires Retaining competitive, integrated and more complex sites in trading hubs and advantaged markets Consolidated footprint Refinery capacity in thousand barrels per day (1%) million barrels per day Retained site 217 Exits Company analysis of external data. Increased refining complexity 1 Shell refining portfolio Competitor refining portfolio Bubble size represents total equity capacity average refinery capacity (thousand barrels per day) Royal Dutch Shell March 21,

43 Chemicals, Refining & Trading Integration Oil Products Make-Buy-Blend Best selection of purchased and produced components Product blending & supply Marketing Refining Highest value Crude and feedstock, equity and non-equity Trading & supply Integration and flexibility release the value of supply chain optionality Crude & feedstock optimisation Highest-margin feedstocks from refinery or market Oil-chemicals Integration Chemicals manufacturing Royal Dutch Shell March 21,

44 Chemicals, Refining & Trading US Gulf Coast & Northeast Shell terminals Shell refineries Northeast volume growth +3 thousand barrels per day Significant and sustainable value uplift created by integrated re-optimisation of the eastern US value chain N o r c o C o n v e n t Operating Convent FCCU for another turnaround cycle +$15-2 million per annum margin Make-Buy-Blend optimisation and exports Hurricane Harvey response business continuity for customers Royal Dutch Shell March 21,

45 Norco manufacturing complex Refining & Chemicals integration Motiva streams managed at arm s length Under-optimised assets Past Present Future Integration in Shell s portfolio Integrated economics drive real time optimisation of streams Short term Catalyst reformulation to maximise utilization of integrated value chain Long term Capital projects to increase integrated profitability Norco integrated Refining & Chemicals value gross margin $ million per annum 1 Optimizing Refining and Chemicals as an integrated value chain expected to unlock >$7 million per annum additional margin Past Present Short Term Long Term Royal Dutch Shell March 21,

46 Delivering operational excellence Process safety & environment Downstream Personal safety Downstream # Tier 1 & 2 process safety incidents TRCF/million working hours Tier 1 Tier 2 TRCF/million working hours TRCF trendline Asset utilisation Refining % utilisation 81 8 Unit cost Refining & Trading Index (213 =1) 1 Improving safety, reliability and cost efficiency in our operations E Asset utlisation Asset utilisation - 4-year average Royal Dutch Shell March 21,

47 Margin resilience and stability Refining & Trading Breakeven margin $ per barrel Delivering more resilient and less volatile margin from a high graded and integrated portfolio E Integrated indicative margin $ per barrel Forward view based on average of the last ten years, covers most of typical volatility: $1.4 per barrel Rule-of-thumb: $ per barrel margin = +/- ~$6 million earnings Actual margin Average margin Indicative margin Royal Dutch Shell March 21,

48 Building resilience for the future Investing in refinery resilience Growth Non- and little discretionary spend Capital investment: $ 2-3 billion per year ( average) Strengthening the core Bottom of barrel upgrading Crude flexibility Logistics and integration Low sulphur fuel oil (IMO) preparedness New solutions Low carbon solutions Strengthening the core assets while building capability through technology advances to adapt to a changing energy world Energy efficiency initiatives Green energy Cogeneration Shell refineries and businesses Asset Carbon Offsets Biofuels Blending Low Carbon Solutions Renewable Power Offerings 3 rd Party offerings, new value chains Nature Based Solutions Royal Dutch Shell March 21,

49 Chemicals Graham van t Hoff EVP Chemicals Royal Dutch Shell Royal Dutch Shell March 21, 218

50 FEEDSTOCKS CONSUMERS Growth priority Chemicals Positioning in the competitive landscape Base Chemicals/ Intermediates Performance Solutions Add Differentiation Pure Chemical Companies Top 1 producer of Ethylene Top 5 producer of Propylene Top 5 producer of Benzene Access to advantaged feedstock Process technologies Big integrated projects Large scale Customised solutions Product-materials innovation Production close to markets Medium scale projects Royal Dutch Shell March 21, 218 5

51 Chemicals Strategy Advantaged feedstock First class footprint Strong product & customer portfolio Excellence every day & HSSE Access advantaged feedstock Monetize with competitive advantage A highly profitable hydrocarbon upgrader Technology Royal Dutch Shell March 21,

52 Chemicals Technology leader Technology focus and operating expertise create winning position OMEGA (MEG - Polyesters) SMPO (Styrene Monomer Insulation / Polyols - Foams) SHOP (Detergents) DPC/PC (Diphenyl carbonate Phone casings) Technology licensing and catalyst sales combine to create strong long-term value Shell Chemicals proprietary technologies leverage key skills and experience to create market leading positions Royal Dutch Shell March 21,

53 Chemicals Financial and competitive performance Earnings Chemicals $ billion 3 Average: $17 $/barrel 12 Competitive performance ROACE 4Q rolling % Average: $ Ensure robust performance under different market conditions and grow base business Earnings Average Brent oil price (RHS) Average earnings Q4 212 Shell ExxonMobil Q4 213 Q4 214 DOW/UCC LBI Q4 215 Q4 216 Q4 217 Earnings and ROACE on CCS basis, excluding identified items; Shell ROACE calculations for 212 has been restated for the impact of IAS 19; source: company reports, Shell analysis Royal Dutch Shell March 21,

54 Chemicals Competitiveness $5 million per annum Unit margin Volume growth Organisational, operational and cultural improvements deliver sustainable annual earnings increases Costs Operational excellence Royal Dutch Shell March 21,

55 Chemicals Growth projects Under construction Geismar, USA 425, metric tonnes additional Alpha Olefins capacity Remains on track to begin commercial production in 2H 218 Geismar site will become largest AO facility in the world New liquids cracker and derivatives units Start-up of cracker and new downstream units in 1H 218 Capacity: ~1.2 million metric tonnes ethylene per annum SMPO/POD on-track for 219/22 start-up Nanhai, China 5/5 JV CNOOC Pennsylvania, USA Greenfield FID 216 Capacity: ~1.5 million metric tonnes ethylene per annum and polyethylene derivatives Main construction phase started in late 217 Feedstock mix 225 Gas Liquid 26 Nanhai 21 USGC go-light strategy 21 Singapore 216+ China + USA Royal Dutch Shell March 21,

56 Chemicals Organic growth Improve base business Expand current base portfolio Adding to portfolio growth Earnings + ROACE $ billion 4 % 2 Targets aspiration per year mid- 2s: 15 Earnings: ~$3.5 4 billion 2 1 Cash flow: ~$5 6 billion 5 Base capex: ~$1 $1.5 billion ~225 Earnings ROACE (RHS) Earnings and ROACE on CCS basis, excluding identified items; Shell ROACE calculations for 212 has been restated for the impact of IAS 19 Royal Dutch Shell March 21,

57 John Abbott Downstream Director Royal Dutch Shell Royal Dutch Shell March 21, 218

58 Downstream Delivering a world-class investment case Thrive in the energy transition Downstream: Customer-centric Uniquely integrated World-class inv estment case Competitive Resilient Strong license to operate Leading through the energy transition Delivering profitable growth Royal Dutch Shell March 21,

59 Questions & Answers John Abbott Downstream Director Huibert Vigeveno EVP Global Commercial Istvan Kapitany EVP Retail Lori Ryerkerk EVP Manufacturing Andrew Smith EVP Trading & Supply Graham van t Hoff EVP Chemicals Bjorn Fermin EVP Downstream Finance Gerard Penning EVP Downstream Human Resources Royal Dutch Shell March 21,

60 Royal Dutch Shell March 21, 218