Brazil Shareholder visit 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc November 11, 2016 Let s make the future Royal Dutch Shell November 11, 2016
John Abbott Downstream Director Royal Dutch Shell plc Royal Dutch Shell November 11, 2016
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. Discovered and prospective resources: Our use of the term discovered and prospective resources are consistent with SPE 2P + 2C + 2U definitions. Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact. Shales: Our use of the term shales refers to tight, shale and coal bed methane oil and gas acreage. Underlying operating cost is defined as operating cost less identified items. A reconciliation can be found in the quarterly results announcement. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this release 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 release 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 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 a venture, partnership or company, after exclusion of all thirdparty interest. This release 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. 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 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 release, 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. There can be no assurance that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this release 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, 2015 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expressly qualify all forward looking statements contained in this release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, November 11, 2016. 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 release. With respect to operating costs synergies indicated, such savings and efficiencies in procurement spend include economies of scale, specification standardisation and operating efficiencies across operating, capital and raw material cost areas. We may have used certain terms, such as resources, in this release 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 November 11, 2016 3
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Improve our financial performance Upgrading our portfolio Returns + free cash flow improvement Differentiated products Brand leverage + customer offer Selective growth Full integration with trading Improve retained assets Reducing refining capacity Feedstock plays Capacity growth Chemicals growth priority Royal Dutch Shell November 11, 2016 4
Downstream financial performance Earnings + ROACE $ billion 10 5 % 20 10 Cash flow $ billion 15 10 5 0 0 0 2012 2013 2014 2015 16Q3 Marketing Chemicals 4Q rolling -5 Refining & trading ROACE (RHS) 2012 2013 2014 2015 16Q3 4Q rolling Cash flow excluding working capital Working capital movements Free cash flow Capital employed $52 billion as at end Q316 Contribute sustainable and growing cash surplus Deliver competitive returns Refining & trading Marketing Chemicals Earnings and ROACE on CCS basis, excluding identified items Royal Dutch Shell November 11, 2016 5
Downstream competitive landscape Downstream ROACE % 30 20 Oil Products ROACE % 30 20 10 10 0 2011 2012 2013 2014 2015 Q3 2016 0 2011 2012 2013 2014 2015 Q3 2016 Shell Peers Chemicals ROACE % 30 20 10 Brand Global brand preference 20% 15% 10% 5% 0 2011 2012 2013 2014 2015 Q3 2016 0% 2011 2012 2013 2014 2015 Shell Chemicals peer group Shell Other majors Downstream: Earnings on local GAAP basis adjusted for inventory valuation differences and excluding identified items, cap. emp based on 2015 reported data; Peer group: CVX, TOT, BP, XOM, RDS Chemicals: Earnings excluding identified items; peer group: XOM, LBI, DOW, BP, RDS Source brand preference: Ipsos Global Customer Tracker (covering 30+ markets) Royal Dutch Shell November 11, 2016 6
Attractiveness Improving our Downstream footprint and performance 2016: Showa Shell Motiva split Denmark refining Malaysia refining PSPC IPO Denmark marketing MLP dropdowns (3) Portfolio change Resilience Backbone / grow: Chemicals China LNG for transport Premium fuels + lubes Refinery crude flexibility others Fix: Netherlands Exit: Rheinland Manufacturing Singapore Australia Motiva JV restructuring Denmark marketing others Harburg Italy LPG France Norway Selected UK retail sites Tongyi lubricants China Showa Shell Malaysia refining Denmark refining completed others Asset sales $ billion 4 3 2 1 0 2011 Stanlow refinery Shell Chile LPG Northwest Europe others 2014 Australia DS Italy DS MLP others 2015 Norway UK retail sites LPG France MLP Tongyi others 2011 2012 2013 2014 2015 Royal Dutch Shell November 11, 2016 7
Oil Products Optimization of footprint Motiva JV restructuring Showa Shell divestment Motiva Enterprises, Norco Refinery, U.S.A. Showa Shell Sekiyu K.K. Kawasaki Refinery, Japan Exit from JV with Saudi Aramco Integrate retained assets with Shell Brand licensing agreement Sale of ~33% of Showa Shell Sekiyu KK to Idemitsu ~$1.4 billion Lubricants and fuel brand licensing agreements Completion expected in 2016 Royal Dutch Shell November 11, 2016 8
Growth priority Chemicals Ethylene capacity Million metric tonnes Pennsylvania cracker Under construction 425,000 tonnes additional Alpha Olefins capacity 8 Bukom start-up Nanhai I USGC restructuring Nanhai II Geismar, USA 6 New liquids cracker and derivatives units 4 Nanhai, China Capacity: ~1.2 million tonnes ethylene per annum 50/50 JV CNOOC 2 0 2000 2005 2010 2015 2020 2025 Pennsylvania, USA Greenfield FID 2016 Capacity: ~1.5 million tonnes ethylene per annum and polyethylene derivatives 2006 Nanhai 2010 USGC go-light strategy 9 2010 Singapore 2016+ China + USA Royal Dutch Shell November 11, 2016 9
Growth priority Pennsylvania chemicals Components of competitive advantage: Locally sourced ethane with supply cost advantage > 70% of the North American polyethylene market sits within 700-mile radius Economic development, job creation and investment incentives from the State of Pennsylvania West Canada 1% 70% of North American PE Demand East Canada West North Central 5% New England Pacific 4% Mountain 6% East North Central 35% Shell site 21% 4% Share of PE demand 1% West South Central 6% 3% East South Central Chemicals industry production hub 14% South Atlantic Mid Atlantic Royal Dutch Shell November 11, 2016 10
Investing in selective growth Refining and Trading Retain competitive sites Refinery capacity in thousand barrels per day (100%) 600 500 400 300 Scotford (100%) Puget Sound (100%) Martinez (100%) Deer Park ( 50%) Port Arthur (50%) Houston 1,110,000 bpd 975,000 bpd 520,000 bpd Calgary Sarnia (100%) Convent (50%) Norco (50%) Fredericia (100%) London Pernis (100%) Rotterdam Miro (32%) Rheinland (100%) Schwedt (38%) Al Jubail (50%) Dubai Beijing Karachi (30%) Singapore Pulau Bukom (100%) Mizue (Toa) (18%) Yamaguchi (13%) Yokkaichi (26%) Tabangao (55%) Port Dickson (51%) 200 100 0 Retained site 2016 Announced exits Exits 2005 16 Buenos Aires (100%) Durban (38%) Refineries (barrels per day) 0 100,000 101,000 200,000 201,000+ Announced exits or split (Motiva) Trading offices Shell capacity as at end Q3 2016 Royal Dutch Shell November 11, 2016 11
Investing in selective growth Shell Oil Products marketing Marketing ROACE % 30% 20% 10% Marketing free cash flow $ billion 5 4 3 2 1 0% 2012 2013 2014 2015 16Q3 4Q rolling 0 2012 2013 2014 2015 16Q3 4Q rolling No.1 market share in global retail + global lubricants ROACE on CCS basis, excluding identified items Royal Dutch Shell November 11, 2016 12
Investing in selective growth Shell premium products Global retail premium product penetration % 30% Global lubes - premium products penetration % 30% 20% 20% 10% 10% 0% 2012 2013 2014 2015 2016 YTD 0% 2012 2013 2014 2015 2016 YTD Shell V-Power is the world s most widely sold premium fuel (68 markets) #1 or #2 in high quality fuels across 90% of markets Leveraging GTL base oil with Pureplus Top 3 in critical markets, #1 in China. Royal Dutch Shell November 11, 2016 13
Oil products Marketing led growth North America 16,000 Europe 9,000 Marketing led growth Growth in China, India, Indonesia, Russia and Mexico Retail presence in 70 countries + 43,000 sites # Retail presence Marketing growth Retail sites Latin America 7,000 BRAZIL Africa 2,000 ~5,500 retail sites 25 billion liters of fuels sales ~1,000 convenience stores 24 sugar mills 2.1 billion liters ethanol production East 9,000 1 lube oil blending plant Brazil activities through Raizen JV with Cosan Royal Dutch Shell November 11, 2016 14
Downstream Cash engine Growth priority Marketing Refining & Trading Chemicals Improve our financial performance Upgrading our portfolio Returns + free cash flow improvement Differentiated products Brand leverage + customer offer Selective growth Full integration with trading Improve retained assets Reducing refining capacity Feedstock plays Capacity growth Chemicals growth priority Royal Dutch Shell November 11, 2016 15
Questions & Answers Royal Dutch Shell November 11, 2016
John Abbott Downstream Director Royal Dutch Shell plc Royal Dutch Shell November 11, 2016
Brazil Shareholder visit 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc November 11, 2016 Let s make the future Royal Dutch Shell November 11, 2016