Oil and Gas Energy Forum Taipei, 4 July 2012...Middle East South Asia East Asia SE Asia Central Asia...

Energy Outlook – Global/Asian Region

Oil and Gas Energy Forum

Taipei, 4 July 2012

Copyright of Shell International BV 1

Alf D’SouzaSenior Adviser/VP Government Relations, Asia-Pacific

Taipei, 4 July 2012

DEFINITIONS AND CAUTIONARY NOTE

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 or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate 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 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 presentation refer to companies in which Royal Dutch Shell 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 which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.This presentation 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. 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’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’,

Copyright of Shell International BV 24 July 2012

are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ 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 potential litigation and regulatory measures as a result of climate changes; (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 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 factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2011 (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 presentation, 21 April 2012. Neither Royal Dutch Shell 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. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.We use certain terms in this presentation, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in

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. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

AGENDA

PART 1: TRENDS AND DRIVERS

PART 2: ENERGY DRIVERS

PART 3: ASIA ENERGY DEVELOPMENTS

PART 4: SHELL ENERGY SCENARIOS TO 2050 – SIGNALS &


PART 4: SHELL ENERGY SCENARIOS TO 2050 – SIGNALS &

SIGNPOSTS

TRENDS AND DRIVERS

PART 1

SIGNALS & SIGNPOSTS – A SNAPSHOT

We have entered an

Intensified Intensified economic cycles economic cycles

following the end of following the end of the ‘great the ‘great

moderation’moderation’

Heightened political Heightened political instabilityinstability


We have entered an‘era of volatile transitions’‘era of volatile transitions’

New planetary New planetary boundaries boundaries defineddefined

Significant Significant demographic demographic transitions transitions ––urbanisationurbanisation

New political New political consensus consensus

building building –– a a minimini--

laterallateral worldworld

FOOD – WATER – ENERGY

Energy intensity of providing water

Water intensity of food production


Impact on land used for biofuels

Energy intensity of food production

Impact of water use for energy production

Impact of agriculture on water quality

Population and GDP

growth and urbanisation

RISING GLOBAL POPULATION, ENERGY DEMAND AND CO2 EMISSIONS

POPULATION AND PROSPERITY DRIVES ENERGY DEMAND

2006.9 7.7 9.3

100

150

100 = Global Primary Energy 2010 100 = Global CO2 Emissions 2010

Population


SOURCE: SHELL ESTIMATES, UN SOURCE: SHELL ESTIMATES

0

100

2010 2030 2050

OECD

NON-OECD

0

50

100

2010 2030 2050

IMPACTS OF AN URBAN WORLD

75% of world’s population in cities by 2050

Urban development decisions lock in city energy profile in

the early stages

Urban planning decisions historically reflect energy prices

at the time of development (urban sprawl in the US linked to


at the time of development (urban sprawl in the US linked to

low gasoline prices)

Can cities be the saviour of the global energy crunch –

extra-ordinary demand moderation?

8.000

10.000

12.000

14.000P

er

cap

ita

en

erg

y co

nsu

mp

tio

n (

toe

pe

r ca

pit

a) San Francisco

Houston New York

Paris

London

Sydney

Los Angeles

Tokyo

Seoul

San Francisco

Houston New York

Paris

London

Sydney

Los Angeles

Tokyo

Seoul

Singapore

DENSER CITIES CONSUME LESS ENERGY


0.000

2.000

4.000

6.000

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00

Pe

r ca

pit

a e

ne

rgy

con

sum

pti

on

(to

e p

er

cap

ita

)

Urban Density (1000 people/km2)

MadridRiyadh

Barcelona

Hong Kong

Mexico City

Istanbul

Bangkok

Rio de Janeiro

Guangzhou

Mumbai

Shenzhen

Bangalore

Buenos Aires

BeijingShanghai

DhakaHo Chi Minh

City

Hanoi

MadridRiyadh

Barcelona

Hong Kong

Mexico City

Istanbul

Bangkok

Rio de Janeiro

Guangzhou

Mumbai

Shenzhen

Bangalore

Buenos Aires

BeijingShanghai

DhakaHo Chi Minh

City

Hanoi Haiphong

Surat

CITIES IN THE ENERGY WEB


ENERGY DRIVERS

PART 2

THE ENERGY SYSTEM TODAY SETS THE CONTEXT FOR THE FUTURE

31% 22% 29% 10% 5% 3%


20% 55% 25%

World population 7 bln; 50% in urban environment Source: Shell; UN Population Division

Terajoule/yr

TECHNOLOGIES TAKE DECADES TO MATURE

Billion vehicle kilometres

EXAMPLE: PASSENGER ROAD TRANSPORT

HOW FAST CAN WE CHANGE?

15,000

20,000

25,000

30,000

35,000


SOURCE: NATURE 462 (2009) SOURCE: SHELL

0

5,000

10,000

2000 2010 2020 2030 2040 2050

Hydrogen

Electricity -Gaseous Hydrocarbon Fuels

Liquid Hydrocarbon Fuels

ROBUST LONGER TERM FUNDAMENTALS

ENERGY INVESTMENT FUNDAMENTALS POSITIVE

MANAGING SHORT-TERM VOLATILITY

$/bblEnergy demand outlook in million boe/d

6

8

10

12

60

80

100

120

140

200

300

400


SOURCE: SHELL ANALYSIS

0

2

4

0

20

40

60

2008 2009 2010 2011

BRENT (LHS)

HENRY HUB $/MMBTU (RHS)

WEIGHTED AVERAGE REFINING MARGIN $/BBL (RHS)

0

100

200

1980 1990 2000 2010 2020 2030 2040 2050

OTHER REN.

WIND SOLAR

HYDRO

NUCLEAR

TRAD. BIOMASS

COM. BIOMASS/WASTE

COAL

GAS

BIOFUELSOIL

SHELL ACTIVITIES

Global oil production million boe/d

CRUDE OIL SUPPLY

Cost indices Upstream – Year 2000=100

INDUSTRY COST ESCALATION

OIL MARKET

180

200

220

240

Upstream Capital Cost Index

Upstream Operating Cost IndexNew

60

80

100

Crude oil - fields yet

to be developed or

found

Natural gas liquids


SOURCE: IEA WEO2010 SOURCE: IHS-CERA

100

120

140

160

2000 2002 2004 2006 2008 2010 2012

Existing0

20

40

1990 2000 2010 2020 2030

found

Crude oil – currently

producing fields

NATURAL GAS DEMAND GROWTH

NATURAL GAS OUTLOOK

UNCONVENTIONAL GAS RESOURCES

Tcf/yr

SOURCE: IEA, SHELL

Tcf

0

600

1200

SOURCE: IEA

0

100

200

1990 2000 2010 2020 2030


0

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012

Brent

UK NBP

AP LNG

Henry Hub

SOURCE: PLATTS, NYMEX

ATTRACTIVE ECONOMICS FOR ELECTRICITY PRODUCERS

SOURCE: WOODMACKENZIE; SHELL ANALYSIS BASED ON EU DATA

CAPITAL COST

NATURAL GAS REGIONAL PRICES

$/MW hour

LONG-RUN MARGINAL COST

0 50 100 150 200

CCGT

Coal

Nuclear

Wind

Solar Thermal

$/MMBtu

100

150

Energy demand outlook in million boe/d

NON FOSSIL ENERGY GROWTH SHELL BIOFUELS - BRAZIL

ALTERNATIVE ENERGY


0

50

1980 1990 2000 2010 2020 2030 2040 2050

SOURCE: IEA, SHELL

WIND

SOLAR

HYDRO/OTHER

NUCLEAR

BIOFUELS

COM. BIOMASS/WASTE

TRADITIONAL BIOMASS

ASIAN ENERGY DEVELOPMENTS

PART 3

Asia energy outlooks under current trends

ASIAN ENERGY DEVELOPMENTS


Energy Mix

This outlook is based on many assumptions and interpretations of possible future choices from today’s perspective. Many uncertainties remain and many alternatives to this outlook are possible. It should be seen as a starting point for discussion and Shell by no means advocates this outlook as a preferred or inevitable one.

ASIA’S SHARE IN WORLD TFC AND TPE

200

300

400

500

600

700

800

EJ /

yea

r (E

nerg

y so

urce

)

World - Total Primary Energy

200

300

400

500

600

EJ /

yea

r (E

nerg

y ca

rrie

r)

World - Total Final Consumption


0

100

200

2000 2005 2010 2015 2020 2025 2030 2035

EJ /

yea

r (E

nerg

y so

urce

)

Year

North America Central America & CaribbeanSouth America EUEurope West Other Europe East OtherNorth Africa West AfricaEast Africa Southern AfricaMiddle East South AsiaEast Asia SE AsiaCentral Asia OceaniaInternational marine bunkers

FSB Energy - Shell WEM v2.4.13 - BBC12 - Normal Efficiency

0

100

2000 2005 2010 2015 2020 2025 2030 2035

EJ /

yea

r (E

nerg

y ca

rrie

r)

Year

North America Central America & CaribbeanSouth America EUEurope West Other Europe East OtherNorth Africa West AfricaEast Africa Southern AfricaMiddle East South AsiaEast Asia SE AsiaCentral Asia OceaniaInternational marine bunkers


Note: This outlook is an example only as it is based on extrapolation of current trends and assumptions around possible future choices. Many uncertainties remain and many alternatives to this outlook are possible therefore.

500

1,000

1,500

2,000

2,500

mill

ion

peop

le

World - Population

SOUTH ASIA POPULATION AND GDP

5

10

15

20

25

USD

trill

ion

(PPP

, 20

10 U

SD)

World - GDP


02000 2005 2010 2015 2020 2025 2030 2035

Year

South Asia


South AsiaIndiaPakistanBangladeshRest of South Asia

02000 2005 2010 2015 2020 2025 2030 2035

USD

trill

ion

(PPP

, 20

10 U

SD)

Year

South Asia



SOUTH ASIA TFC AND TPE

20

30

40

50

60

70

80

90

EJ /

yea

r (E

nerg

y so

urce

)

South Asia - Total Primary Energy - By Source

10

20

30

40

50

60

EJ /

yea

r (E

nerg

y ca

rrie

r)

South Asia - Total Final Consumption - By Sector


0

10

2000 2005 2010 2015 2020 2025 2030 2035Year

Oil Natural Gas

Coal Nuclear

Hydro-electricity Biofuels

Biomass & Waste Biomass - Traditional

Geothermal Solar

Wind Other Renewables


0

10

2000 2005 2010 2015 2020 2025 2030 2035Year

Industry Services

Passenger Transport Freight Transport

Residential Non Energy Use


South AsiaIndiaPakistanBangladeshRest of South Asia


SE ASIA POPULATION AND GDP

2

3

4

5

6

7

8

9

USD

trill

ion

(PPP

, 20

10 U

SD)

World - GDP

200

300

400

500

600

700

800

mill

ion

peop

le

World - Population


0

1

2

2000 2005 2010 2015 2020 2025 2030 2035

USD

trill

ion

(PPP

, 20

10 U

SD)

Year

SE Asia

FSB Energy - Shell WEM v2.4.17 - BBC12 - Version Release

0

100

2000 2005 2010 2015 2020 2025 2030 2035Year

SE Asia


SE Asian population grows x% pa from ~600 mln to 720 mln.

SE Asian GDP/capita growths 2.9% pa from 5,500 to 11,000 (2011-2035)

SE AsiaIndonesiaThailandMalaysiaVietnamPhilippinesSingapore


SE ASIA TFC AND TPE

5

10

15

20

25

30

EJ /

yea

r (E

nerg

y ca

rrie

r)SE Asia - Total Final Consumption - By

Sector

5

10

15

20

25

30

35

40

45

EJ /

yea

r (E

nerg

y so

urce

)

SE Asia - Total Primary Energy - By Source


02000 2005 2010 2015 2020 2025 2030 2035

Year

Industry Services




0

5

2000 2005 2010 2015 2020 2025 2030 2035Year

Oil Natural Gas

Coal Nuclear



Geothermal Solar



SE AsiaIndonesiaThailandMalaysiaVietnamPhilippinesSingapore


EAST ASIA POPULATION AND GDP

1,450

1,500

1,550

1,600

1,650

mill

ion

peop

le

World - Population

20

30

40

50

60

USD

trill

ion

(PPP

, 20

10 U

SD)

World - GDP


1,400

1,450

2000 2005 2010 2015 2020 2025 2030 2035Year

East Asia


0

10

2000 2005 2010 2015 2020 2025 2030 2035

USD

trill

ion

(PPP

, 20

10 U

SD)

Year

East Asia


SE Asian population hardly grows and remains around 1.6 bln people

SE Asian GDP/capita growths 4.5% pa from $11,500 to $33,160 (2011-2035)

East AsiaChinaJapanSouth KoreaNorth KoreaTaiwan


EAST ASIA TFC AND TPE

40

60

80

100

120

140

160

EJ /

yea

r (E

nerg

y ca

rrie

r)

East Asia - Total Final Consumption - By Sector

50

100

150

200

250

EJ /

yea

r (E

nerg

y so

urce

)

East Asia - Total Primary Energy - By Source


0

20

2000 2005 2010 2015 2020 2025 2030 2035

EJ /

yea

r (E

nerg

y ca

rrie

r)

Year

Industry Services




0

50

2000 2005 2010 2015 2020 2025 2030 2035

EJ /

yea

r (E

nerg

y so

urce

)

Year

Oil Natural Gas

Coal Nuclear



Geothermal Solar



East AsiaChinaJapanSouth KoreaNorth KoreaTaiwan


SHELL ENERGY SCENARIOS TO 2050

SIGNALS & SIGNPOSTS

PART 4

WHY DO WE USE SCENARIOS?

� Dealing with uncertainties greater, and time scales longer, than anyone can make predictions for

� Today’s complexity requires a broad dialogue with diverse communities to arrive at sustainable solutions

� Broaden peoples’ perspective

?


� Broaden peoples’ perspective

� Challenging assumptions and mental models

� Develop strategies and test plans

� Identifying risks and opportunities

� Relevant to business and policy decision makers

� To ask “what if” questions, not necessarily give answers

� Not forecasts or predictions

2008 ENERGY SCENARIOS TO 20502008 ENERGY SCENARIOS TO 2050

National supply focusand reactive change

Copyright of Shell International BV 294 July 20126/15/2012 29

Emerging coalitionsand accelerated change

GREENER THAN BLUEPRINTS…?GREENER THAN BLUEPRINTS…?

� Blueprints lower CO2e than most

scenario analyses but still

650ppm by 2100*

� If 450ppm ≈2oC, Blueprints still


� If 450ppm ≈2oC, Blueprints still

isn’t good enough

� Truly unprecedented pace of

transformational investment would

be required MIT analysis – September 2008

Key insights from Shell’s Energy Scenarios Key insights from Shell’s Energy Scenarios to 2050to 2050� The three hard truths that must be tackled together

�Accelerating demand from emerging economies

�Supply struggling to keep pace

�Climate change stresses rising

� Transformation in energy systems is inevitable

�Profound impact on mobility, buildings and electricity


�Profound impact on mobility, buildings and electricity generation

� Technology plays an important role, but cannot do it alone –demand reduction and behaviour changes are also required

� Political and regulatory choices are pivotal – short and long term measures are necessary

� Blueprints approach offers more chance of a sustainable future…but more needs to be done ... 2o target will not be met

KEY DRIVERS IN GLOBAL POLITICSKEY DRIVERS IN GLOBAL POLITICS

� G20 vs G8 – a global role for more nations?

� China/US – a crucial new relationship between the established

and emerging world orders

� Policy paradigm – reshaping the liberal capitalist model.


� Policy paradigm – reshaping the liberal capitalist model.

Re-emergence of state intervention and industrial policy

� Burdens of adjustment – choices on taxation, inflation

targets, and public spending will impact who bears the

costs

� Simmering discontent – unemployment, rising commodity prices

ECONOMIC SIGNALSECONOMIC SIGNALS

An end to the ‘great moderation’

Post recession GDP growth rates


Heightened economic volatility

moderation’

Reduced trend growth?

World Advanced Economies

Emerging Economies

Changing demographics and economic Changing demographics and economic landscapelandscape


©University of Michigan

Step change in energy use by global rise in population and prosperityStep change in energy use by global rise in population and prosperity

Supply from conventional energy resources outstripped leading to stressesSupply from conventional energy resources outstripped leading to stresses

Environmental stresses Environmental stresses –– COCO22 and emerging tensions for water, food, land, etcand emerging tensions for water, food, land, etc


ENERGY ENERGY GAMECHANGERSGAMECHANGERS…?…?

� Shift in consumption power from West to East

� Pressures on oil production

� Supply power shifting to OPEC?

� Iraq oil uptake & arrangements

� Higher cost options

� LTO uptake


� Natural gas, abundant and affordable

� Unconventional gas in US (and elsewhere?)

� Shifting mix of primary energies

� Efficiency affecting demand especially in

Transport

� Substitution in Transport and Electricity

� Renewables

� Nuclear post Japan?

ENERGY RELATED COENERGY RELATED CO22 EMISSIONSEMISSIONS

� Non-OECD has overtaken OECD

� Political process too slow

� Transparent CO2 price urgently needed

� Abundant natural gas

� BLUEPRINTS: early CO2 saving as a

Energy Related CO2 Emissions


replacement fuel for coal in power

generation

� SCRAMBLE: Energy efficiency measures

depressed

� Nuclear slowdown will bring coal back

� Can renewables accelerate further?

CO2 Pathways

ENVIRONMENTAL SCHISMSENVIRONMENTAL SCHISMS

� An uneven road from Kyoto to

Durban

� continued divergence on CO2 policy

is politically unsustainable

� Fallout from Macondo and Fukushima


� Fallout from Macondo and Fukushima

� a higher public awareness of risk

� New planetary boundaries work

points to imminent systemic ecosystem

stress

� links to Water, Food and Energy

Rockstrom, J et al. A Safe Operating Space for Humanity (Nature 46, September 2009)

Q& AQ& A

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