Responsible Investment Annual Briefing - Shell · Responsible Investment Annual Briefing...

Royal Dutch Shell April 11, 2019

Royal Dutch Shell plcApril 11, 2019

Responsible Investment Annual Briefing

#makethefuture


Definitions and cautionary note

This presentation contains data and analysis from Shell’s new Sky scenario. Unlike Shell’s previously published Mountains and Oceans exploratory scenarios, the Sky scenario is based on the assumption that society reaches the Paris Agreement’s goal of holding the rise in global average temperatures this century to well below two degrees Celsius (2°C) above pre-industrial levels. Unlike Shell’s Mountains and Oceans scenarios which unfolded in an open-ended way based upon plausible assumptions and quantifications, the Sky Scenario was specifically designed to reach the Paris Agreement’s goal in a technically possible manner. These scenarios are a part of an ongoing process used in Shell for over 40 years to challenge executives’ perspectives on the future business environment. They are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.

Additionally, it is important to note that Shell’s existing portfolio has been decades in development. While we believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario (World Energy Outlook 2016), it includes assets across a spectrum of energy intensities including some with above-average intensity. While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years. Although we have no immediate plans to move to a net-zero emissions portfolio, in November of 2017, we announced our ambition to reduce our net carbon footprint in accordance with society’s implementation of the Paris Agreement’s goal of holding global average temperature to well below 2°C above pre-industrial levels. Accordingly, assuming society aligns itself with the Paris Agreement’s goals, we aim to reduce our Net Carbon Footprint, which includes not only our direct and indirect carbon emissions, associated with producing the energy products which we sell, but also our customers’ emissions from their use of the energy products that we sell, by around 20% in 2035 and by around 50% in 2050.

Gearing is defined as net debt as a percentage of total capital. With effect from 2018, the net debt calculation includes the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt, and associated collateral balances. Free Cash Flow is defined as the sum of “Cash flow from operating activities” and “Cash flow from investing activities”. Cash flow from operating activities excluding working capital movements is defined as “Cash flow from operating activities” less the sum of the following items in the Consolidated Statement of Cash Flows: (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current receivables, and (iii) increase/(decrease) in current payables. Organic free cash flow is defined as free cash flow excluding inorganic capital investment (acquisitions) and divestment proceeds. ROACE (Return on Average Capital Employed) is defined as the sum of current cost of supplies (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 equity 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.). Headline divestments is a non-GAAP metric. Divestment cash proceeds in 2016-2018 were equal to $26.7 billion (in Cash flow from investing activities) and $2.1 billion (“Change in non-controlling interest” in Cash flow from financing activities, primarily related to Shell Midstream Partners, L.P.). Additionally certain contingent payments associated with these divestments are expected to be received in the future. 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 with 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. As the projects are expected to be multi-decade producing the per barrel projection will not be reflected either in earnings or cash flow in the next five years. 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 forward-looking break-even price (BEP) presented is calculated based on all forward-looking costs associated from Final Investment Decision (FID). Accordingly, this typically excludes exploration and appraisal costs, lease bonuses, exploration seismic and exploration team overhead costs. The forward-looking BEP is calculated based on our estimate of resources volumes that are currently classified as 2p and 2c under the Society of Petroleum Engineers’ Resource Classification System. 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. All outlook on financial metrics and/or alternative performance measures excludes the effect of IFRS 16 implementation.

Also, in this presentation we may refer to “Shell’s Net Carbon Footprint”, which includes Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbonemissions associated with their use of the energy products we sell. Shell only controls its own emissions but, to support society in achieving the Paris Agreement goals, we aim to help and influence such suppliers and consumers to likewise lower their emissions. The use of the terminology “Shell’s Net Carbon Footprint” is for convenience only and not intended to suggest these emissions are those of Shell or its subsidiaries.

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 its 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 thanstatements 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 “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 Form 20-F for the year ended December 31, 2018 (available at www.shell.com/investor and www.sec.gov). 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, April 11, 2019. 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 the 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.

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Ben van BeurdenChief Executive OfficerRoyal Dutch Shell plc

Royal Dutch Shell April 11, 2019 4

Strategic ambitions

1 Methane emissions intensity is for Shell operated oil and gas assets.

Focus on delivering

strong results

Thrive in the energy transition

World-class investment case

Strong licence

to operate

2018

◼ Portfolio reshaped, positioned for long-term resiliency

◼ Focus on asset resilience and longevity through the energy transition

◼ Growth in areas that will be essential in the energy transition

◼ Strong financial delivery and strengthened financial framework

◼ Simpler organisation with higher returns

◼ ~$31 billion of organic free cash flow

◼ Leading through the energy transition

◼ Shorter-term targets to reduce the Net Carbon Footprint

◼ Maintain emissions intensity below 0.2% by 20251


ESG programme Key events

◼ Responsible Investment Annual Briefing

(since 2006)

◼ Board Engagement Day (2018)

◼ Chair roadshows

◼ Remuneration Committee (REMCO)

roadshows

◼ Engagements with IIGCC1 (CA100+2)

1 The Institutional Investors Group on Climate Change; 2 Climate Action 100+ (investor initiative).

www.shell.com/esg

5

Gerard Kleisterlee, Chair of the REMCO,

meeting shareholders in London

http://www.shell.com/esg


Sir Nigel SheinwaldChair of the CSRCRoyal Dutch Shell plc


Linda StuntzCatherine J. Hughes

Sir Nigel SheinwaldChair

Responsibilities◼ Assist and advise Board on:

◼ Safety – HSSE & SP Control Framework

◼ Environment, including climate change and social impact of projects

◼ Ethics: Shell General Business Principles and Code of Conduct◼ Review other major issues of public concern affecting Shell’s reputation

◼ Input into the Shell Sustainability Report

Corporate and Social Responsibility Committee (CSRC)

7

Culture & Conduct


CSRC areas of focus

2018 2019

Safety◼ Process safety

Environment & greenhouse gas◼ Net Carbon Footprint

◼ Nature-based solutions

◼ Contributions to Sky and Shell Energy Transition report

Ethics & compliance◼ Societal licence to operate

Country focus◼ Pakistan, Nigeria, Netherlands (Groningen)

Visits◼ Nigeria, Moerdijk

Safety◼ Process safety, road transport

Environment & greenhouse gas◼ Net Carbon Footprint

◼ Methane emissions and plastics

◼ Advise REMCO on sustainability and energy transition

Ethics & compliance◼ Conduct & culture

Country focus◼ Nigeria, Brazil, Canada (LNG), Netherlands (Groningen)

Visits◼ Singapore, others

8

The CSRC is active and

involved

Skyline of SingaporePort Harcourt, Nigeria


Industry AssociationsClimateReview

1 Full review is available here; 2 American Fuel & Petrochemical Manufacturers.

Memberships should not undermine Shell’s corporate climate positions

Selection Assessment Findings Actions

◼ Selected 19 industry associations because their climate-related policy positions have brought them to the attention of investors and NGOs;

◼ and because they operate in regions or countries with significant Shell business activities

◼ Alignment assessed against public support of 4 policy positions:

◼ The Paris Agreement;

◼ Government-led carbon pricing;

◼ Policy frameworks for low-carbon technologies; and

◼ The role of natural gas

◼ Alignment with 9 industry associations, some misalignment with 9, material misalignment with 1

◼ Improve internal governance

◼ Developed a set of climate-related principles for participation in industry associations

◼ Published review report on 2 April 20191

◼ Announced withdrawal from AFPM2

◼ Implement new principles in 2019

◼ Track and report material misalignments on Shell website

https://www.shell.com/sustainability/transparency/public-advocacy-and-political-activity/_jcr_content/par/textimage.stream/1554193723004/0a46ab13e36e99f8762ebb021bd72decec2f47b2/final-industry-association-climate-review-april1-2019.pdf


GHG metrics in remuneration

◼ CSRC advises REMCO on sustainable development-related measures

◼ Greenhouse gas (GHG) metrics in the 2018 and 2019 scorecard cover close to 90% of the operated direct

and indirect emissions

◼ The Group annual bonus scorecard is aligned for Directors and staff

1 Solomon’s utilised equivalent distillation capacity.

◼ Strategy

drives change

◼ Remuneration

follows and

supports strategy

Cash flow from operating activities Operational excellence Sustainable development

30%

50%

20%

12.5% LNG liquefaction

12.5% Production

12.5% Downstream availability

12.5% Project delivery

5% Personal safety

5% Process safety

10% GHG management

10% Environment

10% Safety

2018 Annual Bonus Scorecard

10% GHG management

◼ Refining GHG intensity in tonne CO2-equivalent per UEDCTM 1

◼ Chemicals GHG intensity in tonne CO2-equivalent per tonne of steam cracker high-value chemicals production

◼ Upstream and Integrated Gas GHG intensity in tonnes CO2-equivalent per tonne production


Remuneration developments –energy transition

1 Long-Term Incentive Plan.

Evolution of GHG and energy transition-related metrics

◼ Measures are evolving

◼ Introduction of energy transition metric in LTIP in 2019

2020 Policy Review

◼ GHG management in Group annual bonus scorecard:◼ ~60% of operated

direct and indirect emissions

◼ Applies to ~55,000 people

◼ Evolved GHG management in Group annual bonus scorecard (intensities)◼ Close to 90% of

operated direct and indirect emissions

◼ Energy transition in LTIP1:◼ 3-year NCF target

(energy products sold)◼ Measures promoting

NCF reduction in the long term

◼ GHG management in Group annual bonus scorecard

2017 2018 2019


25%

25%25%

25%

75% Comparative measures

25% Absolute measures

12

Remuneration developments –energy transition

Energy transition LTIP metrics

1 For the 2019 award, the target is a 2-3% reduction in NCF from the 2016 baseline NCF, disclosed in the “Climate change and energy transition” section on page 77 of Shell’s 2018 Annual Report.

◼ 10% weighting, expected to increase over time

◼ Applies to 150 senior executives

◼ Key collaboration with CA100+ and major shareholders

2018 LTIP structure 2019 LTIP structure

TSR

ROACE

CFFO

FCF

TSR

ROACE

22.5%

22.5%

22.5%

22.5%

10.0%

Energy transition

32.5% Absolute measures

67.5% Comparative measures

CFFO

FCF

◼ The energy transition condition will contain a mix of measures that set the foundation to contribute to Shell’s strategic ambitions in the longer run:

◼ NCF: a target for reducing the NCF of the energy products Shell sells1

◼ Growth of our power business

◼ Advanced biofuels technology

◼ Development of systems to capture and absorb carbon




Shell cares

Enabling better business outcomes

Care

Care for communities and deepening our societal licence to operate

A diverse and inclusive work environment

Enable people to be at their best through engagement and care

Setting the standards on worker welfare

No harm, no leaks

#Iamgoalzero

Safety leadership Worker welfare Engagement

and performanceDiversity and inclusion

Care for communities


No harmGood products

Trusted company

15

Strong societal licence to operate

Shell has a long

history of caring


Donny ChingLegal DirectorRoyal Dutch Shell plc


2018Shell’s ethics and compliance programme

Ethics and Compliance (E&C) staff

◼ 148 staff, reporting to Chief E&C Officer

◼ Chief E&C Officer reports to Legal Director

◼ Regular updates to RDS plc Board

Training

◼ Around 146,750 online courses taken

◼ Around 12,925 face-to-face courses taken

◼ 143 Senior Executives participated in ethical leadership expectations sessions

Based on core values:

honesty, integrity and

respect for people

Knowing our counterparties

Speaking up

~10 million

7,759

Counterparties, existing and potential business partners screened on anti-bribery, anti-money laundering and trade compliance requirements

Enhanced pre-screenings for higher-risk contracts

1,584370266

92

Reports to Shell Global Helpline (76% online)

Substantiated Code of Conduct allegations

Employees or contractor staff subject to disciplinary action

Contract terminations and dismissals

17


External EnvironmentBoard oversight

◼ Audit Committee

◼ Corporate and Social Responsibility Committee (CSRC)

◼ Nigeria Special Litigation Committee

◼ Business Integrity Committee

Link to E&C Manual

Shell General Business Principles

Board of RDS plc, CEO and Executive Committee

Businesses and Functions Legal Entities

Code of Conduct

Strategy, Planning and Appraisal

Statement on

Risk Management

Standards and Manuals

Controls and Assurance

18

https://www.shell.com/about-us/our-values/_jcr_content/par/textimage_1831358597.stream/1542913624596/7f3bbf200040bd37e61113003d4dce214e1a5bd97ffa619fae5966f74563e372/shell-ethics-and-compliance-manual-2018.pdf


Year Event1

1998 Malabu awarded licence for OPL 245

2001 Shell Nigeria Ultra Deep (“SNUD”) farms in

2001 Federal Government of Nigeria (“FGN”) revokes the Malabu Licence

2002 SNUD bids for and is awarded OPL 245 by FGN and later signs a PSC with Nigerian National Petroleum Corporation (“NNPC”)

2002 Various litigations follow

2006 FGN settles litigation with Malabu and reallocates licence to MalabuMalabu and SNUD now have competing legal rights to the Block

2007 Shell (SNUD) commences Bilateral Investment Treaty arbitration against the FGN for wrongful expropriation

2008 FGN seeks resolution, negotiations commence

2010 Negotiations now include ENI Settlement with FGN negotiated with Attorney General of FGN, Minister of Petroleum Resources, Minister of Finance and senior NNPC officials

2011Settlement of all outstanding disputes achieved. FGN receives $1.3 bln: Shell releases signature bonus in return for the licence and pays $110.04 mln to ENI (NAE); ENI (NAE) pays FGN $1,092.04 mln for rights to the block; Malabu relinquished all claims on OPL 245 in exchange for payment from FGN of $1,092.04 mln

2017 Court of Milan decided that Shell and its four former employees should be remanded for trial

2018 Italian trial proceedings started

2019 Italian trial ongoing

2019 RDS plc informed of DPP preparing to prosecute

19

OPL 245

1 Further information can be found in Note 25 of the Consolidated Financial Statements of RDS filed in the 2018 Annual Report and Form 20-F.

https://reports.shell.com/annual-report/2018


OPL 245 Shell media statement:

“Based on our review of the Prosecutor of Milan's file and all of the information and facts available to us from that file, we do not believe that there is a basis to convict Shell or any of its former employees in Italy. If the evidence ultimately proves that improper payments were made by Malabu or others to then current government officials in exchange for improper conduct relating to the 2011 settlement of the long standing legal disputes, it is Shell’s position that none of those payments were made with its knowledge, authorisation or on its behalf.”

“We believe the courts in Italy will conclude that there is no case against Shell or its former employees.”

“Shell attaches the greatest importance to business integrity. It’s one of our core values and is a central tenet of the Business Principles that govern the way we do business. Shell has clear rules on anti-bribery and corruption and these are included in our Code of Conduct for all staff. There is no place for bribery or corruption in our company.”


Harry BrekelmansDirector Projects & TechnologyRoyal Dutch Shell plc


2018

HSSE performance

Injuries – TRCF1 (per million working hours)

Goal Zero on safety

Million tonnes CO2-equivalent

Upstream flaring

Thousand tonnes

Operational spills

Number of incidents

Process safety

Goal Zero

No harm, no leaks

million working hours #

Working hours (RHS2)TRCF Volume of spills Number of spills (RHS)

Tier 1 incidents Tier 2 incidents

22

1 Total Recordable Case Frequency; 2 Right-hand side.


Case studies

Upstream / Projects & Technology

Bonga, offshore Nigeria SSAGS Project, onshore Nigeria

Goal Zero

No harm, no leaks

A Bonga ‘family unit’ on the deck of Bonga, Nigeria

Key to performance

◼ Impactful dialogues: staff welfare & worksite safety

◼ Care for people – family units

Key project facts

◼ Major maintenance project

◼ 1 million exposure hours, 0 recordable incidents

◼ GHG intensity nearly half of that in 2017

Key project facts

◼ Facility scope completed in 2018, start-up in 2019

◼ Target 100 million scf/d gas to domestic market

◼ 13 million exposure hours, no Lost-Time-Injury (LTI)

Key to performance

◼ Focused intervention on marine logistics

◼ Care for people – ‘Aunties and Uncles’

Southern Swamp Associated Gas Solution Project (SSAGS), Nigeria


Case studiesDownstream / Projects & Technology

1The data included here is from commissioning through to startup, 2015-2019; 2 International Maritime Organisation.

Solvent de-asphalter (SDA) Pernis, the Netherlands

Key to performance

◼ Respected neighbour with impact beyond Pernis:

residual heat project, support CO2 storage,

IMO 20202-compliant diesel

Goal Zero

No harm, no leaks

Key project facts

◼ SDA unit in largest integrated refinery in Europe

◼ ~3.5 million exposure hours of which ~3.2 million

hours by contractors, 2 LTIs1

Geismar A04, US Gulf Coast

Pernis refinery, The Netherlands Geismar chemical plant, USA

Key project facts

◼ Expansion to become largest alpha olefins producer

in the world

◼ 6 million exposure hours without LTIs

Key to performance

◼ Focused intervention on dropped object prevention:

high-potential reduction from 1 to 0 per month

◼ AO4 ‘project of choice’ for craft workers




Shell’s Sky scenario – a pathway to keep in pace with Paris

Source: Shell Sky scenario; 1 Massachusetts Institute of Technology; 2 Net Carbon Footprint (CO2 intensity of fuel mix); 3 Carbon Capture and Storage.

Gigatonne CO2 / year

Components of CO2 reduction to meet the goals of the Paris Agreement

Exajoule/year

World primary energy by source

◼ Assessed by MIT1 as limiting temperature increase to 1.75 °C

◼ Link to Sky scenario

26

0

200

400

600

800

1,000

1,200

2015 2030 2040 2050 2060 2070

OilBiofuelsNatural GasBiomassCoalNuclearSolarWindOther Renewables

http://www.shell.com/skyscenario


Scope of our Net Carbon Footprint ambition

27

◼ Full lifecycle of energy products, including consumption

◼ Link to NCF ambition

The Net Carbon Footprint is not a mathematical derivation of total emissions divided by total energy, neither is it an inventory of absolute emissions. It is a weighted average of the lifecycle CO2 intensities of different energy products normalising them to the same

point relative to their final end-use. This graphic is only intended to give an indication of the scope of the emissions included within Shell’s Net Carbon Footprint.

https://www.shell.com/energy-and-innovation/the-energy-future/what-is-shells-net-carbon-footprint-ambition.html


Net Carbon Footprint ambition

Ambitions:◼ Reduce Net Carbon

Footprint of our energy products by ~20% by 2035

◼ Be in line with society Net Carbon Footprint by 2050


Shorter-term targets within a longer-term framework ensures resilience and customer focus

◼ Shell cannot predict society and government future actions, nor customer demand

◼ In step with society’s drive to align with the goals of the Paris Agreement

◼ Reassess progress every five years linked to Nationally Determined Contributions process

Shell’s industry-leading approach is more progressive

◼ The NCF ambition includes a much wider scope of emissions

◼ Committed to setting shorter-term 3- or 5-year NCF targets, linked to remuneration starting from 20191

◼ The NCF ambition is consistent with the Paris agreement

Shareholder resolution –response

1 The 2019 LTIP energy transition metric includes the first 3-year target. The new Remuneration Policy is subject to a shareholder vote at the 2020 AGM.

◼ Welcome Follow This intent to withdraw resolution

◼ Shareholders still requested to vote

◼ Board unanimously recommends to vote against

29

Shell welcomes the announcement on April 7, 2019 by the Dutch shareholder group Follow This of its intention to withdraw the shareholder resolution which had been requisitioned by a group of shareholders coordinated by Follow This and which is set out in Resolution 22 (R22) of the 2019 Notice of Annual General Meeting (AGM). Shell understands that Follow This is now in the process of collecting the requisite support to request withdrawal of the shareholder resolution. Shell will ensure that due procedure is followed ahead of any decision by Shell to propose the withdrawal of R22 from the 2019 AGM. At present R22 remains on the agenda and shareholders are requested to vote. The Directors of Royal Dutch Shell plc maintain that R22 is not in the best interests of Royal Dutch Shell plc and its shareholders as a whole and unanimously recommend that shareholders vote against R22 for the reasons set out on page 7 of the 2019 Notice of AGM.


Maarten WetselaarDirector Integrated Gas & New EnergiesRoyal Dutch Shell plc


Potential tools to achieve our

Net Carbon Footprint ambition

Shell is active in

all of these areas

Existingexamples

Wind power Quest CCSRaízenbiofuels

Shell Recharge & New Motion

Flare reduction Increased LNG Nature-based offsets


◼ Adjacencies to existing businesses

◼ Value chain integrator

◼ Demand-driven development

Power value chain

CUSTOMERS OPTIMISATION SUPPLY ANDGENERATION

Leverage portfolio flexibility and arbitrage opportunities

Multiple parties are active on the demand side

Not all products are supplied by Shell, some are purchased from third parties

◼ New Motion

◼ MP2 Energy LLC

◼ First Utility

◼ GI Energy

◼ sonnen

◼ Shell Energy North America

◼ Shell Energy Europe

◼ Shell Energy Australia

◼ Shell Energy Brazil

◼ Carbon emissions rights trading

◼ US onshore wind portfolio

◼ NoordzeeWind

◼ Borssele 3 and 4 offshore wind

◼ Silicon Ranch

◼ Moerdijk solar

◼ Cleantech Solar

32


Gas and biofuels

◼ Cleanest-burning hydrocarbon

◼ Critical component of energy transition-demand

from hard-to-decarbonise sectors

◼ Coal-to-gas switching leads to 78% improvement in

Beijing winter air quality

◼ Readily available source of energy, easily transported

via pipelines and ships

◼ Support peaks and valleys in renewable availability

Gas

◼ We are one of the largest biofuels blenders and

distributors

◼ Raízen JV some of the lowest-CO2 conventional

biofuels

◼ Investment in advanced biofuels using alternative

feedstocks such as forestry, agricultural and sorted

municipal waste

◼ Waste-to-chemicals Rotterdam consortium could be first

commercial project in Europe

Biofuels

Providing energy

for everyone, while

reducing impact to

the planet and the

air we breathe

Skyline of Beijing, China Harvesting of sugarcane, Brazil


NBS and CCS

◼ Creation of carbon sinks, like forests and wetlands

◼ Short-term potential to deliver over one-third of

greenhouse gas reductions needed1

◼ Invest in nature offsets in support of low-carbon future

◼ Encourage regulatory frameworks that support and

facilitate private sector investment

◼ Create commercial business models to help customers

decarbonise

Nature-Based Solutions (NBS)

◼ CCS is a critical technology to help reduce CO2

emissions

◼ IPCC2 Global Warming Report identified significant

role for CCS in limiting temperature increase

◼ Shell is developing and participating in many CCS

projects

◼ Industry-group membership for further development

and commercialisation of CCS technology

Carbon Capture & Storage (CCS)

Essential to deliver

required emission

reductions in timescale

to match global

climate ambitions

1 Source: WBCSD; 2 Intergovernmental Panel on Climate Change.

Quest at the Scotford Upgrader, Alberta, CanadaRanger looking out over Kashigau corridor, Kenya

https://www.wbcsd.org/Programs/Climate-and-Energy/Climate/NCS




Access to energy

Aim to provide reliable electricity supplyto 100 million people in the developing world by 2030

36

◼ Mini-grid company

◼ Hybrid solar and biomass gasification technology

◼ Reliable electricity on a pay-as-you-go basis

◼ Operations in India and Tanzania

◼ Off-grid solar home systems company

◼ Customised and modular systems

◼ Operations in Uganda and Kenya

◼ Technology company

◼ Universal smart metering platform for mini grids and other utilities

◼ Focused in Africa and Asia

◼ Solar debt finance company

◼ Provides financing for solar assets in emerging economies, including inventory, working capital, construction and structured finance loans


Strong societal licence to operate

Shell has a long

history of caring No harmGood products

Trusted company


Questions and Answers


Ben van BeurdenChief Executive Officer

Sir Nigel SheinwaldChair of the CSRC

Harry BrekelmansProjects & Technology Director

Donny ChingLegal Director

Maarten WetselaarIntegrated Gas & New Energies Director


Additional information


Health, Safety, Security & Environment

◼ We focus on the three areas of safety with the highest risks associated with our activities: personal, process, and transport

◼ Process safety is central in achieving Shell’s goal of zero harm to people and the environment

◼ Managed by combining asset integrity principles with a risk management approach, supported by visible safety leadership

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Asset integrity principles

Risk management approach

Process safety performance

Threats Consequences

CONTROLS, BARRIERS RECOVERY MEASURES

TOPEVENT

Design Integrity

TechnicalIntegrity

OperatingIntegrity

IntegrityLeadership

GOALZERO

NOHARM

NOLEAKS

NO HARMTO PEOPLE

NO LEAKSFROM OUROPERATIONS


Thrive in the energy transition

Driving to resilience and ambition

1 Task Force on Climate-related Financial Disclosures.

TIME HORIZON

SHORT TERMGHG

management

◼ Focussed on operational action

◼ Included in Group annual bonus scorecard

MEDIUM TERMStrategic positioning and

portfolio resilience

◼ Disclosures aligned to TCFD1

recommendations

◼ Demonstrate financial resilience of portfolio to energy transition and climate change actions

LONG TERMNet Carbon Footprint

◼ Covers full range of emissions from our energy products through to consumption

◼ Specific NCF targets for 3- or 5-year periods until 2050

◼ 2019 Long-Term Incentive Plan (LTIP) energy transition condition includes our first 3-year target towards achieving our NCF ambition

1-3 YEARS 5-10 YEARS >10 YEARS

5% Process safety

5% Personal safety

10% GHG management

Sustainable

development

41

Demonstrating Shell’s

approach across

multiple time horizons


Leading through the energy transition

1 The 2019 LTIP energy transition metric includes the first 3-year target; 2 The new Remuneration Policy is subject to a shareholder vote at the 2020 AGM; 3 Methane emissions intensity is for Shell-operated oil and gas assets.

2018 Highlights Proof points

Innovating to meet

changing society and

customer preferences

◼ Net Carbon Footprint – long-term ambition

operationalised with shorter-term targets; linked to

executive remuneration1,2

◼ Methane – maintain emissions intensity below

0.2% by 20253

◼ Task force on Climate-related Financial

Disclosures (TCFD) – driving effective climate

change disclosures as a member of Oil & Gas

Preparer Forum

◼ Thought leadership – Shell Energy Transition

report and Sky scenario publication

NigeriaDecrease in flaring intensity by ~70% over the last 10 years

Brent Delta platform (UK) Decommissioning >97% of material to be recycled

Quest CCS (Canada)>3.5 million tonnes CO2captured and stored

Solar Investments in Asia and North America

Bonny, Nigeria Brent Delta, UK

Quest, Canada Silicon Ranch, USA


Resilience

Financial framework

All information on this slide from the 2018 Shell Energy Transitions Report which is based on 2017 data. 1 Cash flow from operations; 2 Significant variations in oil and/or gas prices will potentially impact certain operating costs, or result in foreign exchange movements, the effect of which are not reflected in the $10 price sensitivity; 3 Assuming oil price fell from around $65 per barrel today to $40 per barrel money of the day; 4 Assuming oil price rose from around $65 per barrel today to $100 per barrel money of the day.

$ billion

CFFO1 excluding working capital Capital investment flexibility

◼ Growing free cash flow

◼ Capital discipline and flexibility

◼ Strong balance sheet

◼ $10 per barrel movement in Brent prices, around $6 billion cash flow impact indicative estimate2

◼ At $40/bbl impact of -$15 billion on CFFO3

◼ At $100/bbl impact of +$21 billion on CFFO4

◼ $10 per tonne CO2 movement in global CO2 price, around $1 billion pre-tax impact on cash flow

◼ Applying more resiliency criteria to capital allocation

◼ Lower break-even prices

◼ Shorter payback periods

◼ Improving project delivery

Average Brent oil price ($/bbl)

$ billion (per annum) 2018 – 2020

Oil products 4-5

Conventional oil + gas 4-5

Integrated gas 4-5

Deep water 5-6

Chemicals 3-4

Shales 2-3

New energies 1-2

Total 25-30

$#

0

10

20

30

40

1 2 3 4 5

$99

$52$44

$54 $50


Resilience

Portfolio

All information on this slide from the 2018 Shell Energy Transitions Report which is based on 2017 data.

The forward-looking breakeven price for pre-FID projects is calculated based on all forward-looking costs associated with pre-FID projects in our development portfolio. Accordingly, this typically excludes exploration & appraisal costs, lease bonuses, exploration

seismic and exploration team overhead costs. The forward-looking breakeven price for pre-FID projects is calculated based on our estimate of resources volumes that are currently classified as 2C under the Society of Petroleum Engineers’ Resource Classification

System. As these pre-FID projects are expected to be multidecade producing projects, the less than $30 per barrel projection will not be reflected either in earnings or cash flow in the next five years.

Diverse business segments Geographic diversity Active portfolio management

◼ Resilience from diverse and actively managed portfolio

◼ Assessed risk of stranded assets as low

Marketing earnings

Chemicals earnings

Americas Asia EU + Africa

◼ Operations across energy system

◼ Strength of integrated model

◼ Global business in more than 70 countries

◼ In 2017, 19 countries accounted for 80% of CFFO

◼ Focus on cost reduction

◼ Improving CO2 performance

DEEP WATER

Projects waiting FID: average break-even <$30

SHALES

Permian direct field expenses -33% in 2017

INTEGRATEDGAS

Since BG, underlying operating expenses -11%

CHEMICALS

Pennsylvania ethylene cracker expected top quartile CO2 intensity

OIL PRODUCTS

INTEGRATEDGAS

CHEMICALS

SHALESNEW ENERGIES

Cash engines

Growth priorities

Emergingopportunities

DEEP WATER

CONVENTIONALOIL + GAS


Nigeria environmental performance

1 United Nations Environment Programme; 2 SPDC JV = 30% Shell, 55% NNPC, 10% Total, 5% Agip; all data on 100% basis unless otherwise stated;

Clean-up Bodo & UNEP1 progress

◼ Bodo spill cleanup first phase completed (free-phase oil removal), contracting for remediation nearly finalised (target starting date Q2 2019)

◼ July 2018: SPDC JV2 completed its first-year contribution to HYPREP3 of $180 million

Oil spill prevention & remediation

◼ Long-term trend improving

◼ Alternative livelihood initiatives to address oil theft and sabotage (Livewire programmes)

◼ Deployed wellhead cages: 171 in place, 0 breaches; drone trial to help enable faster response

◼ Remediation and certification efforts ongoing (116 sites out of 202 remediated in 2018)

◼ Further increase in theft volumes and sabotage spills; multi-disciplinary initiative to help curve trend

◼ IUCN4 collaboration on remediation standards and practices

90% of spills related to sabotage

Link to Nigeria Briefing Notes

3 Hydrocarbon Pollution Restoration Project – this body was established under the Nigerian Ministry of Environment, aimed at the sustainable clean-up of Ogoniland; 4 International Union for Conservation of Nature.

Thousand tonnes

SPDC JV spills

SPDC JV Production and theft

0

200

400

600

800

0

20

40

60

80

2012 2013 2014 2015 2016 2017 2018

Production (RHS)

Thousand barrels per day Thousand boe/day

Theft

#

0

100

200

300

0

5

10

15

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Volume of sabotage spills Volume of operational spills

Operational spills >100kg (RHS) Sabotage spills >100kg (RHS)

http://www.shell.com.ng/briefingnotes


50:50 joint venture between Shell and ExxonMobilNAM

JanuaryEarthquake Zeerijpwith a force of 3.4 on the Richter scale

46

JanuaryMinister Wiebes announces new damage protocol

Source: www.nam.nl, 1 Ministry of Economic Affairs and Climate.

FebruaryGas production locations Loppersumshut down on behalf of Minister Wiebes

MarchTemporary commission for mining damage (RVO) opens counter and starts handling outstanding damage claims

MarchMinister announces proposal: gas production level and completion plan Groningen

JuneHeads of Agreement MEAC1, ExxonMobil, Shell; signed

SeptemberFinal report on 6000 outstanding damage claims to MEAC

OctoberPresentation ‘Nationaal Programma Groningen’

OctoberChange in ‘Gaswet/Mijnbouwwet’ came into effect

DecemberStart new ‘National Coordinator Groningen’

DecemberAnnounced extension to thenew-build arrangement by NAM(at the request of MEAC) until1 July 2019

2018

http://www.nam.nl/


Tax and revenue transparency

47

One of the founders of the Extractive Industries Transparency Initiative (EITI)

2003 2012 2016 2017 2018

Publication of Shell’s Approach to Tax

First voluntary publication of tax payments (covering 2011)

Shift from voluntary to mandatory reporting in line with EU regulations; first publication of Payments to Governments Report (covering 2015), includes payments per country and project for extractive activities Country-by-Country

Report submitted to tax authorities

Publication UK Tax Strategy and Statement on Tax Evasion

Publication taxes paid NAM, Canada, Germany, Australia

Shell commits to the B-Team Responsible Tax Principles

Pilot International Compliance and Assurance Programme

In 2018 Shell paid $64.1 billion to governments◼ $10.1 billion income taxes◼ $5.8 billion government royalties ◼ $48.2 billion levies on fuel and other products

Shell is transparent on its tax payments◼ Total tax contribution publication and filing of

Payments to Government Report with UK Companies House

◼ Provides information on taxes paid per country and per project for Upstream activities

Shell is actively involved in responsible tax discussions◼ Working with industry, governments and civil society◼ Founder of B-Team Responsible Tax Principles◼ Includes providing regular information to stakeholders

about approach to tax and taxes paid

Active advocacy and

transparent tax

reporting

https://eiti.org/

https://www.shell.com/sustainability/transparency/shells-approach-to-tax.html

https://www.shell.com/sustainability/transparency/payments-to-governments/_jcr_content/par/textimage_569728713.stream/1519787788826/2184038c1b9b26056b93b579d172a945b665fe7ccf8d3ad4a754bb4fba459674/shell-cfo-message-revenue-transparency25042012.pdf

http://www.shell.com/payments

https://www.shell.com/sustainability/transparency/shells-approach-to-tax/uk-tax-strategy.html

https://www.shell.com/sustainability/transparency/preventing-the-facilitation-of-tax-evasion.html

http://www.bteam.org/plan-b/responsible-tax/

http://www.oecd.org/tax/forum-on-tax-administration/international-compliance-assurance-programme.htm


Chemicals and plastics

The problem is

not with plastics, but

what happens after

people use them

Chemicals◼ Chemicals demand is growing faster than GDP◼ Growth priority for Shell◼ Chemicals are a component in medicines, detergents,

textiles and plastics

Plastics◼ Many plastics have long-term use that use fewer

resources and have a lower-carbon footprint than glass, paper and metal

◼ Plastics provide important health, safety and sustainability benefits

◼ Plastics don’t belong in our oceans, rivers or landscapes

Shell plastic waste management◼ Investments in conversion of waste materials into valuable

chemicals and biofuels◼ Reduce, reuse and repurpose waste across operations◼ Lubricants business exploring sustainable packing

solutions

Alliance to End Plastic Waste◼ Shell a leading member1

◼ Alliance goal to invest $1.5 billion over the next 5 years to help eliminate plastic waste

◼ Members include companies that make, use, sell, process, collect and recycle plastics

Four strategic pillars:

INFRASTRUCTURE INNOVATION EDUCATION CLEAN-UP

1 Alliance website.

https://endplasticwaste.org/


Oversight of climate change risk management

Climate change

is managed as a

significant risk factor

49

(1) Oversight of climate change risk management.

(2) Non-executive Directors appointed by Board to review and advise on sustainability policies and practices including climate change.

(3) Non-executive Directors appointed by the Board to oversee the effectiveness of the systems of risk management and internal control.

(4) Non-executive Directors appointed by the Board to set the remuneration policy in alignment with strategy.

(5) Responsible for implementing Shell’s GHG strategy. They are represented in Safety and Environment LeadershipTeam

Corporate andSocial Responsibility Committee (CSRC) (2)

Audit Committee(AC) (3)

Remuneration Committee(REMCO) (4)

Board of RoyalDutch Shell plc (1)

CEO and Executive Committee

Executive Vice President,Safety & Environment

Vice President,Group Carbon

EVP Steering TeamGroup strategic steer

Most senior individuals with accountability for climate change risk management

Businesses and Functions (5)

Safety and Environment Leadership Team

Operational implementation steer


Joint statement –updates

1 Full review is available here.

Joint statementdeveloped with institutional investors on behalf of Climate Action 100+

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Public short-term Net Carbon Footprint targets

Targets linked to remuneration

Review of progress

Alignment with the TCFD recommendations

Corporate climate lobbying

◼ 3- or 5-year targets to operationalise the long-term NCF ambition

◼ Update: first target set in 2019 (2019-2021)

◼ Update: link between energy transition and long-term remuneration in 2019

◼ Full Remuneration Policy subject to a shareholder vote at the 2020 AGM

◼ Annual update on the progress towards the NCF ambition

◼ Initial disclosures in Sustainability Report, but with a commitment,to integrate this into the Annual Report/Form 20-F as appropriate

◼ Disclosure of metrics and targets used to assess and manage relevant climate-related risks and opportunities, where material, at relevant intervals

◼ Review of industry associations memberships to assess alignment with the company’s stated positions

◼ Update: results of this review1 were made public on April 2, 2019

https://www.shell.com/sustainability/transparency/public-advocacy-and-political-activity/_jcr_content/par/textimage.stream/1554466210642/0a46ab13e36e99f8762ebb021bd72decec2f47b2/final-industry-association-climate-review-april-2019.pdf

https://www.shell.com/media/news-and-media-releases/2018/joint-statement-between-institutional-investors-on-behalf-of-climate-action-and-shell.html


Shareholder resolution –response

Follow This resolution Shell response

Shareholders request the company to set and publish targets that

are aligned with the goal of the Paris Climate Agreement to limit

global warming to well below 2°C.

◼ Shell already set the Net Carbon Footprint1 (NCF) ambition (November 2017):

◼ Around 50% reduction of Net Carbon Footprint of our energy products by 2050, around 20%

by 2035 (gCO2e/MJ), in step with society’s progress toward the goal of the Paris Agreement

◼ Shell’s NCF ambition is consistent with the emission reductions needed to meet the Paris

Agreement.

◼ Reassess every five-years aligned to Nationally Determined Contribution (NDC) process

◼ The 2019 LTIP energy transition condition includes our first three-year target towards achieving our

NCF ambition

These targets need at least to cover the greenhouse gas (GHG)

emissions of the company’s operations and the use of its energy

products (Scope 1, 2, and 3), and to be intermediate and long-

term.

◼ Shell’s Net Carbon Footprint Ambition goes well beyond Scope 1, 2 and 3 emissions of our energy

products

◼ Includes customers’ emissions produced when they use the energy products we sell

◼ Includes emissions from elements of energy products life-cycle not owned by Shell, such as:

◼ Oil and gas processed - but not produced - by Shell

◼ Oil products and electricity marketed by Shell not processed or generated at a Shell facility

◼ GHG metrics in executive bonus scorecard (since 2017)

◼ The 2019 LTIP energy transition condition includes our first three-year target towards achieving our

NCF ambition

1 Net Carbon Footprint measured on an aggregate “well to wheel” or “well to wire” basis, from production through to consumption, on grams of CO2-equivalent per megajoule of energy products consumed; chemicals and lubricants products are excluded. Carbon

Footprint of the energy system is modelled using Shell methodology aggregating lifecycle emissions of energy products on a fossil-equivalence basis. The methodology will be further reviewed and validated in collaboration with external experts.

The Board recommends voting against the Follow This resolution

51

Shell welcomes the announcement on April 7, 2019 by the Dutch shareholder group Follow This of its intention to withdraw the shareholder resolution which had been requisitioned by a group of shareholders coordinated by Follow This and which is set out in Resolution 22 (R22) of the 2019 Notice of Annual General Meeting (AGM). Shell understands that Follow This is now in the process of collecting the requisite support to request withdrawal of the shareholder resolution. Shell will ensure that due procedure is followed ahead of any decision by Shell to propose the withdrawal of R22 from the 2019 AGM. At present R22 remains on the agenda and shareholders are requested to vote. The Directors of Royal Dutch Shell plc maintain that R22 is not in the best interests of Royal Dutch Shell plc and its shareholders as a whole and unanimously recommend that shareholders vote against R22 for the reasons set out on page 7 of the 2019 Notice of AGM.


Chronology of events (1)OPL 245

Phase 1

◼ 1998 – Malabu awarded licence for OPL 245

◼ March 2001 – Shell Nigeria Ultra Deep (“SNUD”) farms in

◼ Representations and warranties were provided on ownership of Malabu

◼ Federal Government Nigeria (“FGN”) consented

Phase 2

◼ July 2001 – FGN revokes the Malabu Licence

◼ May 2002:

◼ SNUD bids for and is awarded OPL 245 by FGN and later signs a PSC with Nigerian National Petroleum Corporation (“NNPC”)

◼ Signature bonus ($209 million) is placed in escrow pending outstanding disputes with Malabu

◼ SNUD conducts exploration and appraisal work programme

52


Chronology of events (2)

OPL 245

Phase 2 (continued)

◼ Various litigations follow:

◼ May 2002 – SNUD commenced International Chamber of Commerce arbitration proceedings against Malabu

◼ August 2002 – Malabu commenced proceedings against FGN, Shell Nigeria Exploration and Production Company (“SNEPCO”), SNUD and other Shell parties in New York federal court

◼ May 2003 – (following a petition by Malabu), the Nigerian House of Representatives issued a report concluding: (i) OPL 245 was legally awarded to Malabu, (ii) the revocation of Malabu’s licenceshould be set aside, (iii) SNUD should pay $550 million compensation to Malabu. SNUD appeals

◼ September 2003 – Malabu commenced proceedings in Nigeria against FGN, NNPC and SNUD for a declaration that the award of OPL 245 to Malabu was valid, a declaration that the award to SNUD was invalid, and damages of $100 million

53



OPL 245

Phase 3

◼ December 2006 – FGN settles litigation with Malabu and reallocates the licence to Malabu

◼ Malabu and SNUD now have competing legal rights to the Block

◼ April 2007 – SNUD commences Bilateral Investment Treaty arbitration against the FGN for wrongful expropriation

◼ 2008 – FGN seeks resolution, negotiations commence

54



OPL 245

Phase 4

◼ 2010 – negotiations now include ENI

◼ Settlement with FGN – negotiations are conducted with Attorney General of FGN, the Minister of Petroleum Resources, the Minister of Finance and senior NNPC officials

◼ April 2011 – settlement is achieved. FGN receives $1.3bln:

◼ Signature bonus is released by SNUD to FGN from 2003 escrow funds in return for the licence

◼ SNEPCO pays $110.40 million to ENI (Nigerian Agip Exploration (“NAE”)) ($25.40 million interest on the escrow, plus $85 million)

◼ NAE pays $1,092.04 million to FGN for settling all outstanding claims on the Block

◼ FGN agrees to indemnify SNEPCO and NAE from any other claims on the Block

◼ SNEPCO and NAE hold the licence 50/50. NAE is operator

55


Agreements of April 2011

OPL 245

◼ Heads of Agreement between NAE and SNUD and SNEPCO: allocation of the payments due to FGN

◼ Block 245 Resolution Agreement: FGN, NNPC, SNUD, SNEPCO and NAE

◼ Payments to FGN and award of the licence

◼ FGN indemnifies SNEPCO and NAE against competing claims

◼ Key fiscal terms of future PSC

◼ Block 245 Resolution Agreement: FGN and Malabu. Payment to Malabu; settlement of claims

◼ Block 245 Resolution Agreement: FGN and SNUD. Settlement of claims

◼ Settlement submission to Court of Appeal, Abuja: SNUD, SNEPCO, Malabu and Nigerian House of Representatives (“NHR”). Withdrawing SNUD and SNEPCO appeals against a 2003 NHR report in favour of Malabu

56


Shell review

OPL 245◼ Debevoise & Plimpton LLP, an international law firm, was retained by the Shell Group

◼ Debevoise conducted and led an investigation which included staff from the law firm and Shell’s Business Integrity Department

◼ Periodic updates to senior management, Audit Committee and RDS Board, as well as the Nigeria Special Litigation Committee, an ad hoc committee of the Board that assists in monitoring and providing oversight of matters related to the investigations by various authorities into OPL 245

◼ Final report to RDS Board in July 2016

◼ Findings shared with authorities during 2016

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