Scoffone citi climate_conference_06062011

1 Copyright of Royal Dutch Shell plc 06/06/2011

ROYAL DUTCH SHELL PLC

BIOFUELS OUTLOOK LUIS SCOFFONE CITI CLIMATE CONFERENCE LONDON JUNE 6, 2011


DEFINITIONS AND CAUTIONARY NOTE

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‟‟, „„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, 2010 (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, 6 June 2011. 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 may use certain terms in this presentation, such as resources and oil in place, 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.

http://www.shell.com/investor

http://www.sec.gov/


ROYAL DUTCH SHELL MACRO ENVIRONMENT


I. Global energy demand is growing II. Energy supply will struggle to keep up with demand growth III. Climate change looms as a critical global issue

THREE HARD TRUTHS

SOURCES: World Bank WDI, Oxford Economics, UN Population Division, Energy Balances of OECD Countries © OECD/IEA 2006, Energy Balances of Non-OECD Countries © OECD/IEA 2006

ENERGY SCENARIOS

4

INCREASING POPULATION: key driver of energy demand

INCREASED PROSPERITY: increased energy use

400

300

200

100

0

0 10 20 30 40

USA

Europe EU 15

Japan

South Korea

China

India

GDP per capita (PPP, ‘000 2000 USD)

GJ per capita (primary energy)


0

100

200

300

400

1980 1990 2000 2010 2020 2030 2050

Mln Boe/d

GLOBAL ENERGY MIX

SHELL ESTIMATES

ENERGY OUTLOOK

Industry outlook

Hydrocarbons dominate outlook

Growth required in all sectors of energy mix

Energy policy + sustained investment

Shell

Crude oil & oil products

Natural gas & LNG

Biofuels, wind, carbon capture + storage

Petrochemicals

OIL GAS

COAL BIOMASS WIND

SOLAR

OTHER RENEWABLES

NUCLEAR

SHELL ACTIVITIES


Upstream Profitable growth; price upside

>80% of total capital spending

Sustained exploration investment

Downstream Stable capital employed

Fewer refineries; upgrade chemicals assets

More concentrated marketing positions

Financial outlook Generating surplus cashflow through cycle

Investing for growth; competitive payout

Substantial cashflow growth

STRATEGY CAPITAL INVESTMENT

SHELL: STRATEGY & CAPITAL ALLOCATION

$ Bln

GROWTH INVESTMENT – THROUGH CYCLE RETURNS

0

50

100

150

2007-10 2011-14

UP- STREAM

DOWN- STREAM

0%

50%

100%

2007-10 2011-14

EXPLORATION

HEAVY OIL & EOR

TIGHT GAS

INTEGRATED GAS

DEEPWATER

TRADITIONAL

MARKETING

REFINING

CHEMICALS

SOUR

Down- stream


SHELL & CO2

NATURAL GAS

7

BIOFUELS

ENERGY EFFICIENCY CARBON CAPTURE AND STORAGE QatarGas 4: First Cargo arriving at Hazira terminal

Mongstad: CCS Project Shell Fuelsave: 1 liter less per tank

Raizen: Sugar cane harvesting


ROYAL DUTCH SHELL TRANSPORTATION FUELS


TIME TO MATERIALITY

TECHNOLOGY DIFFUSION

9

1.0E+03

1.0E+04

1.0E+05

1.0E+06

1.0E+07

1.0E+08

1.0E+09

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Total Oil Nuclear LNG Biofuels - 1st Gen Biofuels - 2nd Gen Solar Photovoltaic Wind CCS "Laws"

"Materiality"

TJ/Year It takes 30 years to span

the 1000-fold growth to get from „test‟ scale to materiality (1-2% of total primary energy supply)

Thereafter deployment rises linearly to ultimate share in the mix

Focus must be on the technologies we know

Haigh/Kramer – Nature 462 (2009)


0

10,000

20,000

30,000

2000 2010 2020 2030 2040 2050

0

10,000

20,000

30,000

40,000

2000 2010 2020 2030 2040 2050

billion vehicle km per year

WORLD PASSENGER TRANSPORT ROAD

billion vehicle km per year

WORLD FREIGHT TRANSPORT ROAD

SOURCE: IEA, SHELL SOURCE: IEA, SHELL

TRANSPORT DEMAND GROWTH

Oil remains dominant next two decades

Strong growth in biofuels

Strong efficiency improvements required

Electrification making inroads next decade

Liquid Hydrocarbon Fuels Gaseous Hydrocarbon Fuels

Electricity

Hydrogen

Biofuels 1st gen

Biofuels 2nd gen

40,000


CONVENTIONAL GASOLINE BASELINE

CONVENTIONAL DIESEL BASELINE

* Biofuels numbers do not include possible indirect land use change effects

GASOLINE COMPARED TO ALTERNATIVE FUELS WELL-TO-WHEEL CO2 INTENSITIES

11

+34%

-11% -16%

-40%

-84%* -89%*

+50%

+12%

-6%

-33%

-82%*

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


REGULATED MARKETS FOR BIOFUELS

12

Current Mandates

Pilot Mandates/Area Based

Mandate Revoked/Incentives Introduced

Target/future mandate

In discussion


ROYAL DUTCH SHELL BIOFUELS


World's largest biofuels distributor: 9.5 billion liters in 2010

Sustainable sourcing of 1st generation biofuels

Leading technology and next generation portfolio

Global research capabilities

COMMITTED TO SUSTAINABILITY

SHELL AND BIOFUELS

SHELL PORTFOLIO

SHELL GLOBAL BIOCOMPONENT FEEDSTOCK PURCHASE Q4 2010

SHELL‟S BIOCOMPONENT PURCHASES COVERED BY SUSTAINABILITY CLAUSES

Corn

Rape Seed

Wheat Other Sugar Cane

Fully signed up Yet to sign up


SHELL ADVANCED BIOFUELS PORTFOLIO

15

Research & Development

Project Assessment

First Commercial Plant

Demonstration

Gas

olin

e co

mpo

nent

s D

iese

l com

pone

nts

Sugar Ethanol

Cellulosic Ethanol

Biomass to Gasoline

Biomass to Diesel/Jet

HVO

Microbes To diesel

Commercial Roll-out

Cellusosic ethanol from agricultural waste

Enzymes to convert biomass to transport fuels:

Plant sugars directly to transport fuels


RAÍZEN JOINT VENTURE (COSAN)

BIOFUELS GROWTH

Brazil: harvesting sugarcane


0

20

40

60

80

BRAZILIAN SUGARCANE PRODUCERS

BIOFUELS RAIZEN: ETHANOL & SUGAR GLOBAL ETHANOL PRODUCERS

Source: data provided by Cosan, sourced from Czarnikow Group

0

1

2

3

4

5

6

PRODUCTION BLN LITRES PER YEAR (ESTIMATE 2010/2011) MLN TONNES (ESTIMATE 2010/2011)

Sugarcane crushing capacity:

~60 mtpa from 24 mills

market leader in Brazil; market share ~10%

2.2 bln litres ethanol production capacity per year, growth aspiration to 4 bln litres per year

Sugar production > 3 mtpa

Cogeneration installed capacity 625 MW, excess electricity for sale this year: 1,200-1,500 GWh


COSAN INDICATORS

RAIZEN: SOCIAL PERFORMANCE COMMITMENTS

Cosan contributed to and is signatory to additional commitments:

National Commitment for the Improvement of Labor Conditions in Sugarcane Production

Agro-Environmental Protocol for the Sugar and Ethanol Sector (Green Protocol)

Bonsucro formerly the Better Sugarcane Initiative (BSI) standards

41,000 employees (during peak of harvest) of which 36,000 operational, of which 27,000 agri-workers

Manual harvesters: workday 7hrs 20mins, wages ~60% above minimum wage

Mechanization: Cosan accelerated & reached 64% in areas with slope <12%

Social investment in communities:

Cosan Foundation: educating ~ 600 children

Other social initiatives reaching ~70,000 people

Cosan foundation


RAIZEN: ENVIRONMENT

REDUCING IMPACTS, DELIVERING BENEFTIS

Brazilian sugar cane ethanol best performing biofuel:

European Renewable Energy Directive assigns sugar cane ethanol with a 71% GHG savings, compared to gasoline

U.S. EPA designated Brazilian sugarcane ethanol as an advanced biofuel due to its 61% reduction of total life cycle GHG emissions

Cogeneration of electricity from by-product bagasse:

reducing emissions & generating revenues from electricity sales

625 MW installed capacity, with excess electricity for sale this year between 1,200 to 1,500 GWh

Recycling of by-products: vinasse, filter cake and ash used as natural potassium-rich fertilizer

Accelerated mechanization reduces emissions & water use

Closed water circuits in 19 of 24 units

Cosan pioneered biological pest control

Satellite geo-monitoring - a unique competitive advantage


ROYAL DUTCH SHELL SUMMARY


The mobility fuel mix will continue to diversify but hydrocarbon fuels will dominate

All transport solutions will face challenges of introduction and adoption.

A “mosaic” of solutions will be adopted in different regions of the world.

The most effective solutions for achieving a new low CO2 energy future are vehicle efficiency and biofuels

Electrification will feature in the long term. A switch from coal to gas in power generation will be important to ensure electric vehicles can fulfil their potential.

TRANSPORT SECTOR: A MOSAIC OF SOLUTIONS

Emission Concerns

2025 “Simple Mosaic”

2010 “BAU”

2050 “Full Mosaic”

Energy Security

Concerns

Cost Concerns

Scoffone citi climate_conference_06062011

Technology

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