ENERGY TO MOVE FORWARD INVESTING IN TOMORROW, TRANSCENDING THE CHALLENGES OF TODAY ANNUAL AND SUSTAINABILITY REPORT 2020 PILIPINAS SHELL PETROLEUM CORPORATION ANNUAL AND SUSTAINABILITY REPORT 2020 Disclaimer This Report has been produced by Pilipinas ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, stated, implied or inferred from the forward- CONTENTS Shell Petroleum Corporation (“PSPC”) in ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, looking statements contained in this Report. order to meet the requirements of applicable ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, Philippine laws and regulations. ‘‘target’’, ‘‘will’’ and similar terms and In this Report, we may refer to “GHG phrases. There are a number of factors that emissions” and “emissions” which include 4 Introduction from the Chairman The companies in which Royal Dutch Shell could affect the future operations of Royal Pilipinas Shell’s carbon emissions from the plc directly and indirectly owns investments Dutch Shell and could cause those results production of our energy products, our are separate legal entities. In this Report to differ materially from those expressed in suppliers’ carbon emissions in supplying 7 About the Report “Shell”, “Shell group” and “Royal Dutch the forward-looking statements included in energy for that production and our Shell” are sometimes used for convenience this Report, including (without limitation): (a) customers’ carbon emissions associated with where references are made to Royal Dutch price fluctuations in crude oil and natural their use of the energy products we sell. Shell plc and its subsidiaries in general, gas; (b) changes in demand for Shell’s Pilipinas Shell only controls its own emissions 12 About Pilipinas Shell Corporation including PSPC. References in this Report products; (c) currency fluctuations; (d) but, to support society in achieving the to “our Company”, “PSPC” and “Pilipinas drilling and production results; (e) reserves Paris Agreement goals, we aim to help and Shell” refer to Pilipinas Shell Petroleum estimates; (f) loss of market share and influence such suppliers and consumers to 20 A Message from our President and CEO Corporation. The words “we”, “us” and industry competition; (g) environmental and likewise lower their emissions. The use of “our” are used to refer to Pilipinas Shell physical risks; (h) risks associated with the the terminologies “GHG emissions” and Petroleum Corporation or to those who identification of suitable potential acquisition “emissions” is for convenience only and 23 Report from our CFO work for PSPC. ‘‘Subsidiaries’’, “Shell properties and targets, and successful not intended to suggest these emissions subsidiaries” and “Shell companies” as negotiation and completion of such are those of Pilipinas Shell or Shell and its used in this Report refer to companies transactions; (i) the risk of doing business in subsidiaries. 32 Transforming Our Business for the future over which Royal Dutch Shell plc either developing countries and countries subject directly or indirectly has control. Entities to international sanctions; (j) legislative, Shell’s operating plan and budgets are and unincorporated arrangements over fiscal and regulatory developments including established for a three-year period and 40 Advancing a Culture of Care for our People which Shell has joint control are generally regulatory measures addressing climate are updated annually. As society is not referred to as “joint ventures” and “joint change; (k) economic and financial market expected to reach net-zero emissions in the operations” respectively. Entities over which conditions in various countries and regions; next three years, Shell’s operating plan, and Communities Shell has significant influence but neither (l) political risks, including the risks of budgets and pricing assumptions also do control nor joint control are referred to as expropriation and renegotiation of the terms not reflect its Net-Zero emissions targets. “associates”. The term “Shell interest” is of contracts with governmental entities, Shell’s operating plan, budgets and pricing 62 Protecting our Shared Environment used for convenience to indicate the direct delays or advancements in the approval of assumptions reflect the current economic and/or indirect ownership interest held by projects and delays in the reimbursement for environment and what we can reasonably Shell in a venture, partnership or company, shared costs; (m) risks associated with the expect to see over the next three years. In 67 Continuity and Care in the Time of COVID-19 after exclusion of all third-party interest. All impact of pandemics, such as the COVID-19 the future, as society moves towards net-zero references to the “Government” are to the (coronavirus) outbreak; and (n) changes in emissions, we expect Shell’s operating plan, national, local and all other instrumentalities trading conditions. No assurance is provided budgets and pricing assumptions also to 75 The Future of Tabangao of the government of the Philippines. that future dividend payments will match reflect such movement. or exceed previous dividend payments. This Report contains forward-looking All forward-looking statements contained Also, in this Report we may refer to Shell’s statements concerning the financial in this Report are expressly qualified in “Net Carbon Footprint”, which includes 86 GRI Index condition, results of operations and their entirety by the disclaimer contained Shell’s carbon emissions from the production businesses of PSPC. All statements other than or referred to herein. Audience should not of our energy products, our suppliers’ statements of historical fact are, or may be place undue reliance on forward-looking carbon emissions in supplying energy deemed to be, forward-looking statements. statements. Additional risk factors that for that production and our customers’ Forward-looking statements are statements may affect future results are contained in carbon emissions associated with their of future expectations that are based on Pilipinas Shell Annual Report for the year use of the energy products we sell. Shell management’s current expectations and ended 31 December 2020, available at only controls its own emissions. The use of assumptions, and involve known and https://pilipinas.shell.com.ph/ and https:// the term Shell’s “Net Carbon Footprint” is About the Cover unknown risks and uncertainties that could edge.pse.com.ph/financialReports/form. for convenience only and not intended to cause actual results, performance or events do. These risk factors also expressly qualify suggest these emissions are those of Shell or Energy To Move Forward: to differ materially from those expressed all forward-looking statements contained in its subsidiaries. or implied in these statements. Forward- this Report and should be considered by the Investing In Tomorrow, Transcending The Challenges Of Today looking statements include, among other audience. Each forward-looking statement This Report may contain references to Preparing for the future does not mean we abandon the needs of today, things, statements concerning the potential speaks only as of the date of this Annual Shell’s website. These references are for the exposure of Royal Dutch Shell to market risks Stockholders’ Meeting, 11 May 2021. audience’s convenience only. Shell is not especially in the context of the COVID-19 pandemic. The cover highlights and statements expressing management’s Neither PSPC nor any of its subsidiaries incorporating by reference any information expectations, beliefs, estimates, forecasts, undertake any obligation to publicly update posted on www.shell.com. the resilience of the business and the practical ways in which Pilipinas projections and assumptions. These forward- or revise any forward-looking statement as Shell balances the economic and societal needs of today while investing in looking statements are identified by their use a result of new information, future events of terms and phrases such as ‘‘anticipate’’, or other information. In light of these risks, energy for the future. While we aspire to become a low-carbon business, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, results could differ materially from those we will focus on the concrete and doable steps we are taking now that help us not only transcend the challenges of today, but also lay the foundations for the future. Writing and Design: Drink Sustainability Communications | www. DrinkPH.com ENERGY TO MOVE FORWARD ANNUAL AND SUSTAINABILITY REPORT 2020 INTRODUCTION Our grit and agility to respond to these FROM OUR unprecedented changes have been the cornerstone CHAIRMAN of Pilipinas Shell’s business success and sustainability. Sustaining in challenging times In 2020, the Philippines experienced the perfect storm While we recognize our responsibility to ensure of extenuating challenges. The oil and gas industry that our business weathers economic downturns, experienced a global collapse in prices. Over and we also acknowledge that this is only one aspect of above the continuing pandemic, the Philippines was sustainability. For the past four years, Pilipinas Shell beset with a series of natural disasters. The year has published ASRs not only to report on its financial started with the Taal Volcano eruption and ended with performance but also to highlight how we run our a series of typhoons. business, keep our operations safe and strive towards efficient use of our resources. The pandemic disrupted the entire oil and gas value chain, as