UPSTREAM

17 SHELL INVESTORS’ HANDBOOK 2013

INTEGRATED GAS

Strong growth in gas markets is a major opportunity The Repsol LNG portfolio acquisition in late 2013 LNG LEADERSHIP [A] for Shell. Our integrated gas earnings have is another growth leg for integrated gas, with new increased by around 400% since 2009 to some equity supply in South America, and new year-end mtpa $9 billion in 2013 or about 60% of Upstream trading opportunities. earnings. This was mainly driven by several large 40 (LNG) and gas-to-liquids (GTL) LNG projects that came on-stream, including Pearl GTL, Shell is a pioneer of the LNG industry with expertise Pluto LNG Train 1 (Woodside), North Rankin based on 50 years of experience. Shell was 30 Redevelopment, Qatargas 4 and Sakhalin-2. instrumental in delivery of the world’s first LNG Integrated gas earnings incorporate LNG, including plant, in Algeria, which came on-stream in 1964.

LNG marketing and trading, and GTL operations. In the years since, LNG has become a truly global 20 In addition, the associated upstream oil and gas commodity with demand expected to grow rapidly production activities from the Sakhalin-2, North in the coming years. Currently around 240 mpta, West Shelf, Pluto LNG Train 1 (Woodside), the global LNG market is expected to reach about 10 Qatargas 4 and Pearl GTL projects are included 430 mtpa by 2025. This growth will be driven by in integrated gas earnings. Power generation expanding economies in China, India and the and coal gasification activities are also part Middle East, by demand in Europe and by new 0 of integrated gas. destinations such as Malaysia, the Philippines, Singapore, Thailand and Vietnam. Shell Exxon ChevronTotal BG BP The Prelude floating LNG (FLNG), the Gorgon LNG Mobil Trains 1-3 and the MMLS LNG (Elba) projects are Shell is proud of its leadership in this sector. 2013 currently under construction and expected to come Including Qatargas 4, Pluto and the acquired Repsol acquisition (2014+) on stream within the next few years. Repsol LNG portfolio, Shell world-wide LNG equity 2017 liquefaction capacity is about 26 mtpa. Our equity [A] Projects in operation or under construction. Shell is also considering LNG options to monetise share of various ventures across the world delivered natural gas in North America. These would be some 9% of global LNG in 2013. The addition of projects that involve the entire natural gas value volumes from our acquisition in late 2013 grows our chain and so play very much to Shell’s strengths market share to 11%. as an integrated player.

GLOBAL INTEGRATED GAS PORTFOLIO [A]

Sakhalin LNG

MMLS LNG (Elba) Qatargas 4 Pearl GTL

Oman LNG and Qalhat LNG

Atlantic LNG Nigeria LNG Brunei LNG Bintulu Malaysia LNG

Peru LNG North West Shelf Prelude FLNG Gorgon Pluto (Woodside)

Under On stream construction Liquefaction Regasification  GTL [A] As of February 2014. 18 SHELL INVESTORS’ HANDBOOK 2013 REPORTS.SHELL.COM

INTEGRATED GAS CONTINUED

We currently have 7.5 mtpa capacity under In January 2014, Nigeria LNG (NLNG) exported SHELL GLOBAL LNG CAPACITY GROWTH construction and have around 21 mtpa of LNG its 3,000th LNG shipment from the Bonny Terminal options under study including Abadi in Indonesia, in Nigeria. The first shipment left Bonny in 1999 mtpa LNG Canada, Browse and Gorgon Train 4 and the plant has expanded to six trains since then. in Australia. NLNG accounts for about 7% of the world’s total LNG production capacity, with the Shell Petroleum In late 2013 Shell acquired part of Repsol S.A.’s Development Company of Nigeria (SPDC) joint 40 LNG portfolio, including supply positions in Peru venture being a major supplier of gas to the plant. and Trinidad and Tobago, for a net cash purchase Shell holds a 25.6% interest in NLNG together with price of $3.8 billion, subject to post-closing the Nigerian National Petroleum Corporation adjustments. As part of the transaction, Shell also (49%), Total LNG Limited (15%) and ENI 20 assumed $1.6 billion of balance sheet liabilities International N.A. (10.4%). relating to existing leases for LNG ship charters. The deal gives Shell an additional 7.2 mtpa of directly managed LNG volumes of which 2.1 mtpa is uncontracted, and 5.1 mtpa is contracted to 0 customers mainly in Canada, Mexico and Spain. 2007 2013 2014 ~2020+ On stream Under construction Integration of this acquisition into the Shell LNG Repsol acquisition Options trading portfolio is well advanced and delivering synergies and opportunities in line with expectations. Shell is uniquely placed to add value through opportunities on the gas market, by supplying contracted customers from multiple Shell LNG sources rather than a single point, and, potentially, from pipeline gas.

In October 2013, the 700th LNG cargo left the Sakhalin-2 LNG plant in eastern Russia (Shell interest, 27.5%). Sakhalin-2 provides around 10% of ’s LNG supplies and more than 4% of ’s. In the USA and Canada we have proposals to build liquefaction plants. In Western Canada, near Kitimat, British Columbia, we are progressing to a final investment decision through the LNG Canada project consortium.

Shell’s Pearl GTL installation, the world’s largest gas-to-liquids plant, near Doha, Qatar, turns natural gas into cleaner burning fuels and other speciality products.

A Shell Qatar staff member in a Pearl GTL plant laboratory. UPSTREAM

19 SHELL INVESTORS’ HANDBOOK 2013

WIND

GTL can mean faster, cheaper, more flexible Shell has more than a decade of experience in GTL is an important part of Shell’s gas monetisation development and deployment strategies for wind energy, and owns interest in 10 operating capabilities. We are uniquely positioned to make resources that were previously uneconomic, or wind projects: eight in North America and two GTL a success through our commercial capability constrained by technical or other challenges. in Europe (Shell share of total capacity is and our in-house GTL technology – from smaller approximately 50%). The projects’ generating scale such as our Shell Middle Distillate Synthesis The Prelude FLNG facility is now under construction capacity totals about 1,000 megawatts – enough (SMDS) plant in Malaysia, which can produce in South Korea, with the massive hull substructure electricity to meet the annual requirements of 14,700 b/d, to large scale developments such floated out of dry-dock in November 2013. The approximately 300,000 homes. Generating that as Pearl GTL with a design 140,000 b/d topsides, the equipment that will process and amount of electricity with conventional power product capacity. liquefy the gas, and turret, will be installed on the plants could have emitted about 3 million tons

hull as the project progresses in coming years. of CO2. Most of this energy comes from around Shell’s GTL technology is founded on four decades 720 turbines at eight joint venture wind projects of research, development and commercial In September 2013, Woodside (Operator) in the USA. deployment. We continuously improve our GTL announced that the Browse joint venturers had technology, enhance design, add new GTL adopted Shell FLNG technology as the products and refine the process. In 1993, the development concept for the Browse gas fields, Shell SMDS plant started up in Bintulu, Malaysia. and that Basis of Design (BoD) was underway. Since then we have filed more than 3,500 patents Shell will provide its project delivery capability and covering all stages of the GTL process. We used Floating LNG technology to support delivery of the our proprietary technology and operational BoD project phase. The facilities would be based experience to build Pearl, Shell and Qatar on Shell’s established FLNG design, which Petroleum’s GTL plant in Qatar. Pearl ramp-up was underpins the Prelude FLNG project. completed in late 2012. In 2013 Pearl set a new quarterly production record in Q2, and loaded Shell’s Floating LNG technology can bring significant its 200th ship by the end of June. long term, sustainable jobs as well as providing local employment and business opportunities. FLOATING LNG Floating liquefied natural gas (FLNG) is the latest in a line of Shell achievements in developing new technologies for the oil and gas industry. Moving the production and processing out to sea where the gas is found is a major innovation that brings more energy resources within reach. It is an exceptional example of developing and deploying both innovative thinking and technology. We believe that FLNG will enable the development of gas resources ranging from clusters of smaller more remote fields to potentially larger fields via multiple facilities. This

Shell’s Rock River Wind Farm in Carbon County, Wyoming, has a capacity of 50 megawatts – enough to power approximately 25,000 households.

INSTALLED WIND CAPACITY

MW, Shell share

600

500

400

300

200

100

0

2009 2010 2011 2012 2013 USA Europe