100 YEARS OF SHELL IN BRAZIL: PROSPECTING FOR THE FUTURE Presentation at the British Consulate in Rio de Janeiro March 11th Flavio Rodrigues Shell Brasil Petróleo Ltda. Copyright of INSERT COMPANY NAME HERE January 2013 1 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. “Shell Brasil Petróleo Ltda”, ‘‘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 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 the Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve 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, 2012 (available at www.shell.com/investor and www.sec.gov - opens in new window). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation. 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. Copyright of INSERT COMPANY NAME HERE 2 SHELL IN THE WORLD Largest global revenue, Investment of US$ 1.1 billion Present in over 80 countries, with according to ‘Fortune’: US$ per year in research and 90,000 employees 484.5 bn in 2011 development Production of 3.2 million barrels/day, equivalent to 2% of Innovative partnership with global oil Ferrari in Formula 1 Recognised for technological Production of 3% of global gas Sale of transport fuels to more innovation and delivery of consumption (of which 48% is than 10 million consumers a megaprojects natural gas) day Copyright of INSERT COMPANY NAME HERE outubro 2012 3 100 YEARS OF HISTORY IN BRAZIL Gasoline pump at a garage At the beginning, it was Anglo-Mexican Donkeys being used to transport fuel One of the Former headquarters in first Shell Praça Quinze (from 1929 service to 1958) stations in Brazil Copyright of INSERT COMPANY NAME HERE outubro 2012 4 ON THE GROUND AND IN THE AIR PIONEER IN AIRCRAFT AND IN HAVING A PRESENCE IN REFUELLING… BRASÍLIA, BEFORE IT BECAME THE CAPITAL CITY Copyright of INSERT COMPANY NAME HERE outubro 2012 5 THE STRENGTH OF THE BRAND 4,600 Raízen service stations, the joint venture between Shell and the Cosan Group Copyright of INSERT COMPANY NAME HERE October 2012 6 THE JOINT VENTURE Market value of US$ 12 billion Production of more than 2 billion litres/annum of ethanol from sugarcane, the cleanest commercial biofuel More than 40,000 employees Copyright of INSERT COMPANY NAME HERE October 2012 7 LUBRICANTS Plant in Ilha do Governador (Icolub) Annual production of 174 million litres 14% of the national lubricants market Product portfolio: Advanced ranges for passenger cars (Helix) and motorcycles (Advance) Other ranges: Rimula, Donax, Spirax and Gadus Copyright of INSERT COMPANY NAME HERE October 2012 8 EXPLORATION & PRODUCTION AREAS SF-T-83 (R10) Shell (60%)* SF-T-80 (R10) Vale (40%) Shell (60%)* BM-ES-27 (R7) Vale (40%) (ES-M-411/437/436) SF-T-93 (R10) PBR (65%)* Shell (60%)* Shell (17.5%) Vale (40%) Vale (17.5%) SF-T-81 (R10) SF-T-82 (R10) Shell (60%)* Shell (60%)* Abalone, Argonauta, Nautilus & Vale (40%) Vale (40%) Ostra (R0 - Former BC-10 BMES-23 (R6) Block) (ES-M-525) Shell (50%)* PB (65%)* PBR (35%) Shell (20%) ONGC (15%) Inpex (15%) Bijupirá & Salema (R0) Shell-operated fields Shell (80%)* PBR (20%) Shell-operated blocks BM-S-54 (R7) SM-518 Shell interest Shell (80%)* Total (20%) Copyright of INSERT COMPANY NAME HERE October 2012 9 ON COURSE FOR PHASE 2 Phase 2 Copyright of INSERT COMPANY NAME HERE October 2012 10 FUTURE PROSPECTS th May:11 bidding round Generate jobs and income November: pre-salt bid Develop the industry October : Onshore BR(?) Copyright of INSERT COMPANY NAME HERE October 2012 11 LOCAL CONTENT Copyright of INSERT COMPANY NAME HERE outubro 1 2012 2 THE CHALLENGE: LOCAL CONTENT Part of the Shell principles… … but it’s a long journey Government policy Support of the oil and gas industry Supplier training Adjustments to the model Incentive for operators Emergence of globally competitive national suppliers Copyright of INSERT COMPANY NAME HERE outubro 2012 13 SHELL BRASIL LOCAL CONTENT STRATEGY Shell supports Local Content Development on a competitive basis; Shell will comply with existing regulation and will seek to influence the regulatory environment to be more flexible and/or to consider incentives rather than penalties to foster the delivery of Local Content; Shell will actively focus on delivering Local Content beyond legal requirements in its operations in Brazil. Small investments that may create greater impact in the future Copyright of INSERT COMPANY NAME HERE 14 BRAZIL INDUSTRY INVESTMENT The local environment has changed along the years and the exploratory success has added an extra challenge to the Brazil Supply Chain. Brazil Upstream Annual Investment ($bln) Pre-Salt Round 7 Round Round 5 Round Round 1 Round Round 0 Round PROMINP study based on Petrobras Business Plan 2012-2020 Date 22/03/2013 15 BRAZIL O&G INDUSTRY – CHALLENGES Challenges to attend Brazil O&G Industry and Local Content Growing Demand PROMINP study based on Petrobras Business Plan 2012-2020 Copyright of INSERT COMPANY NAME HERE Prioritization Matrix Prioritization Matrix 1 + 2 Greater 3 6 10 9 Demand* Demand* 11 5 4 7 Lower 8 9 9 9 11 1 1 11 - 1 1 - Social&Economical + Lower Atractiveness Greater 1 7 SUPPLIERS MARKET DEVELOPMENT PROGRAMME “A JOURNEY TOWARDS ROBUST AND SUSTAINABLE LOCAL CONTENT DELIVERY IN BRAZIL”. Copyright of INSERT COMPANY NAME HERE SHELL INICIATIVES FOR LOCAL CONTENT Stratigraphic tank in partnership with the Federal University of RS São Francisco Basin: priority given to local workers Parque das Conchas: 36% local content Copyright of INSERT COMPANY NAME HERE October 2012 19 .