LNG in the Atlantic Basin –plain sailing or choppy waters ahead?

Andrew Jamieson

Executive Vice President: Gas and ProjectsProjects

Shell Global Solutions International BV

Solutions should meet a combination ofSolutions should meet a combination of the 3E’s

EEfficiency/Economy(Cheap)

HVO

OilShale

NaturalGas

Hydro

ME Oil & G

Coal

HVO

Energysecurity Environment

ME Oil & GasGeothermal

OilSands

Energysecurity Environment(Clean)(Convenient) WindSolar BioWave

2

Renewables

Shell Global Scenarios to 2025Shell Global Scenarios to 2025– Critical Discontinuities

Energy-intensive growth

Supply security Carbon dioxide

3

LNG CompetitorsLNG Competitors

RenewablesRenewables

CoalPipeline Gas

4

More Energy Less CarbonMore Energy, Less Carbon

RegionMM BOE By TypeMM BOEg

350

400By Type

350

400MM BOE

NE Asia

SE Asia250

300

Transport

Other250

300

FSU and CEELatin America

Africa /MES. Asia

NE Asia

150

200

Heat

Transport

150

200

W EuropeJapan/ANZ

US/Canada

50

100

Power50

100

W. Europe0

2000 2005 2010 2015 2020 2025

[Shell Global Energy Scenarios 2005

0

2000 2005 2010 2015 2020 2025

5

[Shell Global Energy Scenarios 2005 Data]

Setting the energy sceneSetting the energy scene

“Th il i d h“The oil industry has to explore new frontiers, develop new hydrocarbon energy sources and integrate ‘CO2solutions.’ The challenge is to develop technology that can p gyfuel growth without environmental degradation.”

Jeroen van der VeerChief Executive, Royal Dutch Shell plc

World energy demand 1971 – 2030(IEA World Energy Outlook 2004 reference case)

Shell plc

6

At the same time environmental impactAt the same time environmental impact must be minimized

MANAGING OUR OWN CO2 EMISSIONS ADDRESSING CO2 INTENSITY

- Increasing gas and LNG supplyBASELINE EMISSIONS

- CO2 sequestration / Enhanced Oil Recovery

Improving efficiency

Reducing flaring

Leading designs

- Clean coal technologies

- Biofuels

CO2 for enhanced oil recovery

CO2 sequestration

Renewables offsets

- Renewables & HydrogenCO2 credit trading

REDUCED NET EMISSIONS

7

Managing CO – multiple approachesManaging CO2 – multiple approaches

Gas GatheringClean coal to Power

(IGCC) Refinery Efficiencyg(IGCC)

• Buggenum, NL (250 MW)

y y

• Port Dickson, Malaysia• Substantial re-vamp existing facilities and

• NLNG Bonny

• Waste gas from oil wells• 12 yrs in operation

• 15% lower CO2emissions than

existing facilities and construction of new units to improve efficiency• Shell refineries achieved

Waste gas from oil wells into LNG and pipeline gas

• CO2 emissions reductions ~30M tonnes

conventional coal

• Stanwell ZeroGen

CO2 emissions reductions approaching 1M tonnes

reductions 30M tonnes

8

Shell’s Global LNG BusinessShell s Global LNG Business

Sh ll i ECoral in North America

#3 energy marketer4 LNG import sites

Shell in Asia Pacific#1 LNG supplier*

India and China access

Shell in EuropePan-European marketer

#1 LNG importer*

In operationUnder construction

LNG supply

Under constructionUnder development

Regas capacityIn operationpUnder constructionUnder development

*Sources: Shell Analysis Poten & Partners Platts Wood Mackenzie Shell share of sales amongst private companies

9

Sources: Shell Analysis, Poten & Partners, Platts , Wood Mackenzie, Shell share of sales amongst private companies

Positioned for Long Term GrowthPositioned for Long Term GrowthLNG GROWTH PORTFOLIO, (SHELL SHARE*) Mtpa

50

60

40

20

30

10

20

0Op era tion Construction Design Business

Develop m ent

10

* Incl. indirect interest in Woodside, Sakhalin at 27.5%

Driving LNG GrowthDriving LNG Growth

11

N America: Integrating Gas Supply &N. America: Integrating Gas Supply & Market

STRONG GROWTH IN SHELL GAS SUPPLYSUPPLY & MARKET POSITIONS

Broadwater

Cove Point

Elba Island

Gulf of Mexico

Baja

#3 gas marketer

Gulf of Mexico

Altamira

2 0 0 6 2 0 1 0 t

PRODUCTION

REGAS: OPERATION CONSTRUCTION DEVELOPMENT

2 0 0 6 2 0 1 0 est.

NORTH AMERICAN PRODUCTIONSHELL LNG IMPORTS

12Source: Shell analysis

IMPORTS

LNG Leadership in EuropeLNG Leadership in EuropeDIVERSITY OF MARKET AND SUPPLY

Russia

Global

N. Africa

Global

LNG

REGAS OPPORTUNITYREGAS CAPACITY PRODUCTION

MARKETING PRESENCE CURRENT IMPORT CHANNELS

13

Source: Company reports & Shell estimates

LNG – Fuelling the FutureLNG – Fuelling the Future

14

Challenges Ahead - Industry cost g yescalationRig rates

(increases since 2002)Corrosion resistant alloy pipe

(increases since 2002)

North Sea Jack up

Alloy 825

WW Semi-sub 2001 5000'

GoM Jack-up 250-300

Jack-up

0% 20% 40% 60% 80%

316L

0% 100% 200% 300% 400%

WW Floater 5000'+

2001-5000

500%

Source: London Metals Exchange, Shell estimatesSource: ODS Petrodata

Equipment prices (FEED)(increases since 2002)

0% 20% 40% 60% 80%

Construction & labour(increases since 2002)

0% 100% 200% 300% 400% 500%

( ) (increases since 2002)

EPIC/EP contracts

Project management rates

Fabricated pipe

Large specialty fabricated

General fabricated

Construction labour

t

Installation vessel rates

General fabricated (eg,

exchangers)Mechanical

(eg, pumps)

15Source: © IHS, Inc 2006

Source: IPA Independent Project Analysis

0% 20% 40% 60% 80% 100%rates0% 10% 20% 30% 40% 50% 60%

Other Challenges AheadSakhalin Construction in

Frontier LocationsOther Challenges Ahead Frontier Locations

Safeguarding Pacific Grey Whales

16

Meeting the Challenges 4D SeismicMeeting the Challenges 4D Seismic

Brunei

Na Kika Gulf of Mexico

17

Na Kika - Gulf of Mexico

Dual and Parallel Mixed RefrigerantDual and Parallel Mixed Refrigerant

Main liquefaction cycle

Pre-cooling cycle

NG LNG

Main liquefaction cycle

GT M

GT M

GT M

NG LNG

Pre-cooling cycle

GT M

GT M

y

18

T

Enriching Quality of LifeEnriching Quality of Life

Bonny Community

19

Relations

Future Skilled WorkforceFuture Skilled Workforce

20

21