Andre Araujo - Credit Suisse Brazil Oil Trip - April 13, 2011


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Andre Araujo, Brazil Country Chair, presented at the Credit Suisse Brazil Oil Trip.

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Andre Araujo - Credit Suisse Brazil Oil Trip - April 13, 2011

  1. 1. ROYAL DUTCH SHELL PLC SHELL BRASIL CreditSuisse Brazil Oil Trip ANDRE ARAUJO Brazil Country Chair RIO DE JANEIRO APRIL 13, 20111 Copyright of Royal Dutch Shell plc 13/4/2011
  2. 2. DEFINITIONS AND CAUTIONARY NOTEReserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves for all 2009 and 2010 data, and includes both SEC proved oil and gas reserves and SEC provenmining reserves for 2008 data.Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC proven mining reserves. Resources areconsistent with the Society of Petroleum Engineers 2P and 2C definitions.Organic: Our use of the term Organic includes SEC proved oil and gas reserves and SEC proven mining reserves (for 2008) excluding changes resulting from acquisitions, divestments and year-average pricing impact.To facilitate a better understanding of underlying business performance, the financial results are also presented on an estimated current cost of supplies (CCS) basis as applied for the Oil Products andChemicals segment earnings. Earnings on an estimated current cost of supplies basis provides useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell’s resultsof operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS.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 forconvenience 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 thosewho 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 “Shellcompanies” 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 acontrolling 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 controlare 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 forconvenience 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 historicalfact 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 andassumptions 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 offactors 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 thispresentation, 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 productionresults; (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 acquisitionproperties 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 countriesand 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 delaysin 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 cautionarystatements 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 RoyalDutch Shell’s 20-F for the year ended 31 December, 2010 (available at and ). These factors also should be considered by the reader. Each forward-lookingstatement speaks only as of the date of this presentation, 13 April 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-lookingstatements 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.The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actualproduction or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as resources andoil in place, that SECs 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 onthe SEC website You can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2 Copyright of Royal Dutch Shell plc 13/4/2011
  3. 3. SHELL ‘GOAL ZERO’ ON SAFETY Injuries – TRCF per million working hours 4 3 2 Customer and Profitability & 1 partner focus performance 0 99 00 01 02 03 04 05 06 07 08 09 10 Sustainability & Value added growth technology Focus on personal and process safety Industry leader in Sustainable Development EMPLOYEES AND CONTRACTORS PER MILLION WORKING HOURS; SHELL OPERATED FACILITIES3 Copyright of Royal Dutch Shell plc 13/4/2011
  5. 5. UPSTREAM REGIONAL OUTLOOK - AMERICASKEY PROJECTS FINANCIALS $ Bln 20 CFFO CAPEX 10 0 2006 2007 2008 2009 2010 OIL & GAS PRODUCTION Kboe/d 1000 2011+ • AOSP Exp 1 • Perdido 500 • Onshore gas • Mars B • BC10 Ph2 0 2009 2010Tight Gas drilling Espirito Santo FPSO USA CANADA BRAZIL ARGENTINA OTHERGroundbirch Canada BC-10 Brazil5 Copyright of Royal Dutch Shell plc 13/4/2011
  6. 6. SHELL IN SOUTH AMERICA VENEZUELA • Urdaneta West Field (Lake Maracaibo) 40% Shell, 60% PDVSA • Lubricants Plant, Global Solutions GUYANA/ Fr. GUIANA • 25% in Stabroek deepwater offshore concession (38,700 km2) - Operated by ExxonMobil • 45% in Guyane Maritime deeepwater concession (35,200 km²) - Operated by Tullow Oil COLOMBIA • 100% in VMM 27 block – Middle Magdalena Valley (subject to signing) • 100% in Gua 3 deepwater block Technical Evaluation Agreement (TEA) (subject to signing) • 50% in CPE2 and CPE4 Technical Evaluation blocks, operated by Ecopetrol BRAZIL • Leading Upstream and Downstream presence ARGENTINA PRODUCTION • 22.5% stake in Acambuco Concession EXPLORATION • Downstream: Refining, Retail, Commercial, Lubricants, Chemicals, Marine REFINERY and Aviation6 Copyright of Royal Dutch Shell plc 13/4/2011
  7. 7. SHELL IN BRAZIL In Brazil since 1913 ~2,200 staff Largest private exploration & production company producing in the country Upstream offshore and onshore Downstream fuels and lubricants >$3 bln invested in Upstream Acreage in core offshore basins 1st IOC to produce oil & gas in Brazil Downstream JV with Cosan - Raízen Comgas Local Distribution (São Paulo)UPSTREAM GROWTH: BC-10 ON STREAM 2009 DOWNSTREAM: FUELS & LUBRICANTS7 Copyright of Royal Dutch Shell plc 13/4/2011
  8. 8. BRAZIL GROWTH POTENTIALOVERVIEW SHELL POSITIONS SHELL BRAZIL PRODUCTION Kboe/d Kbbl/d Raizen (Cosan) JV OIL & GAS Espirito Raizen (Cosan) JV Marketing & 100 ETHANOL 300 Biofuels (50%) Santo Basin OIL PRODUCTS Sao Francisco (RHS) exploration 200 Parque das Conchas BC-10 50 • Start-up phase -1 2009 Massa discovery – • Phase 2 FID 2010 100 potential for BC-10 phase 3 Bijupira-Gato de Mato BMS-54 Salema 0 0 Camposdiscovery 2005 2010 ~2015 Basin• Drilling 2011 to assess commerciality Santos Basin UPSTREAM PRODUCTION UPSTREAM POTENTIAL 2010 PROGRESS Raízen – Sugarcane harvesting8 Copyright of Royal Dutch Shell plc 13/4/2011
  9. 9. BM-ES-27 - R7 (ES-M-411/ES-M-437/ES-M- Shell Portfolio – March/2011 436) *PBR (65%) Shell (17,5%) Vale (17,5%) BM-ES-23 - R6 14 Concessions: 9 offshore and 5 onshore (ES-M-525) *PBR (65%) Shell (20%) - 9 Exploration Concessions operated by Shell; Inpex (15%) - Production from Bijupirá/Salema and BC-10 Assets ARGONAUTA - R0 *Shell (50%) OSTRA - R0 *Shell (50%) PBR (35%) PBR (35%) ONGC (15%) ONGC (15%) ABALONE - R0 NAUTILUS - R0 *Shell (50%) *Shell (50%) PBR (35%) PBR (35%) ONGC (15%) ONGC (15%) BM-C-31- R6 (C-M-103/C-M-151) *PBR (60%) Shell (20%) Inpex (20%) BIJUPIRA & SALEMA *Shell (80%) PBR (20%) ATLANTA - R0 *Shell (40%) PBR (40%) Chevron (20%) BM-S-45 (S-M-320/S-M-322) - OLIVA - R0 R6 *Shell (40%) *PBR (60%) PBR (40%) Shell (40%) Chevron (20%) BM-S-54 (S-M-518) - R7 *Shell (80%) Total (20%) BM-S-8 - R2 *PBR (66%) Shell (20%) Petrogal (14%)9 Copyright of Royal Dutch Shell plc 13/4/2011
  10. 10. BC-10 OPERATING PERFORMANCEBC-10 (PARQUE DAS CONCHAS) PHASE 1 TECHNOLOGY IN ACTIONKboe/d (100%)100 Actual Plan 75 50 25 0 Jan Apr Jul Oct 2010 Nine wells on-stream in Q1 2010 Ultra Deepwater development with advanced FID on second phase taken in 2010 technology firsts applied Deepwater low API oil Project delivery as planned Shell 50% Production from Phase 1 exceeded Plan in 2010 Unlocking heavy oil in deepwater Outstanding operational safety performance10 Copyright of Royal Dutch Shell plc 13/4/2011
  11. 11. BC-10 Phase 2 (PARQUE DAS CONCHAS)FIELD LAY-OUT BC-10 PHASE 2 (CAMPOS, BRAZIL) Peak production ~30 kboe/d Argonauta O-North field Tie-back to Phase 1 FPSO Water depth 1,600 meters Shell 50% (operator) Sustaining plateau production Phase 2 Exploration upside (Massa 2 - well drilling) 2000 2005 2006 2009 2010 2000 2005 2006 2009 2010 2012-3 BC-10 BC-10 Shell stake 1st Oil Phase 2 Phase 2 Discovered Declared increased FID Start-Up Shell 35% Commercial to 50% Part of Shell’s new deepwater world-wide potential of ~200 kboe/d 201511 Copyright of Royal Dutch Shell plc 13/4/2011
  12. 12. BIJUPIRÁ & SALEMA• Shell (80% - Operator) Petrobras (20%)• Aver. daily production of 22K boe/d• 1st oil in 2003• Water depth of 800 meters for Bijupirá and 600 Rio de Janeiro meters for Salema Bijupirá & Salema• Excellent Safety Performance Record since 2003 Salema Bijupira FPSO FLUMINENSE12 Copyright of Royal Dutch Shell plc 13/4/2011
  13. 13. ONSHORE OPPORTUNITIES: SÃO FRANCISCO5 onshore blocks / ANP Bid Round 10Contracts signed June 2009Partnership with Vale (40% WI) under ANP approvalPotential for Tight Gas : Shell holds internationalexperience503km 2D seismic survey in 20111-3 wells drilling opportunities to be evaluatedSeismic permitting processes initiated Exploration PlanShell 2011 2012 1st half 2013 2013-5ANP13 Copyright of Royal Dutch Shell plc 13/4/2011
  14. 14. RAÍZENJV STRUCTURE 50% Management 50% Company JV’s face to the market Facilitate the building of a unified corporate culture Sugar, Ethanol, Cogeneration & Downstream Co Biotechnology Co Production of sugar and ethanol Supply, distribution and sale of fuels in Brazil. Co-generation activities Technology activities: Iogen & Codexis14 Copyright of Royal Dutch Shell plc 13/4/2011
  15. 15. RAÍZEN: BRAZIL MARKETING AND BIOFUELSSHARE OF BRAZILIAN RETAIL FUELS DISTRIBUTION%40 Leading Brazil marketing player 4,470 retail sites, 53 depots30 Fuel sales volume ~18 billion litres per year20 Retail, commercial fuels10 JV synergies + growth potential 0 Petrobras Ultra Raízen AleSat OthersBRAZILIAN SUGARCANE PRODUCERSMln tonnes (estimate 2010/2011)60 Leading Brazil ethanol player40 Sugar cane capacity~60 mtpa from 23 mills ~ 2 bln litres ethanol production capacity per year,20 growth aspiration to more than double volumes Top 5 global ethanol player 0 Shell world-wide trading synergiesSOURCE: SINDICOM 2009 AND ANP15 Copyright of Royal Dutch Shell plc 13/4/2011
  16. 16. SUMMARYSHELL STRATEGY PRIORITIES SHELL BRAZIL PERFORMANCE FOCUS • Safe operations • Production performance • BC-10 Phase 2 FID NEW WAVE OF PRODUCTION GROWTH • Downstream: Raízen • Shell Global strategy for Biofuel • Exploration success: 2 new 2010 discoveries MATURING NEXT GENERATION OF • Further exploration potential (pre-salt) PROJECT OPTIONS • Onshore opportunities Competitive performance – Profitable growth – Sharper delivery16 Copyright of Royal Dutch Shell plc 13/4/2011
  17. 17. ROYAL DUTCH SHELL PLC SHELL BRASIL Q&A17 Copyright of Royal Dutch Shell plc 13/4/2011