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NATURAL GAS DEVELOPMENT IN NIGERIA A COMPELLING INVESTMENT FRONTIER IN A TURBULENT OIL MARKET Mr.

NATURAL GAS DEVELOPMENT IN NIGERIA

A COMPELLING INVESTMENT FRONTIER IN A TURBULENT OIL MARKET

Mr. Osagie Okunbor Managing Director , SPDC & Country Chair Shell Companies in Nigeria

PETAN Luncheon/Offshore Technology Conference, Houston, May 5, 2015

DEFINITIONS & CAUTIONARY NOTE

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.

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. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.

Resources plays: Our use of the term ‘resources plays’ refers to tight, shale and coal bed methane oil and gas acreage.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document “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.

‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this document refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint

control are referred to as “associates”. 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 Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves 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, 2014 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, May 6 2015. 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.

We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) 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 on the SEC website www.sec.gov. You can also

OUTLINE

Nigeria Natural Gas Resource Base Unlocking the Gas Value Chain The Nigeria Gas Master Plan (NGMP) The Shell Story The Reality What We Need Summary

GAS BUSINESS VALUE CHAIN

GAS BUSINESS VALUE CHAIN 4

NATURAL GAS A GLOBAL RESOURCE

Nigeria has the world’s 7 th -largest gas resource base… which has considerable potential upside with further exploration

has considerable potential upside with further exploration TOTAL GAS RESOURCE BASE >500 tcf 250-500 tcf <250

TOTAL GAS

RESOURCE BASE >500 tcf 250-500 tcf <250 tcf
RESOURCE BASE
>500 tcf
250-500 tcf
<250 tcf

Source: Oil & Gas Journal (Proven Reserves as of 1 Jan 2013); US Geological Survey (YTF as of 2000)

MANY DEVELOPING COUNTRIES ARE UNLOCKING THE GAS VALUE CHAIN

 Creation of extensive industrial supply chain from gas via LNG, Petrochemicals, associated supply chain
Creation of extensive industrial supply
chain from gas via LNG,
Petrochemicals, associated supply chain
Built “energy cities” (e.g., Jubail)
around use of gas as feedstock for
industrial development
 Diversification agenda
 Development of aluminium industry
Aggressive expansion in
petrochemicals (Sabic), shifting
from LPG exports to domestic use
Proposed creation of gas hub including
petrochemical, methanol, and fertiliser
plants
Significant investment in
gas-intensive industries:
 Aggressive promotion of
downstream industries:
 Nitrogenous fertilizers (JV with Yara Chem.)
 Aluminium (e.g., EMAL)
 Petrochemicals (QAPCO)
 Petrochemicals (Borouge, Chemaweyaat)
 Aluminium (Qatalum)
World class GTL project (Pearl)

THE NIGERIAN GAS MASTER PLAN / IMPLEMENTATION

LAUNCHED

MoP PRICE LETTER

New Gas-to-Power price of $2.50/Mmbtu effective

2008

2010

2015

NGMP CREATED TO TACKLE THESE CHALLENGES:

1. Gas Availability

2. Gas Affordability

3. Gas Deliverability

4. Commerciality of Supply

NGMP INFRASTRUCTURE POLICY REGULATIONS BLUEPRINT
NGMP
INFRASTRUCTURE
POLICY
REGULATIONS
BLUEPRINT

GDP Growth

Value Extraction

Pricing

Dept of Gas

Domestic Gas

Aggregator (SA)

DSO + Penalties

GSPA

Gas Grid

(wet/dry lines)

E/W, S/N

Pipelines

CPF concept

KICK-STARTS THE GAS DEVELOPENT JOURNEY

 CPF concept KICK-STARTS THE GAS DEVELOPENT JOURNEY NIGERIA HAS MADE PROGRESS  Gas Master Plan

NIGERIA HAS MADE PROGRESS

Gas Master Plan developed

Doubling of total gas production Major upstream investment planned

NIGERIA GAS PRODUCTION, BCF/D

Major upstream investment planned  NIGERIA GAS PRODUCTION, BCF/D Source: NNPC, WoodMac projections 2008 and 2013

Source: NNPC, WoodMac projections 2008 and 2013

7

GLOBAL INTEGRATED GAS PLAYER

INCREASING SHELL’S MANAGED SALES

Total LNG volumes in mtpa

INCREASING SHELL’S MANAGED SALES Total LNG volumes in mtpa SHELL’S LNG PORTFOLIO INCREASING SHELL’S MANAGED SALES
INCREASING SHELL’S MANAGED SALES Total LNG volumes in mtpa SHELL’S LNG PORTFOLIO INCREASING SHELL’S MANAGED SALES

SHELL’S LNG PORTFOLIO

SALES Total LNG volumes in mtpa SHELL’S LNG PORTFOLIO INCREASING SHELL’S MANAGED SALES $billion North West

INCREASING SHELL’S MANAGED SALES

$billion North West QG4 Pluto North Shelf Pearl GTL LNG Rankin 12 Sakhalin 30% Repsol
$billion
North West
QG4
Pluto
North
Shelf
Pearl GTL
LNG
Rankin
12
Sakhalin
30%
Repsol
8
LNG
20%
Elba
Earnings
Gorgon T1-3
~400%
Prelude
4
FLNG
10%
0
0%
2009 2010 2011
2012 2013
Earnings
CFFO
ROACE (RHS)

Includes LNG + GTL; earnings excluding identified items

PARTNERING WITH NIGERIA GOVERNMENT TO DEVELOP GAS & POWER

PARTNERING WITH NIGERIA GOVERNMENT TO DEVELOP GAS & POWER Afam VI, 650MW CCGT Okoloma Gas Plant
Afam VI, 650MW CCGT
Afam VI, 650MW CCGT
Okoloma Gas Plant 240MMscf/d
Okoloma Gas Plant 240MMscf/d
Gbaran Ubie Gas Plant 1.2bcf/d
Gbaran Ubie Gas Plant 1.2bcf/d

PRESENCE ACROSS GAS VALUE CHAIN IN NIGERIA

SPDC JV*

NNPC - 55%, Shell - 30%, Total- 10%, Agip - 5%

10 gas plants

Gas production: 2.3bcf/d

*Pre portfolio rationalization

SNEPCo

PSC contractor to NNPC & operator of OML 118-- SNEPCo -55% Esso 20%, NAE 12.5 %, Total -12.5%

Operator of Bonga deepwater field/FPSO

150 MMscf/d of Bonga gas now to supply DomGas

SNG

100% Shell owned

Transmission and distribution network ~ 98 kilometres of gas pipelines

Supply capacity is

42MMscf/d

NLNG

NNPC - 49%, Shell 25.6%, Total - 15%, Eni

10.4%

Accounts for ~10% of world’s total LNG capacity

Overall capacity of some 21.6 million tonnes per annum LNG

WAPCO

NNPC - 25%, Shell 18%, Chevron - 37%, Takoradi Power 16%, Bengaz & SLG 2% each

Trans-regional pipeline supplying 3 ECOWAS countries

Overall capacity of some

470Mmscf/d

AFAM VI POWER PLANT

CRITICAL IN POWERING THE COUNTRY

Afam VI, 650MW CCGT

Generated 18% of Nigeria’s current grid-connected electricity in 2014

Availability of >95%

Integration of new technology in domestic power generation.

Afam VI uses combined cycle gas turbine (CCGT) technology burning 40% less gas than plants using older open cycle technologies

This contributes significantly to the reduction of greenhouse gas emissions

BUT NIGERIA’S UTILISATION STILL LOW COMPARED TO POTENTIAL

Sample daily gas production and utilisation

TO POTENTIAL Sample daily gas production and utilisation TOTAL PRODUCTION 7,8 bcf/d RE-INJECTION AND OTHER

TOTAL

PRODUCTION

7,8 bcf/d

production and utilisation TOTAL PRODUCTION 7,8 bcf/d RE-INJECTION AND OTHER OPERATIONAL USAGE (32%) 2,5
production and utilisation TOTAL PRODUCTION 7,8 bcf/d RE-INJECTION AND OTHER OPERATIONAL USAGE (32%) 2,5

RE-INJECTION

AND OTHER

OPERATIONAL

USAGE (32%)

2,5 bcf/d

AND OTHER OPERATIONAL USAGE (32%) 2,5 bcf/d GAS FLARING (15%) 1,2 bcf/d EXPORT LNG (41%) 3,2

GAS

FLARING (15%)

1,2 bcf/d

USAGE (32%) 2,5 bcf/d GAS FLARING (15%) 1,2 bcf/d EXPORT LNG (41%) 3,2 bcf/d (NLNG) DOMESTIC
USAGE (32%) 2,5 bcf/d GAS FLARING (15%) 1,2 bcf/d EXPORT LNG (41%) 3,2 bcf/d (NLNG) DOMESTIC

EXPORT LNG (41%) 3,2 bcf/d (NLNG)

DOMESTIC

CONSUMPTION

(12%)

0,9 bcf/d

Nigeria’s Historical and Projected Gas Demand

0,9 bcf/d Nigeria’s Historical and Projected Gas Demand Nigeria’s Historical Gas Utilisation and Forecast

Nigeria’s Historical Gas Utilisation and Forecast Potential Demand

Gas Demand Nigeria’s Historical Gas Utilisation and Forecast Potential Demand Source: NNPC,NAPIMs Presentation 2014 12

Source: NNPC,NAPIMs Presentation 2014

12

WHAT DO WE NEED?

ACCELERATING GAS DEVELOPMENT OPPORTUNITY IN NIGERIA

1

 
 

INFRA-

STRUCTURE

2

 
 

PRICE AND

FISCALS

3

 
 

FUNDING

4

 
 

PSC GAS

TERMS

5

SECURITY AND BUSINESS ENVIRONMENT

 
Infrastructure across the value chain: Production & processing facilities and pipelines Power generation,
Infrastructure across the value chain:
Production & processing facilities and pipelines
Power generation, transmission and distribution facilities
Economic and market driven prices across the gas to power value chain Fiscals that are
Economic and market driven prices across the gas to power value chain
Fiscals that are gas friendly – not increasing tax for a sector where you require
increased investment (eg PIB versions where tax is increased from 30% to 80%)
Payment of bills for gas consumed
Adequate multi-year JV funding for gas development and production Resolving the JV funding challenge could
Adequate multi-year JV funding for gas development and production
Resolving the JV funding challenge could increase gas production
Comprehensive PSC gas terms for development of large discovered offshore resources e.g. Nwa Doro
Comprehensive PSC gas terms for development of large discovered offshore resources
e.g. Nwa Doro
 Improved security of lives and property in the Niger Delta Effective & Efficient Regulations
 Improved security of lives and property in the Niger Delta
Effective & Efficient Regulations

Source: Wood Mackenzie/OPTS Team analysis

SUMMARY

Natural gas is the most abundant, acceptable and affordable fossil energy source

Nigeria is blessed with abundant natural gas resource

that is sweet and rich in liquids

Opportunities abound to monetise Nigeria’s gas provided key enablers for investment and commercial operations are

made available

Nigeria can leverage on other similar examples around the world to develop gas economy