LNG Outlook

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

cautionary note
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 (SPE) 2P + 2C definitions.
Discovered and prospective resources: Our use of the term discovered and prospective resources are consistent with SPE 2P + 2C + 2U 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.
Shales: Our use of the term shales refers to tight, shale and coal bed methane oil and gas acreage.
Underlying operating cost is defined as operating cost less identified items. A reconciliation can be found in the quarterly results announcement.

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risk factors also expressly qualify all forward looking statements contained in this release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this
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Royal
Royal International
Dutch
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Gas playing a prominent role in meeting growing energy demand
GLOBAL GAS DEMAND GROWTH BY REGION (BCM)

Global energy demand growth by fuel (bcm) Global gas demand growth by sector (bcm) Global gas demand growth by region (bcm)
20000 5000 5000

13% 2% 7% 22% 7% 21%

15%
45% 18% 26% 15%
4000 4000 25%
45% 39%
15000

3000 3000

10000

2000 2000

5000
1000 1000

0 0 0

Source: Shell interpretation of Wood Mackenzie Q4 2016 data

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Gas provides competitive, flexible, cleaner energy

Gas plants are cheaper to build & operate Addressing local air quality concerns
Capital Cost Of Power Plants KW/yr lb/MWh gross
$400 0.8
$8,000 Negligible Negligible
$300 0.6 emissions from emissions from
$6,000 gas gas
$200 0.4
$4,000

$2,000 $100 0.2

$0 $0 0
Biomass CC Geothermal Offshore Dual Solar Photovoltaic Coal Single Hydro Onshore CCGT
Wind Nuclear Thermal Unit Wind SO2 NOx PM2.5
Overnight Capital Cost ($/kW) Fixed Operation & Maintenance Cost ($/kW-yr) RHS Coal Emissions, Supercritical Pulverized Coal Boiler Natural Gas CCGT

Supporting renewable generation growth

Facilitating climate change objectives
Average Time Required To Come Online, Minutes
Life-cycle GHG Emissions: kg CO2e/MWh,100-year Global Warming Potential
Gas Large OCGT 22 1200 54% lower than coal 1,133
1000 emissions
Gas CCGT 15 80 800
600 518
400
Coal 300 85
200
0 50 100 150 200 250 300 350 400 0
Time to synchronise with grid Time to reach full load Average Natural Gas Fleet, baseload Coal Average Fleet, baseload

Copyright of Royal Dutch Shell plc Source: IEA, NETL 2015-Cost & Performance baseline for Fossil Energy Plants, NETL; Life Cycle Greenhouse Gas, DECC 5
Policymakers increasingly choose gas

Leaders Communique pledged to enhance collaboration on solutions that promote natural gas as a less emission-
intensive fossil fuel

170+ members agreed sulphur limit in shipping fuel of 0.5% from 2020
LNG as a fuel contains virtually zero sulphur vs. 3.5% specification for global marine fuel today

13th Five Year Plan targets 45 bcm of incremental gas consumption by 2020. China has suspended more than 100
coal-fired plants either approved or under construction

We have given priority to move towards a gas based economy. Effort must be made to increase
natural gas production while also creating import infrastructure to meet the growing domestic demand.
Prime Minister Modi

EU Liquefied Natural Gas Strategy acknowledged critical role of gas in support of energy security, increasing
competitiveness and greenhouse gas emissions targets

France and Canada announced plans to phase out coal fired generation by 2023 and 2030 respectively. They join
Austria, Belgium, Britain, Denmark and Portugal in pledging to close coal fired generation by the end of the next
decade
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Emission reduction policies drive increased gas demand

UK: Lower CO2 emissions Germany: Static CO2 emissions Beijing: Improving air quality
Gas to Coal
TWh MtCO2e TWh MtCO2e ratio PM 2.5
UK Power Dynamics German Power Dynamics
12 12 30 30 2 120

1.8
10 10 25 25 100
1.6

1.4
8 8 20 20 80
1.2 Action Plan for
Air Pollution
Prevention
6 6 15 15 1 60

0.8 Beijing Closure

Olympic of coal
4 4 10 10 40
0.6 Games boilers

0.4 WHO PM 2.5

18/t CO2e floor guidance
2
kicked in
2 5 5 20
0.2

- 0 - 0 0 0

2008

2009

2010

2011

2012

2013

2014

2015

2016
Aug-15

Nov-15
May-15

Jul-15
Jun-15

Jan-16

Feb-16

Mar-16

May-16
Apr-15

Sep-15

Dec-15

Apr-16
Oct-15

Jul-15

Sep-15

Dec-15
Mar-15
Apr-15
May-15
Jun-15

Aug-15

Nov-15

Feb-16
Mar-16
Apr-16
May-16
Oct-15

Jan-16
Power CO2 Emissions Coal generation Power CO2 Emissions Coal generation PM 2.5 Gas vs. coal consumption ratio
Gas generation Gas generation

Copyright of Royal Dutch Shell plc Source: Aurora Energy Research; Embassy of the USA Beijing, China; National Bureau of Statistics of China 7
One-third of new LNG supply growth already online
LNG volume set to expand 50% from 2014 to 2020

Delivered volume Capacity additions

MTPA MTPA
400 50 100%
Annualized capacity additions

350 Share online

40 80%

300
265 30 60%
250
20 40%
200

10 20%
150

100 0 0%
2006 2008 2010 2012 2014 2016 2018 2020 2015 2016 2017 2018 2019 2020

Source: Shell interpretation of IHS (LNG Waterborne Trade, Liquefaction Projects Database) and Note: only includes projects online by 2016 or currently under construction
Wood Mackenzie Q4 2016 data

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 2016 import growth dominated by China, India & new entrants

Million tonnes
8 Existing demand
New entrants
Net imports vs 2015 = +17.0 million tonnes

South Korea
Italy
Greece

Taiwan

Jordan

China
Japan

Puerto Rico
Belgium

Lithuania
Netherlands

Thailand

United States

Poland

Indonesia

France

Pakistan
Brazil

Turkey

Portugal

Singapore

Chile

Kuwait

Egypt
Mexico

Malaysia

Canada

Dominican Republic

Jamaica

Spain

United Arab Emirates

United Kingdom

Argentina

Israel

India
Colombia

-2

-4

Source: Shell interpretation of IHS (LNG Waterborne Trade) data, delivered volumes; red denotes new entrants (2015-2016)

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Growth in LNG demand absorbed increase in supply

Net exports: 2016 YoY Net imports: 2016 YoY

Million tonnes Million tonnes
20 20

15 15

10 10

5 5

0 0

Total exports Australia US Rest of World Total imports Rest of World Northwest Europe
-5 -5

Source: Shell interpretation of IHS data, delivered volumes

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Robust spot prices reflect the markets ability to absorb new supply

Global LNG prices ($/MMBTU) Asia spot (JKM as % Brent)

25%
25

20%
20

15 15%

10 10%

5 5%

0 0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 J F M A M J J A S O N D

Energy price range Henry Hub Brent Range 2010-2014 2015 2016
NBP JKM (Platts) Japan LNG Import
Coal (ARA)
Source: Japanese customs data (Japan LNG import), Platts (JKM), ICE (NBP, Brent, ARA coal), NYMEX (Henry Hub)

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Trend to shorter and smaller contracts with emerging buyers

Average contract length, years Average contract volume, MTPA LNG buyer credit ratings
20 2.5 100%

16 2.0 80%

12 1.5 60%

8 40%
1.0

20%
4 0.5

0%
0 0.0

2008

2009

2010

2011

2012

2013

2014

2015

2016
2008

2009

2010

2011

2012

2013

2014

2015

2016

2008

2009

2010

2011

2012

2013

2014

2015

2016
A-rated B-rated Non-investment grade
Source: Shell interpretation of IHS (Energy LNG Sales Contracts
Database), Moodys and Fitch data Investment grade

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New FIDs required to meet demand growth after 2020

LNG supply/demand gap Overview of LNG FIDs

MTPA MTPA
500 50

400 40

300 30

200 20

100 10

0 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016
2000 2005 2010 2015 2020 2025 2030

LNG supply in operation LNG supply under construction Demand forecasts

Copyright of Royal Dutch Shell plc Source: Shell interpretation of Wood Mackenzie Q4 2016, IHS, Poten, Gas Strategies and PFC. 13
Changing drivers of LNG demand growth

LNG imports by role in meeting gas demand (MTPA)

500 LNG demand driver Countries/regions

Bunker fuel Atlantic Middle East Pacific

Balances LNG supply Northwest Europe
400
LNG replaces India Egypt* Bangladesh*
declining domestic Thailand Kuwait Bahrain*
production into Indonesia UAE Philippines*
300 existing demand Malaysia Colombia* Vietnam*
Pakistan*
LNG complements Southern Cone China Morocco*
domestic and pipeline Eastern Europe Singapore Jordan*
200
supply Southern Europe Israel
North America

Gas supply solely Japan Puerto Rico Jamaica*

100 dependent on LNG Korea Dominican Panama*
Taiwan Republic

0 Source: Shell interpretation of Wood Mackenzie Q4 2016 data

2000 2005 2010 2015 2020 2025 2030 * Denotes new or emerging LNG importing countries

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LNG to take larger share of European gas demand

European gas supply (bcm)

600
2035 demand forecast range:
540-575 bcm
500

400
LNG
300 Russia pipe

Other pipe
200
Algeria
100
Norway pipe

0 Indigenous production
2010 2015 2020 2025 2030 2035

Source: Shell interpretation of Wood Mackenzie Q4 2016, IHS, and Eurogas data

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Policy and macroeconomics driving gas demand growth in China

China total primary energy demand Gas supply by source 2030, bcm
5% Conventional
11%
Other unconventional
2015 2030 Shale
Russia pipeline imports
Other pipeline imports
LNG imports
Gas Renewables Nuclear Oil Coal
0 50 100 150 200

Chinas share of global LNG demand Gas demand potential 2030, bcm
4% Demand forecast
16% 15% gas in energy mix
2015 2030 +1% gas in energy mix
+1% gas demand CAGR
+1% GDP growth rate
//
Source: Shell interpretation of Wood Mackenzie Q4 2016 data 0
400 450 500 550 600 650

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Southeast Asia to become net LNG importer by 2035
Traditional exporters ramping up demand
30
MTPA
Vietnam
20 100
10 30 Philippines
0 20
2015 2035 50
10
30 Thailand LNG Export
0
20 LNG import
2015 2035
10 0
Net imports
0
2015 2035
-50

30
30
Malaysia Singapore
20 20
-100
10 10 2015 2025 2035

0 30 Indonesia
0
2015 2035 20
2015 2035
10
0
2015 2035

Source: Shell interpretation of Wood Mackenzie Q4 2016 data

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Potential demand upside from transport sector

MTPA equivalent, 2025

1400 LNG contributes virtually zero
Heavy duty Marine
sulphur emissions and has reduced
1200
particulates and NOx emissions,
1000
compared to heavy fuel oil.

800 LNG can help reduce the well-to-

wheel emissions compared to
600
conventional fuels.
400

200

0
Heavy duty and marine transport LNG industry LNG for transport -
Forecast range
Source: Shell interpretation of Wood Mackenzie and IHS

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Summary

Strong growth in LNG supply in 2016, one-third of new supply online

LNG demand growth from China, India and new entrants absorbed supply growth in 2016
Continued LNG supply growth to 2020
Global demand for gas is expected to increase by 2% a year between 2015 and 2030; LNG
is set to rise at twice that rate at 4 to 5%
Future LNG demand growth will be driven by: policy, floating storage regasification units,
replacing declining domestic gas production, small scale LNG and transport
LNG and Russian gas imports required to balance European gas demand
New investments required to meet growing LNG demand after 2020
LNG trade is changing to meet the evolving needs of buyers, including shorter-term and lower-
volume contracts

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