Outlook

We have initiatives underway that are expected to improve Shell’s integrated Downstream business, focusing on the profitability of our portfolio and growth potential.

 In early 2012, Shell set out a new growth agenda, to deliver $175-200 billion of cash flow from operations excluding working capital movements for 2012-2015 in aggregate, some 30-50% higher than in 2008-2011. This assumes that the Brent oil price is in the range of $80-100 per barrel and conditions for North American natural gas and downstream margins improve relative to 2012. This cash flow is to finance a 2012-2015 expected net capital investment programme of $120-130 billion, an increase of some 10-20% compared with the 2008-2011 level, and funding a competitive dividend for shareholders. Shell is on track to deliver these targets.

In Upstream we have the potential to reach an average production of some 4.0 million boe/d in 2017-2018, compared with 3.3 million boe/d in 2012. Shell’s strategy in Upstream is designed to drive financial growth, with production growth regarded as a proxy for this over the long term.  Our 2017-2018 production potential will be driven by the timing of investment decisions and the near-term macroeconomic outlook, and assumes some 250 thousand boe/d of expected asset sales and licence expiries from 2011 to 2017-2018. In Downstream we evaluate selective growth opportunities in chemicals, biofuels and growth markets.

Shell has built up a substantial portfolio of options for a new wave of growth. This portfolio has been designed to capture energy price upside and manage Shell’s exposure to industry challenges from cost inflation and political risk. Key elements of this opportunity set are in global exploration, and in established provinces in the Gulf of Mexico, North American tight gas, liquids-rich shales and Australian LNG. These projects are part of a portfolio that has the potential to underpin production growth to the end of this decade. Shell is working to mature these projects, with an emphasis on financial returns.

The statements in this strategy and outlook section do not take into account the impact of the recently announced agreement to acquire part of Repsol S.A.’s LNG portfolio.

The statements in this Strategy and Outlook section, including those related to our growth strategies and our expected or potential future cash flow from operations, net capital investment and production, are based on management’s current expectations and certain material assumptions and, accordingly, involve risk and uncertainties that could cause actual results, performance and outcomes to differ materially from those expressed herein.