Shell Plc · LSE:SHEL
Shell — Investor Presentation (March 2017)
20 slides from Shell's investor presentation, March 2017
Slide 1: LNG Outlook
LNG Outlook Copyright of Royal Dutch Shell plc 1
Slide 2: Definitions & cautionary note
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 c
Slide 3: Copyright Shell Royal
Copyright Copyright of of Shell Royal Royal International Dutch Dutch Shell Shell plc plc B.V. 3
Slide 4: Gas playing a prominent role in meeting growing energy demand
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
Slide 5: Gas provides competitive, flexible, cleaner energy
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 $100 0
Slide 6: Policymakers increasingly choose gas
Policymakers increasingly choose gas Leaders’ Communique pledged to ‘enhance collaboration on solutions that promote natural gas’ as ‘a less emission- intensive fossil fuel’ 170+ members agreed sulphur limit in shipping fuel of 0.5% from 2020 LNG as a fuel contains virtually zero sulphur vs. 3.5% sp
Slide 7: Emission reduction policies drive increased gas demand
Emission reduction policies drive increased gas demand UK: Lower CO2 emissions Germany: Static CO2 emissions Beijing: Improving air quality Gas to Coal TWh MtCO2e TWh MtCO2e ratio PM 2.5 UK Power Dynamics German Power Dynamics 12 12 30 30 2 120 1.8 10 10 25 25 100 1.6 1.4 8 8 20 20 80 1.2 Action Pla
Slide 8: One-third of new LNG supply growth already online
One-third of new LNG supply growth already online LNG volume set to expand 50% from 2014 to 2020 Delivered volume Capacity additions MTPA MTPA 400 50 100% Annualized capacity additions 350 Share online 40 80% 300 265 30 60% 250 20 40% 200 10 20% 150 100 0 0% 2006 2008 2010 2012 2014 2016 2018 2020 2
Slide 9: 2016 import growth dominated by China, India & new entrants
2016 import growth dominated by China, India & new entrants Million tonnes 8 Existing demand New entrants Net imports vs 2015 = +17.0 million tonnes 6 4 2 0 South Korea Italy Greece Taiwan Jordan China Japan Puerto Rico Belgium Lithuania Netherlands Thailand United States Poland Indonesia France Pak
Slide 10: Growth in LNG demand absorbed increase in supply
Growth in LNG demand absorbed increase in supply Net exports: 2016 YoY Net imports: 2016 YoY Million tonnes Million tonnes 20 20 15 15 10 10 5 5 0 0 Total exports Australia US Rest of World Total imports Rest of World Northwest Europe -5 -5 Source: Shell interpretation of IHS data, delivered volumes
Slide 11: Robust spot prices reflect the market's ability to absorb new supply
Robust spot prices reflect the market’s ability to absorb new supply Global LNG prices ($/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
Slide 12: Trend to shorter and smaller contracts with emerging buyers
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 2
Slide 13: New FIDs required to meet demand growth after 2020
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 un
Slide 14: Changing drivers of LNG demand growth
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
Slide 15: LNG to take larger share of European gas demand
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,
Slide 16: Policy and macroeconomics driving gas demand growth in China
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 China’s s
Slide 17: Southeast Asia to become net LNG importer by 2035
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 Indo
Slide 18: Potential demand upside from transport sector
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 c
Slide 19: Summary
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
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