Thomson Financial: Event Brief of Q4 2006 Royal Dutch Shell Plc Earnings Conference Call – Final

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PARTICIPANTS Jeroen van der Veer, Royal Dutch Shell, Chief Executive . Malcolm Brinded, Royal Dutch Shell, Executive Director Exploration & Production . Linda Cook, Royal Dutch Shell, Executive Director Gas & Power . Rob Routs, Royal Dutch Shell, Executive Director Downstream . Peter Voser, Royal Dutch Shell, CFO . Neil Perry, Morgan Stanley, Analyst . Mark Iannotti, Merrill Lynch, Analyst . Ed Westlake, Credit Suisse, Analyst . Gordon Gray, JP Morgan, Analyst . Neil McMahon, Sanford Bernstein, Analyst . Paul Spedding, HSBC, Analyst . Tim Whittaker, Lehman Brothers, Analyst . Paul Carolli, Acts Investment Managers, Analyst . Colin Smith, Dresdner Kleinwort, Analyst . Jon Wright, Citigroup, Analyst . Irene Himona, Exane BNP Paribas, Analyst . Jason Kenney, ING, Analyst . Jon Rigby, UBS, Analyst . Lucas Herrmann, Deutsche, Analyst

OVERVIEW

RDS.A reported 2006 CCS earnings of $25.4b and 4Q06 CCS earnings of around $6b. CCS EPS increased by 14% from 4Q05.

FINANCIAL DATA

A. Key Data From Call 1. 2006 CCS earnings = $25.4b. 2. 4Q06 CCS earnings = around $6b. 3. 4Q06 CCS EPS increase = 14% from 4Q05. 4. 2006 net CapEx = $21b.

PRESENTATION SUMMARY

S1. 4Q06 Results (J.V.) 1. Highlights: 1. RDS.A increased its reserves and took many decisions about big projects. 2. Restarted Mars, the very large production platform in the Gulf of Mexico, running at higher rates than before. 3. Deepwater Nigeria and LNG in Nigeria going well. 1. Deepwater performance better and ramped better than expected. 4. With onshore in the Delta, continues to have serious problems. 5. Growth in LNG in total, RDS.A stabilized Sakhalin II project and is busy with the minority shareholders in Shell Canada and it tried to buy them out. 2. Strategic Framework: 1. The whole strategic framework is aimed to generate competitive returns: 1. On operations on the projects done. 2. To shareholders. 2. The Co. will never do it at the expense of safety or how it sees and how it feels should work at the environment. 1. This is the basic of the strategic framework. 3. For growth in energy markets, has a very simple strategy called more upstream, profitable downstream. 4. Priorities within the framework is about delivery and growth. 5. Culture of the Co. is also important. 1. Encouragement of people based on their survey of employees filled in by 75,000. 3. Organization: 1. The Co. has made changes. 2. RDS.A has the real global organization and simple structures. 1. Sold a lot of chemicals with the base chemicals as Rob Routs integrated in the downstream. 1. This gives a sustained competitive advantage. 2. All the 12,000 finance people the Co. has in the world, all report to the CFO that helps: 1. Raise capital allocation. 2. Raise compliance. 3. In due making. 4. For speed. 3. In the upstream, the Co. has centralized its large project management. 4. One should have tools to win and so emphasis is given on technology. 1. Appointed a Chief Technology Officer, important to Linda and for the whole Co. to speed up how to drive technology. 5. For CO2, sees this as an opportunity and not as a stress. 1. Gets the right CO2 technologies and drives the business development there. 4. Executive Committee: 1. The executive committee has very clear accountabilities now. 2. Based on the simple structures really enables the Co. to drive faster and has stronger decision-making powers. 5. Cost Side: 1. Looks for additional synergies of about $0.5b each year to the medium term. 2. Over the past year, the Co. recorded 6,000 persons of staff of which 1,500 young graduates and 4,500 professional mid-career hires. 1. Came from 60 countries. 6. Downstream Refining Capacity: 1. RDS.A keeps its capital roughly employed in the downstream. 2. Refineries are more or less horizontal. 3. The Co. bought the price of refining capacity that was in the US and which took basically the Texaco partner. 1. Picked up another refining capacity. 4. Over the past two years, acquired different market circumstances and sold refinery capacity. 5. Shifts the growth from the West to East on a global basis. 6. Built a large chemical [type coke] plant integrated at the refinery in Singapore. 7. Not afraid to invest in the West. 1. Example, expansion of Port Arthur Refinery in the States. 2. If going, it becomes 600,000 boe/d refinery. 8. Sold the Los Angeles refinery and RDS.A reviews its refined portfolio in France and some smaller ones. 1. Over consideration of 9% of refining capacity. 7. Upstream Refining Capacity: 1. Creates growth in the upstream. 1. It is to do more than the natural decline rates to get a growth of the production and of profitable production over time. 2. There are all kinds of short-term disturbances. 2. Have to realize and invest a lot of money. 3. RDS.A does two things in the upstream where it has smaller isolated assets and is not afraid to divest them if it gets good prices for it: 1. The major emphasis is where the Co. can have major big projects and would like to have high stakes in those big projects. 2. In short-term, the Co. has significant production in Nigeria shut in at this moment. 3. Has the Sakhalin project, meaning half of the production. 4. Expects for the coming 2-3 years, the production growth to be 1-2%. 5. By end of the decade, expects LNG to grow by 50% vs. today. 6. Oil Sands have grown by 60% vs. today and hopes at beginning of next decade to start a gas-to-liquids plant in Qatar. 1. This will help the Co. on a growth path for that turn from 2-3% per annum. 8. Projects: 1. RDS.A has very important environmental considerations. 2. Industry has a lot of political aspects. 3. Expects technology to play a key role in winning. 4. The Co. see a lot of competition for new oil and gas resources. 5. RDS.A emphasizes on technology and integration. 6. Standard easy oil and gas, the competition is toughest here. 1. Expects smallest margin where the Co. can apply a lot of technology of integration of project management or specific finance constructions. 2. Expects the margins to be better and it is so essential to have that technology and experience and the people to have them in-house. 7. Looking at the downstream, to refine the refineries and the chemical complex is excellent. 9. Explorations: 1. Sees exploration as a key strength. 2. Had in good performances in 2005 and in 2006. 3. Exploration drives a lot of the conventional oil production. 4. RDS.A looks at unconventionals. 1. This can be Oil Sands, it can be that the Co. developed a technology for even the next generation of more difficult oil to produce that. 5. These are all the big projects where the Co. thinks it can win and brings technologies that it can repeat elsewhere. 10. 2006 Results: 1. CCS earnings was $25.4b. 2. The cash flow was nearly $40b. 3. Net CapEx was $21b. 4. Return to shareholders 16%, about half dividends, half buybacks. 11. Total Portfolio: 1. Strongly believes that organic CapEx and for all the projects that the Co. does, it has make sure that they are still financially attractive even if the oil and gas projects are lower than today. 2. Worked very hard on the commercial side over the past two years. 3. Expects to divest this year and sees the financial framework coming back about $9b. 1. $9b is made of four out of Sakhalin and five out of divestments the Co. has in mind. 4. Projects: 1. The major projects is a project from $100m or more. 2. 45 major projects under construction. 3. In total, the Co. has in preparation, [either] design or business development 140 projects. 1. Both upstream and downstream projects and most of them are expected of about 45 to be upstream by the end of the decade. 4. Example is LNG in Nigeria. 1. The first two trains started up in 1999. 2. Has now the six trains constructed and the seventh train is under its way. 3. Expects similar for Sakhalin. 4. Has two trains under construction. 5. Has Gazprom as a partner, and the Co. closed an area of an agreement of mutual interest. 12. Summary: 1. Technology was a very differentiator. 2. Insurance spent was about 50% to $0.9b in 2006. 3. Tried to get renewables, alternative energy off the ground over the large scale. 4. One uses CO2 technologies for in-house or recovery.

S2. Exploration & Production (M.B.) 1. Three Major Points: 1. EP strategy is unchanged and the Co. is on track. 2. Delivered strong results in 2006. 3. Got a great portfolio of opportunities that are founded on key strengths in technology, integration through the value chain and global scale. 2. 2006 Upstream Results: 1. Full-year production was just under 3.5m barrels a day (boe/d) ahead of 3.4m boe/d guidance given after 2Q06. 2. New fields more than offset the decline in the Co.’s base production. 3. Uptimes increased. 4. Proud of the way the Co. brought back on Mars and the Gulf of Mexico facilities after the hurricanes in 2005. 5. Excluding Nigeria security issues and hurricane damage, RDS.A’s underlying production increased by 2% from 2005-2006. 6. Had good results in both reserves and resource additions and took several key project investment decisions. 7. Performed well in earnings. 8. In 2006, upstream unit cash flows increased by 21% vs. 19% increase in Brent crude process. 3. Sustained EP Focus: 1. The EP strategy the Co. pursued consistently for the last years is essentially unchanged. 2. Using the strong portfolio to build for the future. 3. RDS.A would drive the portfolio towards higher price and volume upside. 4. Continued emphasis on growing unconventionals and technology as a key differentiator in getting access to good upstream opportunities, then delivering more value from them. 4. Industry Evolution: 1. Competition for the Easy Barrels has never been so intense. 2. Sees NOCs with very different returns targets doing government-to-government deals. 3. Niche independents are going global and upstream service contractors are sometimes offering increasingly integrated offerings. 4. Exploration signature bonuses typically increased two to three-fold over the last four years. 5. What Takes EP to Win: 1. Technology: 1. Tripled since 2002 the R&D budget in E&P. 2. Shifted focus to the subsurface and to uncoventionals. 3. Technologies like subsoil imaging and seabed logging. 4. This drives the leading exploration performance. 2. Integration: 1. Increase in recovery from existing fields with new subsurface imaging, with [EOR] with Smart Field Management. 2. In Brunei last year, the Co. added 25,000 boe/d from five smart snake wells. 1. They tap 11 pockets of oil and in the process the Co. set a record production in the country for 25 years. 3. Mega projects such as in LNG, in GTL, in Deepwater and Oil Sands can only be executed by very few IOCs. 4. The ability to integrate right through the value chain and across all the disciplines is what the Co. finds the host governments and national companies won from RDS.A, to unlock their difficult hydrocarbons. 5. Whether it is extra heavy oil in the Americas or for Deepwater in Brazil, sour gas in the Middle East or tight gas in China. 3. Scale: 1. Scale allows RDS.A allows to leverage on know-how globally. 2. Learns from underbalanced drilling pilots in the North Sea in the late 90s to become the world’s largest user by a factor of three. 3. Has over 530 underbalanced drilled wells, which give a three-to-five fold production increase in tight gas reservoirs. 4. Using it properly, scale gets one better value from suppliers. 5. 2006 costs for deepwater rigs were some 30% below the market avg., which is $300m annual savings. 4. Sustainable competitive advantage for the Co. lies with technology, scale and integration. 6. Middle East & Caspian Growth: 1. In 2002, the Co. had upstream producing positions in just four Middle Eastern countries, plus a project underway in Iran. 1. The Middle East is the hardest region for IOCs to gain new access. 2. Re-entered Qatar and has two massive projects in construction. 3. Extended by 40 years, concession in Oman, which produces 90% of the countries crude. 4. In Kazakhstan, the Co. has cash accounting construction and last year, the Co. added more exploration success and significant new acreage. 2. With potential new LNG projects under development in Iran and in Libya, the Co. has won new exploration acreage in Egypt, Syria, Algeria and Saudi Arabia and is negotiating further based on already agreed MOUs in four more key countries in the region. 3. Expects to double production in this region in the next decade with scope for further growth. 7. Production Delivery and Capability Demonstration: 1. While delivering production, the Co. beats market expectations and is in target, but for the Nigeria security shutdowns. 2. Deepwater Nigeria really delivered in 2006. 1. Bonga and Erha alone produced 50% above plan. 2. The growth potential in Deepwater Nigeria is particularly exciting and is now having six significant discoveries awaiting appraisal and development. 3. Several of them have new hub potential. 3. Salym in Russia has seen a steep production ramp up and is setting new drilling records. 1. This week it hit 70,000 boe/d. 4. In US, the Pinedale operation is building tight gas output with a decade plus of further production growth ahead of it. 1. Taken major investment decisions to expand Pinedale operations and to prolong South Texas production. 2. Will have 15 rigs drilling onshore for gas in the US this year. 3. Great operations are not limited to these examples. 5. RDS.A’s 50 or so largest operated assets collectively improved uptimes by some 2% in 2006 vs. 2005. 6. 80 land rigs in the US, Oman and Russia are also outperforming where benchmarked, the Co. had costs 15-30% below competitors in similar basins. 8. Reserves & Resources: 1. 2006 was a strong year in reserves and resource additions. 2. Expects organic additions from SEC proved reserves and provable mining reserves to be around 2b boe. 3. Reserve’s replacement ratio for 2006 will be around 150%. 1. Over two years it will be more than 100%. 4. Discovered resource additions from exploration and new business development, which shows even stronger performance with well over 2b barrels added for the second consecutive year. 5. Over the two-year period, the Co. has added more than twice as many resources as it produced. 6. Project portfolio is robust and growing and target remains in the long-term to add at least one barrel of resources and reserves for every barrel that RDS.A produces. 9. Exploration Strategy: 1. Focuses on basins with proven hydrocarbon systems and has roomed for growth. 2. In 2005 and 2006, the Co. has added major positions in five focus basins. 1. Entries in Libya, Algeria, Ukraine, North American Gas, and in Alaska. 3. Expanded six major focus areas as well as acreage in a number of additional countries. 4. Exploration discovered resources in well over 1b barrels with the drill bit in 2006 with unit-finding costs between $1-2 a barrel. 1. Over the two years, drilled 28 Big Cat wells to target depth of which 13 were Big Cat discoveries. 5. That is a success rate of 46% which is significantly better than the 25-30% that RDS.A expects. 6. In 2006 alone, drilled in total about 100 exploration and appraisal wells with over 50% success rate. 7. On top of this from exploration comes new business development. 1. Acquired BlackRock significant unconventional resources in Canada, new offshore gas positions in Australia and increased equity in BC-10, the heavy oil development in Deepwater Brazil. 8. Exploration plus business development together delivered 2006 additions of well over 2b barrels recoverable conventional resources plus significant unconventional scope. 10. Exploration to Production: 1. From 1999 to 2006, added some 12b barrels from of discovered resource volumes. 1. This sustained exploration record comes with an increasing proportion of larger discoveries. 2. Around 10b of the 12b barrels is in discoveries that are on 100% basis over 30-40m barrels. 3. Remaining 2b barrels are basically near filled potential, which can be quickly tied in to existing assets. 2. Overall some 75% of this 12b barrels of discoveries will come on stream, or have moved into construction before 2010. 1. Believes that is a very good record for monetizing exploration, which is key to follow up the exploration success. 2. This combined with what is benchmarked as leading exploration performance is basically why Co. continues to back the explorists with one of the biggest exploration budgets in the industry at around $2b a gain in 2007. 3. Nigeria: 1. About 180,000 barrels a day shut in there to date. 2. Sustained major damage to facilities, which was not accessed for a year, so it remains difficult to predict when these fields will come back on stream. 3. All drilling and construction is suspended in the area, which further reduces the future production. 4. Decline in contractor capacity that is available in the region means that restitution and new growth will take even longer. 5. For 2007, expects production there to be some 250,000 barrels a day below what was planned a year ago, which was the 180,000 shut in plus the growth that is being slowed by the delays in getting access. 6. Looking at 2007 for the group, expects production to be 3.3-3.5m barrels a day. 7. Today RDS.A accounts for 40% of the country’s production. 11. Global Project Portfolio: 1. In 2006, started the execution of another nine major projects. 1. Projects that are dominated by long live positions and by unconventionals and technology plays. 2. Already opened up almost half the 20b barrel resources targeted by the end of the decade and is on track with the remainder. 3. Change in portfolio balance is gradual over time with continued emphasis on all the elements of production mix. 4. Going to reduce stake in Sakhalin II. 5. The new partnership with Gazprom will stabilize the venture and will give it a good basis for long-term growth into a major L&G hub. 12. Production: 1. Expects production growth from 2007 to be modest to the end of the decade, maybe 1% or 2% a year with a growth rate largely depending on the Nigerian situation and the extent of divestments. 2. Looking further ahead, investing to underpin the Group’s production with an extremely stable base of new long-live assets adding to the long-live positions that Co. already has today. 3. In May, these new projects on avg. generate unit cash flows that are stronger than those of Co.’s portfolio today. 4. From the end of the decade, growth should accelerate as these new projects come on stream. 5. Resource base has the potential to support 2-3% per annum avg. growth. 1. Sees 2-3% is a sensible long-term framework. 6. As always there will be periods when: 1. It will be higher. 2. New projects come on stream. 3. It might be lower as Co. sells assets. 7. Economic value will be the driver of RDS.A’s priorities and that would drive project and portfolio decision-making. 13. Technology Leverage: 1. Future depends on leveraging technology, integration and scale. 2. Deepwater is great example of this approach. 3. RDS.A was the industry deepwater pioneer and it continued this with two important ultra deepwater projects. 1. BC-10 offshore Brazil. 2. Perdido in the Gulf of Mexico. 3. Both final investment decision in 2006. 4. Both should deliver first oil around the turn of the decade. 5. Both projects incorporate a lot of design innovations, which mitigate rising supply costs, and also recoverable volumes are expected to increase by 10-20% as a result. 4. Perdido in 8000 foot water will the deepest [spar] production facility in the world and will become an integrated hub for fields in the region. 5. BC-10 is a key milestone in the commercialization of heavy oil offshore Brazil. 1. Will be the first field development globally that will be based on subsea oil and gas separation and subsea pumping. 2. With around 1.5b barrels oil in place, BC-10 has great potential for upside in recovery factors and producible volumes overtime. 6. Enhanced oil recovery is another key technology play for RDS.A, targeting recovery increases of typically 10-30% through advanced technologies. 1. Increased R&D spend on a year around by ten times since 2004 as RDS.A sees multiple benefit in both mature and new provinces. 2. Includes game changing approaches using novel solvents and chemical EOR. 3. ARA JV in California is a leader in thermal EOR demonstrated over decades with a well base of now over 15,000 wells. 4. Expects to increase the recovery factor to almost 80% in the Belridge field using high-density steam injection. 7. In Oman, in just the last 18 months taken FID Co.’s major projects on each of the four main EOR technologies: 1. Miscible gas flood. 2. Steam assisted gravity drainage. 3. Got steam flood there. 4. Going ahead with polymer assisted water flood project. 5. Has a handful of promising CO2 injection projects under study around the word. 8. Technology integration and scale are key to RDS.A’s portfolio of unconventionals and Co. has made real progress in GTL in oil sands and in-situ conversion. 1. Took final investment decision on the Pearl GTL project last year. 2. Construction is well underway to deliver 1.6 Bcf/d of gas from the offshore faculties to the onshore processing. 3. In Athabasca RDS.A gave the go ahead for the first oil sands expansion, raising production by 100,000 barrels a day with more such expansions to come and in-situ conversion is progressing well in R&D as well as in building resource positions that will be very important in the next decade. 14. Summary: 1. Strategy is unchanged and is on track. 2. Focused on delivery and growth. 3. In 2006, increased underlying production by 2%. 4. Major projects are on track. 5. 2006 exploration was very successful and reserves replacement was over 150%. 6. Continues to build a very strong portfolio of assets, which have long life and low decline rates. 7. Long-term competitiveness is founded on technology leadership.

S3. LNG (L.C.) 1. Natural Gas Business: 1. During 2006, saw significant progress in the execution of integrated gas strategy. 2. In LNG, had the production ramp-up from three new trains in Nigeria and in Oman. 1. Had the first ever LNG cargos delivered into Mexico and China in both cases from Shell projects. 2. Had good progress with the five new trains that are under construction, all on track for completion before or around the end of the decade. 3. Has eight new trains of LNG in the final engineering and design phase. 3. LNG sales for the year was strong at 14% YonY. 4. Began construction on the Pearl gas to liquids projects in Qatar. 5. Gas and power earnings in 2006 reached almost $2.7b, up 68% over 2005. 1. Driven by LNG volume and price growth and a very strong performance in marketing and trading organization in North America, Europe and across global LNG portfolio. 6. ROACE, or return on avg. capital employed was better than 19%, even with a very high rate of investment in the business. 1. Increasingly Co. is seeing the benefits of scale, portfolio flexibility, and global market presence reflected in the bottom line of the gas and power business. 7. Strategy in gas and power is about leveraging leading capabilities across global portfolio. 1. This enables to match customer and supplier needs, creating value throughout the chain and giving a competitive advantage. 8. Among the international oil companies: 1. RDS.A is the world’s third largest natural gas producer. 2. LNG portfolio is the largest and most geographically diverse. 3. Has scale and expertise in shipping, storage, and marketing and trading. 4. Have leading technology, enabling excellence in opportunities and growth opportunities for the future. 9. In last seven years, successfully delivered 11 new trains of LNG. 10. Looking ahead, investing in R&D to: 1. Lower the unit cost 2. Improve operating efficiency. 3. Reduce CO2 emissions from LNG plants even further. 2. JV: 1. In 2006, LNG JV’s delivered avg. reliability of 98%, this Co. believes is the first quartile performance vs. plants around the world. 2. Through efficiency improvements and debottlenecking, the Co.’s plants produced on avg. 117% of their original design capacity. 3. Shipping: 1. Provides support to about 30% of the world’s fleet, helping to deliver more than 9,000 cargos safely over the last 40 years. 2. Currently owns six ships and also have access to additional short term shipping through an arrangement with Golar, providing with greater flexibility without tying up capital unnecessarily. 3. These capabilities underpin growth that Co. sees in its outlook for Shell’s equity LNG capacity. 4. Accounting only projects already under construction will essentially double Co.’s capacity during the period shown. 5. With the planned dilution of Sakhalin to Gazprom, and also the expected completion of the Qatargas IV project around the end of the decade, the Co. forecasts a growth rate of about 11% per annum from 2006 to 2010. 1. This pace of growth should enable Co. to maintain its lead over the competition. 4. Project Updates: 1. Nigeria: 1. Had good operational performance in 2006, including new trains four and five. 2. Train six construction is continuing according to plan and expecting completion around end of this year. 1. Once on stream the capacity of the NLNG complex will be 22m tons per annum making it the third largest LNG complex in the world. 3. Outlook in Nigeria is for further growth overtime with the possibility of additional expansion at NLNG and also a possible new greenfield project Olokola. 4. Both of these projects progressed though the feed phase during 2006, and they are in feed at this time. 2. Sakhalin: 1. Essentially all of the LNG from the two train initial project in now committed to customers in Asia Pacific and North America. 2. Agreement importantly with Gazprom is that these existing contracts will be honored. 3. Qatar: 1. The most recent LNG project to enter construction is Qatargas IV. 2. This is just on of six large trains currently under construction at the [Rosco farm] industrial complex. 1. It is quiet impressive when considering that the capacity of these six trains alone is equivalent to about 30% of last year’s global LNG production. 3. Recently has been appointed the shipping service provider to the entire Qatargas fleet of at least 27 new LNG carriers. 4. Australia: 1. Northwest Shelf train five is on schedule for completion in late 2008 and sees expanding set of longer-term opportunities. 2. This includes Gorgon where Co. continues to work with its partners to progress the project taking into account environmental permit conditions, cost challenges. 3. On the positive side the real strengthening Co. see in the Asia Pacific LNG market is progress in Woodside with their Pluto LNG project and longer term they have greenfield opportunity in the Browse basin and Co. sees possible opportunities from its own exploration program as well. 5. As a result of these projects and others the outlook for longer-term growth in LNG is positive. 6. Beyond projects and operation under construction, has a portfolio that should enable Co. to double again its LNG capacity in the coming years. 7. Long-term goal is to maintain or grow Co.’s market share in a sector that is forecasted to grow to about 10% per annum for the foreseeable future. 5. Market Perspective: 1. Currently about 60% of world LNG is purchased by customers in the Asia- Pacific. 1. Their demand will continue to grow as this region more than any other has limited alternatives for natural gas supply. 2. Co.’s roots in the LNG and Shell are in Asia Pacific. 1. Co. is the region’s leading supplier with long-standing relationships with world’s largest LNG buyers such as Tokyo Gas, Tokyo Electric, and KOGAS (Korean Gas Co.) 2. LNG demand in this market has turned around from the low of five years ago. 3. Sees strengthening in emerging markets, including: 1. India, where increasingly customers are willing to compete internationally for natural gas supplies and illustrates value of Co.’s access through Hazira. 4. Global portfolio presents Co. with opportunity for optimization, enabled through: 1. Combination of gas from exploration and production and from LNG. 2. LNG shipping and regasification capacity access. 3. Access to pipelines and natural gas storage. 4. Strong customer and supplier relationships. 5. Keen insight into the markets. 5. Creating Value: 1. By diverting LNG to customers in the Northeast Asian winter or North American summer or to India, and backfilling original market with spot cargos or pipeline gas from upstream operations. 2. As direct LNG marketing grows over coming years, the Co. will further increase its ability to assist customers and create value throughout the portfolio. 6. Europe: 1. World’s second largest natural gas market and growing LNG importer. 2. Has leading supply position and broadest marketing presence in the Euro zone. 3. Now active in 16 countries, including Turkey and Ukraine, nearly twice as many as international competitors. 4. This combination allows to take the relative market that provides the best return for upstream gas and LNG volumes, and Co. saw increasing benefits from this in 2006. 7. North America: 1. Co. has an unmatched position in meeting needs of energy customers. 2. Significant producer of natural gas in the US and Canada. 3. Has strategic LNG import access on East and West Coasts. 4. Third largest natural gas marketer through Coral, which had a great year in 2006. 5. Expects to grow North American gas supply in coming years, in particular through LNG imports. 1. This should enable continued growth in continental marketing and trading, and additional value for LNG business. 6. Gas-to-Liquids (GTL): 1. Another strong performance from plant in Malaysia in 2006 with reliability at greater than 99%. 2. Learnt a great deal at Bintulu using it to test new catalysis and gain operating experience in the new sector. 3. Now building on this with Pearl GTL in Qatar, which will be ten times larger than Bintulu plant. 4. Expanding global GTL marketing capabilities. 5. Pearl GTL: 1. Construction began in 3Q05. 2. Today, the Co. has awarded $10b of contract, including all of the main EPC elements. 3. Once onstream, project will produce: 1. About 120,000 barrels per day of natural gas liquids and Ethane. 2. 140,000 barrels per day of GTL products. 3. These products include more than 1m tons of base oils, 2m tons of gas oil, and 1m tons of naphtha each year. 4. Exciting new project for Co. enabling diversification of Qatari natural gas resources, new volumes for upstream, and valuable new products for downstream. 7. Coal Technology: 1. Has technology to convert coal into synthesis gas. 1. This gas can be used as chemical feedstock or for power, where lower CO2 emission by 15% is compared to conventional coal power generation. 2. Facilitates capture and sequestration of CO2. 2. Technology has been licensed to 15 projects in China, capturing the lion’s share of that growing market. 1. Five of these have come onstream in just the last six months, including Co.’s Dongting JV with Sinopec. 3. Issued first new license for coal gasification in Europe in 2006, and was named supplier to Zerogen power project in Australia. 1. Demand for technology is strong and Co. continues to evaluate a number of possible options for the future. 8. Summary: 1. In 2006, gas and power has seen further progress with execution of strategy, that’s remained unchanged. 2. Continued to build on successful track record of major project delivery, leading technology, strong financial performance, and profitable growth, and believes to have an exciting portfolio for the future.

S4. Gas & Power (L.C.) 1. Technology, CO2 & Renewables: 1. Steadily increased investment in technology across Co. over the past several years, recognizing that this is one area that can differentiate it in a competitive sector. 2. Co. has driven growth in the past through technology including: 1. Deepwater. 2. Tight gas. 3. LNG. 4. Differentiated fuels. 3. Investments take form of traditional R&D and early technology applications such as through demonstration projects and pilots. 1. It has led to strong position in intellectual property amongst major competitors. 4. Believes hydrocarbons will remain major source of world energy for many years to come. 1. As a result, investment in technology is largely focused on improving recovery and lower cost of producing these resources. 5. Co. is investing in technology to lower CO2 impact. 1. Includes energy efficiency, reducing flaring, and improving designs for next-generation LNG and GTL. 6. Industry leader in CO2 emissions credit trading. 1. Exploring potential projects to capture and use or sequester CO2. 2. Examples include: 1. A study to use CO2 from power generation in Norway for offshore enhanced oil recovery. 2. Delivering CO2 from furnace refinery to vegetable greenhouses in Netherlands. 3. Exploring possibility of near zero CO2 emissions power from coal in Australia. 7. Aims to have at least one material alternative energy business in the future. 1. Leading wind electricity producer with focus on US and Europe. 2. In solar, the Co. is exploring thin-film technology. 3. In hydrogen, the Co. is involved in demonstration projects and technology development.

S5. Downstream (R.R.) 1. Earnings & Delivery: 1. Had another strong performance in 2006. 1. Made $8.1b vs. $8.3b the year before. 2. Products have delivered 12 consecutive quarters of earnings in excess of $1b. 1. Due to good operational performance and this year’s good strong lubricants results. 3. Chemicals, a solid contribution. 1. Good market conditions, particularly in Europe and in Asia. 2. Successful startup in commercialization of Nanhai plant in China. 4. Industry leader in terms of earnings. 1. Competition remains intense in this regard. 5. After holding Number 1 position for about six consecutive quarters, Exxon moved into first place. 1. Certainly in 2005 and expects in 2006 to have the first position in terms of unit cash generation. 2. Environment: 1. Challenging environment from a number of perspectives. 1. Significant investment industry-wide and increased refining capacity could quickly lead to oversupply and lower margins. 2. Increased government regulations. 3. Tougher fuel specifications. 4. Support for bio-fuels. 5. There is an increasing demand from consumers. 1. Looking in the high crude scenario for lower prices, higher performance of fuels, and lower emissions. 2. Co. well positioned to meet aforementioned challenges. 1. Has diverse and well-balanced portfolio, which will continue to strengthen and shift to higher growth markets in the East. 3. Leads industry with strong brand. 1. Will continue to deliver further operational excellence benefits and is leader in bio-fuels development with strong technical leverage. 3. Industry Refining: 1. Increase of capacity, especially east of Suez is starting to happen. 2. For a long time, the gap has been narrowing between demand and production in the world. 3. Now looking at entering the next cycle, which will build capacity [in the face of] demand. 4. Given forecast of additional refining capacity, the Co. expects industry to remain cyclical in the long run. 1. Means, lower refining margins in the medium term and aligning critical importance of diverse portfolio and operational excellence. 4. Global Manufacturing Portfolio: 1. Has a global spread in manufacturing assets, about 4m barrels a day. 2. Refining capacity, about [60m] tons of ethylene across the world. 3. Over the last years and also recently Co. has taken significant steps to reshape its manufacturing portfolio. 4. Co. increased size of its manufacturing portfolio significantly in 2001 by acquisition of Texaco and DEA, when refining margins were on the low point. 1. Co. is now rationalizing some effort again at a fairly high margin environment. 5. Around the world, capacity is below 100,000 barrels a day. 1. Still has quite a few refineries that does not have critical size going forward. 5. Strategies: 1. 2006 Achievements: 1. Downstream earnings, $8.1b. 2. China Lubricants and Bitumen acquisitions. 1. Lubricants deal makes Co. the largest IOC marketing lubricants in China. 2. Bitumen acquisition in China more than doubles the size of business in the country. 3. Turkey, another fast growing economy. 1. Did a retail JV with Turcas. 2. Doubled size of network to 1200 sites, and most of the sites about six months into the process have been converted to Co.’s site and are showing tremendous uplift in volume. 4. Nanhai, on time, on budget, and full commercialization. 5. $1,4b in disposals. 1. Disposals since 2003, up to $9b across the business. 6. Disposals: 1. Non-strategic assets are giving Co. chance to redeploy capital either in upstream or downstream across the business. 2. Signed an agreement to: 1. Sell Los Angeles refinery and retail sites, 250 of them. 2. Supply agreements in and around Los Angeles and San Diego to Tesoro Corporation. 3. Reviewing portfolio in France and Puerto Rico. 4. Considering sale of business in Dominican Republic. 5. Will maintain strong positions in heartland markets and seize new opportunities in fast-growing markets in the world. 7. Investments: 1. More upstream, profitable downstream, means disciplined growth investments and investments in asset integrity. 2. Asset integrity themes are process safety, facility siting, and consent decree in the US. 3. Asset master plans focus on process safety and reliability of manufacturing assets and on longer-term growth. 4. Significant investments in facility siting continues in order to proactively ensure compliance with Co.’s internal standards, industry standards, and inventory requirements for facilities at the manufacturing sites. 5. Continues to make investments in environmental protection to meet internal standards and external standards that are being asked by regulatory processes. 6. Looking ahead for the period from 2007 to 2009, avg. asset integrity and care and maintain spend is projected to be at about 55% of total capital outlay. 1. Shift is primarily due to fact that Co. is going to build this cracker in Singapore. 7. Excluding this project, avg. percentage of downstream CapEx for asset integrity and care and maintain would continue to be at 65%, which has been historically. 8. Growth Part: 1. Strategic investments are aimed at increasing scale. 2. CapEx is focused on long-term winning assets, enhancing oil and chemical synergies, and focusing growth investments on strategically important markets. 1. Examples: 1. World scale chemical cracker in Singapore. 2. Expanding Port Arthur refinery from 325,000 barrels to 610,000 barrels, which would make it biggest refinery in the US. 3. Few examples mentioned before on recent lubes and Bitumen acquisition in China. 3. Looking at refining expansions in China. 9. Nanhai Petrochemical Complex: 1. Was a long negotiation and a good period of construction. 2. It has been successfully commercialized and is now operating at world-class performance levels. 3. Safety performance has been excellent, driven by high management attention to compliance with systems and procedures, and particular focus on process safety. 4. Operating rate has continued to ramp up throughout the year, and achieved at near capacity rate in 4Q06. 5. Sales volumes were as expected, and positive financial contribution from first qtr, of operations and startup. 6. Operating rates in 4Q06 were 98%, which is quite unusual for a big complex. 7. Utilization rates for the year were at 85% following startup. 1. This was against a plan of 80%. 10. Chemicals: 1. Looking at existing portfolio and Co. is strengthening hardline base. 2. Investing selectively across the piece. 3. Strategy includes, in base countries of Americas and Europe, reducing costs in an intelligent way and improving reliability. 4. In Asia-Pacific and Middle East, the Co. is focusing on advantage feedstock projects and exploiting oil and chemical synergies. 5. World scale petrochemical complex doing exploration and production and gas and power project is also being studied. 6. Singapore: 1. Expansion really enforces an important hub into important hub into the fast-growing Eastern market. 2. It adds about 800,000 tons of ethylene, 750,000 tons of mono ethylene glycol and modifications and additions to the Bukom plant. 3. A lot of the economics of this deal are [enshrined] in the oil chemical interface. 4. This project has the full support of the Singapore government. 11. Marketing: 1. China is one of the key strategic markets. 1. In retail, about 300 sites running in China. 2. Lubricants: 1. The acquisition of 25% of Taunggyi makes Shell the leading IOC in lubricants in China. 2. The third largest market share after the NOCs. 3. Bitumen: 1. The bitumen deal with coke added about 20% to the total global bitumen production. 4. Turkey and 1,200 sites in India. 1. First international oil co. that actually has retail sites on the ground. 5. Indonesia, first international oil co. underground with throughputs through stations that the Co. has not seen elsewhere in the world bringing unit costs down to a level that is exciting going forward. 12. Brand: 1. The Shell brand is a key asset for the Co. to win against the competition. 1. This was the only brand that actually improved the customer satisfaction between 2005-2006. 2. A leader in brand preference with 18% preference across the world. 3. The factors that make up the brand preference are: 1. Technological leadership. 2. Innovations. 3. Fuel quality. 4. Has a strong brand image due to: 1. A powerful logo. 2. Biggest retail in network in the world. 3. Successful global advertising. 4. Association with Ferrari and Formula 1 sponsorship has helped a lot. 5. Lubes: 1. The global brand leader with 16% market share now. 2. Independent research shows that the Shell brands such as Helix, Rimula, and Rotella T are the Number 1 choice of both passenger car and heavy-duty engine consumers. 3. In a recent survey, more than 4,000 customers in 11 markets in this business, RDS.A comes in on top for customer satisfaction. 4. Margins get competitive. 13. Operational Excellence: 1. In refining, operational excellence focuses on attaining cost leadership, maximizing reliability and availability, looking at margin uplifts, energy conservation and supply optimization. 1. This program has already delivered over half of the expected benefits. 2. In marketing, operational excellence program focuses on cost leadership, shared services, price management and network efficiency. 1. Similar to refining, considerable progress has been made. 2. Example, Rheinland Refinery in Germany close to Cologne. 3. Reduced the unplanned downtime from 3.4% in 2004 to top class at 1.6% in 2006, through business improvement programs. 4. Due to the integration of the formal (indiscernible) refinery nearby the Shell facilities. 5. Performance delivery through people on processes and concentration on essential initiatives. 6. First quartile performance in Solomon system sets the unplanned downtime at 4%. 14. Operational Excellence in the Back Office: 1. An important driver to maintain leadership in the industry is by simplifying and standardizing the way the Co. does business. 2. Sees some operational excellence initiatives in the back office and administrative areas. 1. Due to these results, the Co. focuses more taking time to care customers and less on managing the internal systems. 2. Already started to see benefits of this approach. 15. Integrated Oil Trading: 1. Trading has had an excellent year. 2. The drivers of the increased turning in trading are: 1. Increased levels of absolute price volatility allowing trading to capitalize on the embedded optionality in the portfolio. 2. Growth in the business, volumes, trading locations and products traded. 3. Increased integration with the downstream and E&P capturing more value at the interfaces. 4. Increasing experience and competency of the staff and the best practice of a real global trading network. 3. Expertise on trading and shipping helps, the portfolio is important, and long-term relationship in this business is a key to what the Co. is doing. 16. Leading Edge Capability: 1. Providing high-quality cost competitive fuels. 2. On main grades, the Co. sets the Guinness World Record for Around the World Fuel Economy. 3. Premium fuels in over 40 countries such as Shell V-Power diesel. 1. This diesel is an advanced formulation with the GTL component in it already today. 2. On sale in 4,000 stations in Europe. 4. Audi chose RDS.A as their partner. 5. Leader in Gas-to-Liquids (GTL) development. 1. Big plant in Qatar. 6. GTL base oils is a piece of the GTL manufacturing site in Qatar. 1. This will make a step change in the ability to fabricate future lubricants and cleaner lubricants for engines. 2. GTL base oil production from Pearl will deliver over 1m ton per year which is extremely significant. 17. Bio-Fuels: 1. A leader in bio-fuels and is a large distributor of these fuels today. 2. The new bio-fuels technologies look at better supply security, greater CO2 reduction, non-compete with the food chain, and the increased demand on corn and palm oil and sugar is going to drive those prices up. 3. Focuses on second-generation technologies and that is the (indiscernible) technology, an enzyme technology that converts cellulose into ethanol and a [grain] expertise where Co. uses the GTL knowledge to actually gasify organic wastes and turn that into diesel that comes out of the GTL process. 1. These positions in the long-term will give a future competitive advantage. 4. An operating, financial and competitive performance that demonstrates that the Co. has a strong track record of delivery. 5. The operational excellence remains central to everything that RDS.A is doing and will always continue to put safety in the forefront. 6. Will continue to leverage brands, maintaining the customer focus and delivering leading-edge technology.

S6. Financial Strategy (P.V.) 1. Financial Strategy: 1. Main priority is to make sure that RDS.A can fund the sustained organic spending program and maintain the competitive payout. 2. Investing in multi-billion dollar projects that can take more than five years to build and will then generate cash flows for decades. 3. Large numbers talked about in the recent months such as buybacks, dividends, CapEx, and so on are all joint-op decisions and part of an overall team strategy. 1. Not shy to invest in large projects in large numbers. 2. Shies to sell assets, delay projects, and invest in large stakes in large assets. 4. Sees maintaining investment levels as a major priority as RDS.A rebuilds its upstream business for the future. 5. Strong operating performance is needed from today’s businesses to create competitive cash flows. 1. Will also be adding to cash flow generation from asset sales. 2. Expects the pace of asset sales to pick up again in 2007 after a rather lower year in 2006. 2. 4Q06 Results: 1. CCS earnings were around $6b. 2. CCS EPS increased by 14% from 4Q05. 3. Cash flow was up 19% QonQ and 11% from 2005 to 2006. 4. Dividend increased 9% in 2006 to 0.25 euros per share. 5. Combined with share buybacks returns to shareholders were some $16b or an increase as 5% vs. 2005 excluding the special minority buyout in 2005. 6. Upstream earnings increased by 5% from 4Q05 levels driven by: 1. 2% increase in underlying production volumes. 2. High oil prices. 1. Was partially offset by a decrease in US gas price and increasing operating costs. 7. Downstream earnings declined slightly vs. a year ago with weaker refining margins outside the US West Coast. 1. Gulf, Europe, and Asia were weaker. 2. To some extent, this was offset by a recovery in chemicals’ earnings but also strong lubricants earnings in B2B business. 8. In Chemicals, saw the positive impact of industry margins and the contribution from the new capacity in Nanhai. 9. In Marketing, headline products volumes declined by some 3% but increased slightly excluding the impact of asset sales. 10. Benefited from a positive impact for other industries and corporate in 4Q06 largely due to positive currency exchange movements. 11. Earnings from the corporate segment can vary substantially largely due to movements in exchange rates or differences in financing costs. 1. Guidance of the charge is $0-100m per qtr. and that remains unchanged from the past. 12. Effective tax rate guidance was and will be 41-43%, unchanged. 3. Other 4Q06 Highlights: 1. Has seen protocol to farm out 27.5% stake in Sakhalin II to Gasprom. 1. Expects the transaction to close in 2007. 2. Accounting impact of this deal would speed to move Sakhalin from a consolidated co. to an associate to RDS.A’s accounts. 3. Expects to receive $4.1b of cash. 4. Sakhalin reserves are consolidated at the end of 2006. 5. Taking RDS.A Canada as an unestimated number and Sakhalin together, estimates that the combined impact on the reserve side will be a reduction in net reserves of around 100m barrels, around 1% of 2006 net reserves. 2. Cash generation has been strong at business level as well as for the group. 1. Upstream and downstream are generating cash flow greater than their capital spend requirements. 2. Disposals in 2006 were some $1.7b. 1. Most of the disposal in 2006 was from downstream. 2. Most of the acquisition spent was in upstream. 3. In 2006, returned roughly $16b to shareholders, split more or less half and half in buybacks and dividends. 1. Has had and still has a long-held policy of growing dividends at least in line with inflation. 2. This policy is not going to change. 4. Buybacks will continue as per previous guidance. 1. Preference is to invest in assets and return cash to shareholders by dividends rather than by buybacks. 5. Will be calculating and declaring dividends in US dollars from 2007 because: 1. Earnings and costs are overwhelmingly in dollars. 2. Believes it is correct to return cash shareholders in the same currency as the one RDS.A is dealing with in its business. 6. Because of the aforementioned change, has taken the step of indicating that dividend for 1Q07 will be $0.36 per share, an increase of some 14% vs. 1Q06. 1. Recognized that some shareholders may need to anticipate this change in currency policy. 2. Believes pre-announcement of 1Q07 dividend creates some space for this. 4. Balance Sheet: 1. Includes off-balance sheet items in estimates, which is in line with the assessment carried out by the credit rating agencies to look at the gearing target. 2. Gearing as increase over 4Q06 and is at the year-end at 15%. 3. Expecting some large one-off cash movements in 2007 as a result of the form now to Sakhalin on the one side and the minority buyout on the other side. 4. Adjusting for those two, which the end gearing rate of 2006 then RDS.A would get around to 19% on and off balance sheet gearing, which leads these transactions in. 5. Portfolio: 1. Has around a 140 major projects in the business development and design stage. 2. From an accounting perspective these PFID projects creates the extra costs though P&L and that is the cost of this portfolio approach. 3. Continues to generate a large range of foreign investments in the Co. 6. Spending Profile: 1. In many cases the upstream and downstream projects are world-scale integrated projects with LNG and GTL facilities for gas upgrade as for Oil Sands and new regional production hubs in deepwater. 1. Some 80% of spending is in upstream and this spending includes these integrated facilities. 2. Against other competitors, the Co. has a higher waging to these type of long-life investments. 3. These projects have long reserve lives, have stable production profiles and will be a good foundation for new growth in the next decade and the long-term cash generation. 4. Some 30% of CapEx is into the base portfolio. 1. This covers incremental investment of offset decline in the current production upstream and maintenance and safety across the Co. 5. Has ongoing commitment there. 7. Cost of Major Projects: 1. The costs reflect the operating environment so that deepwater developments are inherently more expensive than the onshore activity and [sales force]. 2. The overall pattern though is an investment cost of avg. of $6 per boe on a post-FID resource position and over 10b boe, which is in an attractive preposition for the group and for shareholder, comes from having a wide portfolio to choose form. 1. Costs for post FID projects which are on construction contracts that are in some cases more attractive than if Co. [reattends] it today because of the inflation it is seeing in the market. 3. Looking at the price structure, for projects which where the Co. has not FID yet, it is seeing prices that are as much as 30% higher than the averages it is showing, which would be to add roughly $2-3 per boe on avg. 4. The final impact depends on which projects the Co. chooses and when and it might choose to delay certain projects or sell down if the returns do not look attractive. 1. Many to these newer projects are partner-operated so the Co. looks to them to be as rigorous and cost control as it is. 5. RDS.A expects to pay some scale of assets sales to accelerate in 2007, meaning recycling of underperforming capital or capital tied up in non-core assets and re-investing those dollars in more attractive projects. 1. Brings the benefits of a more focused portfolio approach. 6. Has decided to retain large stakes in major projects to create the best scale for the future. 1. This increases the organic CapEx. 8. CapEx: 1. Net CapEx in 2006 including the acquisitions made was $21b. 2. For 2007, sees net CapEx at some $22-23m. 3. Is investing in major profit centers for the future and funding that to some extend through disposals. 4. Net CapEx is the right way to think about spending program since it captures all the elements of these important choices. 5. Capital investment is driven by gross project of spending bills up in the construction phase and as the Co. launches entirely new projects. 1. Following the FID in mid 2006, the Pearl and the Oil Sands project spending is stepping up as construction begins. 6. Looking at CapEx over recent years, the Co.’s organic spending is growing in steps of around [$4-5b]. 7. Will not give precise guidance on spending and disposal for 2008, but has been managing to make CapEx level in the low 20s. 8. CapEx and capital not in service would remain at these relatively high levels this decade. 9. Risk Management: 1. Looks to maintain and grow steady cash flows for shareholder so portfolio choices are all about balancing the different types of fiscal regimes and balancing political and technical risk and project scale. 2. Overall risk balance does not change much over this timeframe. 1. By investing in the size of projects, those specific project risks are higher in than in the recent past but the Co. is comfortable with that. 3. Is focusing and continues to focus on cost and synergies. 1. Cost efficiency is embedded in its business and the practical and operating level. 4. In downstream, RDS.A continues to find ways to enhance margins to investing in incremental equipment, energy efficiency supply chain sales force. 5. Finding tremendous potential for (indiscernible) though the introduction of common standards, globalized standards, accounting systems, which has become possible ways to creation of unified Shell co. and the creation of global business functions. 6. Over the next few years, the Co. sees potential for cost saving and operating synergies from around the business to add around $0.5b each year on a pretax basis and continues to look for more of these kinds of benefits in organization. 10. Summary: 1. Has established a real performance culture. 2. Capital discipline is embedded in the Co. and goes for the best projects. 3. Has a balance sheet that can take on world scale investments and has very strong commitment to shareholder returns.

S7. Closing Comments (J.V.) 1. Brief Remarks: 1. 2006 performance was robust. 2. Continuing in 2007, wish to focus driving synergies. 3. In 2004, the Co. had a difficult year. 1. Had really significant challenges. 2. Upstream was not in good order, and Co. tried to correct it. 1. In the mean time, business environment was becoming much more competitive. 2. Has made a lot of progress there. 3. Downstream had a better shape, but was not a reason to stand still. 4. Costs for the industry is rising. 5. Co. realizes as well, and even before 2024 that CO2 will play a major role in the industry in the future. 2. Focus: 1. Has strong portfolio. 2. Will show good profitability to shareholders. 3. In the future, industry in the upstream side will be more competitive, and downstream will also be competitive as always. 4. Has worked hard at the commercial side of Co. 1. Has more good opportunities to invest into. 5. Will continue with high investments. 1. Co. expects this to be good in organic growth. 2. Co. is convinced this makes good returns to shareholders. 3. This gave Co. confidence to increase dividend when it got to [14%].

QUESTION AND ANSWER SUMMARY

NEIL PERRY, ANALYST, MORGAN STANLEY: Neil Perry, Morgan Stanley. You have told us your production is flattish out to the end of the decade. Costs are rising very rapidly. You told us refining margins are going to fall. Why do you chose now to rate the dividend, having maintained a dividend policy for 20 odd years, and give it a step change? Particularly because, if you stick in your $25 billion of organic CapEx, and about $8.5 billion of dividend, you’re talking about $33 billion odd, which is more than you generated in cash flow last year, if you go after the working capital (inaudible).

PETER VOSER, CFO, ROYAL DUTCH SHELL: We have a clear philosophy of staying very competitive on the dividend payout. We want to share at the same time we’re investing for the future with our shareholders the payout. We have set our policies at least in line with inflation. That will not change. We have done this step up this year. We have — last year we had a mixture of, let’s say, buybacks and dividend. We have last year increased 9%, just to remind you as well. So it is 9% last year, it is 14% this year.

We have confidence in our earnings cash flow or cash flow generation in the future years. And we look at actually the profitability of the projects which we are realizing now. Malcolm has said that he sees that actually generating more than what we have today. So we’re taking it through the cycle, look at all of our performance at our balance sheet flexibility. And from that point of view we have the confidence we have the — we’re convinced that this increase in dividends, of maintaining our of off inflation, or at least inflation policy in the longer-term, will give the right yields to our shareholders.

We’re carefully balancing both, but it is really the outlook of our portfolio which generates the confidence that we will have here earnings flow in the future, not just over the next two years, but a long-term earnings flow.

MARK IANNOTTI, ANALYST, MERRILL LYNCH: Mark Iannotti, Merrill Lynch. A couple of questions. First of all, one for Malcolm. Malcolm, you gave a very upbeat presentation on the E&P business. Clearly good reserve replacement, exploration success. When we go back to last May’s presentation, you gave some pretty definitive targets on E&P volume growth in the medium and the long-term, 3.84 2009, and aspiration of 4.5 plus for 2014.

Those targets appear to have been abandoned, and despite very upbeat comments you’re making, and the fact that you’re increasing CapEx significantly. Obviously for ’07, we know it is Nigeria. Sakhalin has an impact longer-term. Can you just walk us through exactly where the production has gone versus May last year?

And a question for Peter. I must say as an analyst, I think it is quite complicated this new net CapEx idea. Can you just explain how it works? Let’s say two months down the lane you see an opportunity to buy something. Are you telling us now you’ve got the discretion to [cull] organic CapEx near the 22. Or if you don’t get the price you want for the disposals, can you then open the taps and increase organic CapEx more? You seem to be claiming that is linked. But I just understand. Do you have that much flexibility in your organic CapEx on an annual basis to link all that together?

MALCOLM BRINDED, EXECUTIVE DIRECTOR EXPLORATION & PRODUCTION, ROYAL DUTCH SHELL: If I take your first question, let’s start with this year. And that is pretty clear. We said — in my talk we’re down to 50,000 barrels a day in terms of our outlook for this year from Nigeria, relative to what we thought a year ago. That is from what is already shut in and from the slower growth of projects that are just not happening and drilling that is not happening.

It is Nigeria that now goes forward to 2009 that is one of the key contributors to the outlook for 2009. Because clearly the assumptions and the constraints around the rate of growth there are quite significant, not only in terms of security, but also in terms of funding and contractor capacity.

On top of that, as I indicated, we got Sakhalin impact of dilution. And [RBR] expected production in 2009. And then the other factor, just to take you through the mechanics, will be what we’ve assumed around the divestments.

It is about, I think, proper portfolio focus on those opportunities, those assets where we see long-term growth prospects for the future. This where we want to put our people. That is where we want to focus our money. So in the mature, getting towards end of field life positions, or the isolated assets, those are the ones that we’re likely to divest when the time is right, and when we get more value. That is basically is simply it. If you look at the rest of it, there is not much difference as we look out to 2009.

That is why we come back then and say, so 1 to 2% growth over that timeframe until the end of the decade. Beyond that, I think we have laid out the framework pretty clearly, 2 to 3% long-term. I think that is because we view the importance in the world of increasing costs of making the right choices around value on the projects that we want to do. Not being driven by a very specific production target, because we see the outlook of projects changes significantly from what you see five years ahead of taking the final investment decision, to when you get there in terms of costs, in terms of government, rent, taxation policies and whatever.

We’ve got a resource base that can support that 2 to 3%. That is the long-term framework. We think we are in a good position to be able to make choices, which is indeed why I’ve got an upbeat presentation. And we are delivering.

PETER VOSER: I don’t think it is that complicated as you do actually paint it. Because at the end of the day, you’re managing the spend level, and that is the next — has to be the next spend level, because that is what you manage from a cash point of view, from a balance sheet strategy point of view, according to priorities. We have always been very clear that our priorities are shareholder return. So it is dividend, it is organic growth, maybe supplemented by some inorganic growth, by portfolio management, and potentially, if a market environment is successful, with some buyback.

I said quite clearly you have to make tough choices when you actually drive that forward. So you may actually increase your divestments if you see better investment opportunities somewhere else. You may actually drive your organic CapEx a little bit harder when you see that these choices are there. I think that is something a management does actually manage on a permanent basis, month by month, quarter by quarter, year by year. How do you want to grow? How fast do you want to grow? How you want to apply your dollar? And what can your balance sheet in the long-term actually sustain, whilst at the same time you’re optimizing the returns of your portfolio and the returns to your shareholders.

I don’t think I will go into a potential hypothetical acquisition for this discussion. We will have that if something like that comes up. But that is the way I think every CFO and every management will manage their long-term portfolio decisions. And we are just making that very transparent.

ED WESTLAKE, ANALYST, CREDIT SUISSE: Ed Westlake, Credit Suisse. First question — well, actually, two questions for Malcolm, if I may. The first one, obviously you talked about cash flow per barrel going up. It would be nice if you could just tell us the number, that would be great.

But costs in terms of OpEx are going up. So presumably it must be to do with the tax rates or realizations. Can you just talk us — maybe some talking points to what we should expect. And by when would you expect the cash flow per barrel to start changing? That is the first question.

Then the second question, obviously you’re spending more money, which is good. We want you to make a positive return on that money. But one area which personally I have a concern is around the oil sands, and the type of oil price you think you need to generate a positive return spread there. And how much of an improvement do you think technology can make over what timeframe?

MALCOLM BRINDED: On the first question, what we are saying is that the portfolio of assets that we’re investing in is going to generate at any given time a better cash barrel than the portfolio of assets we have today. I’m not going to give any forecast of the outcome, of the precise numbers. It is all about essentially the quality of the assets we are going into, and also the places where we are choosing to invest in terms of the physical structures. We’re looking for high margin, high upside, and as I said long-term growth opportunities.

You mentioned challenges to OpEx, and that is a major focus. One of the advantages of being a global business now — we used to run as independent countries, if you go back three or four years. We think they’re still a lot of leverage to do what Rob has already done in the downstream business, which is more from global standardization and leveraging our global scale in a way we buy from contractors, we drop by goods and services. And I gave you the rigs example. I think there is more of that we can do.

You asked about oil sands. And the simple answer is we have already indicated in the past that we evaluate our oil sands projects. We look to get an oil price into the 30s to evaluate our oil sands project. But we think that they are very robust as you look forward, because we’re talking about projects which will have decades — many decades of plateau productions. This is an absolutely enormous resource base.

One of the things you see as you develop the operations is not so much technology, but process efficiencies in the whole mining operation, and the whole integrated operation through the upgrader. It is a bit like Linda showed with her debottlenecking and capacity increase of LNG plants over time. The longer you’re at this business the better you get at it.

And I will just nail one thing, which is the expansions are really I think very valuable in that respect. We’re doing the first expansion now, but it should be the first of several. The resource base can support really quite a few expansions. We’re talking in terms of three or four taking us to 0.5 million barrels a day by the middle of the next decade. But it could go on beyond that.

GORDON GRAY, ANALYST , JP MORGAN: Gordon Gray, JP Morgan. A couple of questions for Robert, if I could. You showed us that chart on the improvements in unplanned downtime at Rheinland. I wonder if you can give us a little bit more quantification of the amount of improvement, both on a global scale and particularly in the U.S. on the unplanned downtime figure.

And secondly, a difficult one to quantify, but you had a roughly doubling of the contribution from the trading side. A lot of that is obviously due to market volatility. I was wondering if you can give us a feel for what is structural improvements within the group, and what is simply market improvements. A very tough one, I know, but any (indiscernible) you can give us.

ROB ROUTS, EXECUTIVE DIRECTOR DOWNSTREAM, ROYAL DUTCH SHELL: First of all, the downtime story. I showed you a very good example for Rheinland. You had also, to be completely open, some issues at other plants across our system. But if you look at the underlying downtime, unplanned downtime we are first quartile across the system.

We had a number of cases where we had prolonged turnarounds, because it gets difficult in some areas of the world to get qualified labor, to get the job done in a quality way and in a shorter period. We’re working to improve that. More to be had in that arena, both on the refining side and on the chemical side. And that can only improve the contribution of refineries to the system. It will have to, if you believe that the margins are going to decrease, actually our efficiency in that regard we will have to do even better.

On the trading side, we don’t — historically, we have never given you any numbers, and only shown you a trend. But I think it is organization that has developed it skills tremendously over the years. And what we are seeing now is across crude oil trading, products trading, chemicals, power, gas, natural gas trading, that we now have people in place that have extensive knowledge as to how to do this.

We have a global system that basically trades 24 7 across the world. We have a tremendous flow of oil ourselves. But if you will get what we’re trading these days — we have shown you before that we refine about 4 million barrels a day, but that we trade at more than double of that. And that volume is increasing, which also contributes to the bottom line.

We’re also getting more smart to turnaround our facilities, for instance, in refining. We have told you in the past that certainly in crude oil blending we had a trading opportunity, that we’re starting to see more opportunities in product planning as well. As we learn the business more and more and combine our assets with actually our trading facilities, we get this tremendous advantage. Very different than the bankers who don’t have that physical flow to look at, and don’t have the advantage to move forward on.

(technical difficulty).

Small addition. If you think about the business environment, where one hand you have OPEC, and on the other hand you have very small spare capacity in our industry. And then a lot of political tensions. And maybe the full activity in our industry may be structural. Next question.

NEIL MCMAHON, ANALYST, SANFORD BERNSTEIN: Neil McMahon, Sanford Bernstein. Three questions. I will go with the strategy in upstream and the downstream one, just to cover the bases. First of all, just looking at it from an upstream side, there seemed to be a big glaring hole from cash again in the 2009 to 2011 bar you had for production. It seemed to pick up quite nicely after 2011. Are you indicating that this is a project that may not even start up until 2011?

On the strategy side, given your position in the Northwest Shelf and the growing volumes that are going to be coming out with Gorgon, etc., what is your position on Woodside? Would you sell your interest there since you are the majority shareholder? It would be interesting to find out what the situation is, given Woodside’s problems with Mauritania and other things.

Lastly, on refining, with the recent deal with Tesoro, there seems to be a bit of a divergence of opinion as to how you value refining assets at Tesoro. And various followers seem to feel they’ve got it for a bit of a steal. You probably on the other hand probably don’t feel you are a charity organization. Maybe you could go into how you look at valuing refining assets, especially with more coming up on the block.

JEROEN VAN DER VEER, CHIEF EXECUTIVE, ROYAL DUTCH SHELL: Malcolm starts, then Linda, then Rob.

MALCOLM BRINDED: I wouldn’t try and dissect the graphics too precisely, but there is production in there in the ’09, ’11 period from Kashagan. We expect it to be onstream in that period. I can’t be precise how much volume we expect from it, but I think the key thing is ask the operator, ENI. But what I will say is as consortium, we are all involved in that project. We’re all much involved. We are all very focused on it. And in fact, increasingly we’ve got experts from all of the companies very much involved in bringing the project to a landing. It is a huge — it is another one of these huge legacy assets, massive resources in place. Yes, technical challenges, but it will be for decades producing a really strong cash flow and production.

LINDA COOK, EXECUTIVE DIRECTOR GAS & POWER, ROYAL DUTCH SHELL: I will take the Australian Woodside question. I will just start with Australia. You saw in my chart that we see a lot of potential in Australia as a region for us for many, many years to come, because of its large natural gas resources, and I think relative to other areas, relatively unexplored actually. And also its vicinity to the key LNG markets, in particular Japan and Korea.

So we like Australia. We’re increasing our own investment in Australia. And then we also have the exposure to it through Woodside. And the majority, the vast bulk of Woodside’s investment is in Australia. We like the prospects there. And they have a high stake in those prospects. We have 34% plus or minus of Woodside, and so it gives us a reasonable stake in their opportunities in Australia. And so for that reason we’re happy with the asset.

ROB ROUTS: Thanks for giving me a chance to clarify that Los Angeles situation. It was an old ex Texaco refinery. We acquired it with the acquisition of Texaco. And I must say at a fairly low price. If anybody got a steal, it was probably us at a time.

And secondly, on your remark of giving stuff away, I hope that I have shown you guys that by pulling LTG off the market that we were prepared to pull deals off the market if they wouldn’t contribute value to what we’re doing.

It is obvious that L.A. — I’m happy that Bruce Smith is happy with the deal, and I’m happy that the market is happy with the deal. From our side we have, as you clearly saw in our strategy, we have limited capital for the downstream. And the Los Angeles refinery is going to take a lot of capital. Tesoro was talking about $1 billion that was needed to bring that plant up to where it needs to be. I would rather invest that in growth markets than on the West Coast of the U.S. You know, with the Martinez San Francisco refinery, and they are going to be completely balanced.

PAUL SPEDDING, ANALYST, HSBC: Paul Spedding, HSBC. Peter, you made a comment about buybacks. You made the comment that this market environment is favorable. I just wonder if you could explain what you meant by that. And secondly, in the past you have occasionally given us an indication on the assumption of current refining margins, what sort of oil price balances your capital cycle — your cash cycle. I wonder if you might be able to do that again for us.

PETER VOSER: Can you just repeat your first question? Can you put the mike very closely please.

PAUL SPEDDING: Sorry. You made the comment about buybacks. That you said that you would undertake buybacks if the market environment was favorable. I’m just curious as to what you meant by that phrase.

PETER VOSER: I think the market environment has obviously a function then of oil prices and gas price, but it also has a function of cost development, project development on the organic growth side. We will take all of that now with organic growth purchase pipeline. It could also be in that organic growth opportunities we have, plus our dividend policy into account, look at the overall oil price and gas price outlook, and then we decide what we do with our funds in that sense. And buybacks could play a role in that or could not play role in that. It depends it on all these circumstances.

I think we have demonstrated the last two years, if we see it fits then we will do it. We have not grown as big as some others have grown. As I have said, we believe in long-term value generation through project, rather than actually through buybacks. And I think that policy will not change.

UNIDENTIFIED COMPANY REPRESENTATIVE: Questions from the telephone?

OPERATOR: [Phil Whittaker]. (OPERATOR INSTRUCTIONS).

TIM WHITTAKER, ANALYST, LEHMAN BROTHERS: Tim Whittaker, Lehman Brothers. My first question is also around buybacks. Peter, you seem to be deemphasizing them while lifting the dividend. What does this suggests that your buybacks will be lower than in the past?

Secondly, I had a question around your decline rates. You’re investing a lot of capital to deliver very little growth. I wonder if you could explain what is happening in your underlying portfolio, and what are your assumptions about decline rates in that portfolio over the coming years?

JEROEN VAN DER VEER: I suggest the answer — you get an answer from those persons who understood the question, because they are difficult to (multiple speakers).

PETER VOSER: It is difficult to hear you, but I think what you said on the buyback side, is it going to be less or more than in the past, if I understood you correctly. I think I will not allowed to answer that, as you most probably have (indiscernible) anyway. Because as I said this is a forward-looking statement on market environment and our other possibilities, and we will see that later on. For me the message to the shareholders is quite clear. We have a very strong dividend philosophy and policy, and that is what we’re driving, apart from our organic growth strategy.

And the second one was about decline rates, but I hand that over to –.

MALCOLM BRINDED: I think it was about (inaudible) capital and growth. And I think you asked about underlying decline rates in the upstream. Was that the question?

TIM WHITTAKER: Yes, Malcolm, that’s correct. What decline assumptions do you have underpinning your growth in CapEx spending?

MALCOLM BRINDED: (indiscernible) There’s no change in the sort of guidance that we give on decline rates, which is typically in the 3 to 6% per annum, but taking into account the normal sort of infill activity. What I would say there is there is always a big range. I’m not so sure how helpful that is, but that is the average. You see it every quarter in the results.

I think other comment on capital intensity is that we are — you saw in the slide Peter showed the distribution of the capital intensity across the resources. You can see it is very competitive at around $6 a barrel. But we are investing in some large resources with very long lives. So we’re putting a lot of money in to create positions that will generate cash for decades. I think that is what particularly marks the set of opportunities that we are taking at the moment.

PAUL CAROLLI, ANALYST, ACTS INVESTMENT MANAGERS: [Paul Carolli], [Acts Investment Managers]. I have three questions, if I may, and I’m all on CapEx. Probably all for Peter. The first one, it has been mentioned that the organic capital spending for 2006 has been about $20 billion, and for 2007 would be about $24 billion, $25 billion. Is it possible to add a bit of color on what does cause this $5 billion growth in 2007? In particular how much has been cost of inflation? How much existing project CapEx ex inflation? And how much completely new projects?

The second question, and if I may, is when you say in the slide, spending will be relatively stable in 2008 and 2010, stable with respect to what label? It will be with respect to the organic CapEx or the net capital spending? Because depending on the amount of divestments, of course there can be quite different scenarios there.

Finally, since there has been this growth in CapEx, the assumption that you don’t hold price in the capital budget in decision for better CapEx has changed at all or it remains the same?

PETER VOSER: As to the first one, as your 20 to 24, 25, I think I give you let’s say three reasons or three points. The first one is we have roughly 30 projects more in that CapEx number than we used to have. I would say that we are looking at a cost increase market-driven, which is around 10% in that number. And then also I think by taking obviously — looking ahead on our projects which are coming into (indiscernible) later on, we have taken a deliberate decision clearly to stay with bigger stakes in our project. And that drives also a higher and organic CapEx in the future. So I think these are the three ones which has contributed to the increase. It is new growth, it is inflation, but also larger stakes.

It is clearly that when I talked about looking forward, I was talking about the next CapEx number staying relatively stable over the next few years. Obviously, I have to say this, and that is what we don’t give precise guidance, a lot will depend in what is happening in the market on both sides. What do you get in terms of cost increases, and on the other side, what values are paid for divestments, for example.

On the oil price, I think we haven’t changed in the way we explained that to all of our shareholders in that sense. We do not take one price for — let me take a project division which goes over 30 years. We look at price ranges. We look at how they behave in certain political and financial, tax fiscal environment. We look at all those scenarios, which has actually protected us at the downside, but also make sure, as Malcolm explained, that we actually go for those projects which have quite a bit of upside as well. For the 12 months operational plan, quite clearly you take them, one, oil price because that is really your short-term cash flow management. But that is less important for the shareholders because that is not where we base our project assumptions on.

COLIN SMITH, ANALYST, DRESDNER KLEINWORT: Colin Smith, Dresdner Kleinwort. A few questions. First of all, on the heavy oil project, could you just say a little bit more about what you’re planning to do with heavy oil in terms of upgrading and refining through this expansion and future ones, and also that is in the CapEx number?

Secondly, on the Sakhalin deal, could you provide a bit more color about exactly what has been agreed with Gazprom covering, for example, things like when does Gazprom’s liability to CapEx start? Has the government accepted whatever the number is for the CapEx budget now, or is any part of that — if any part of that is excluded, is Gazprom also excluded from it? What happens with the environmental liability and all of those kinds of issues that remain opaque that make a bit of the difference to the value of that deal?

JEROEN VAN DER VEER: (indiscernible) refining side. The CapEx part of it.

COLIN SMITH: It was in terms of what are you planning to do — you didn’t touch I think on exactly what you’re planning to do with upgrading and refining of heavy oil from Canada.

JEROEN VAN DER VEER: First of all, the Port Arthur expansion is completely geared towards very heavy oil, hygienic acid oil. We can run the — what what we call the worse part of the oil through that expansion when it is done. That is a major addition to our upgrading facilities.

The oil sands picture in Canada, of course, we’re building more upgrading facilities in Scotford in our next expansion. And I can’t say anything about it, because I’m the Chairman of Shell Canada, but I’m sure that the group sees some synergies between the bitumen production and other upgrading facilities in North America. Jeroen van der Veer?

MALCOLM BRINDED: So there were three parts to the Sakhalin question. The first one was about when they start paying their way. Obviously, we have it in the outline agreement before Christmas really, we have mapped out aspects like that. But we are now in the process of finalizing the negotiations and aiming to get everything formally closed.

On the second point about the government acceptance of the full budget, I am not going to comment further other than what we said at a time, which was it is our expectation that the full development budget will be approved by the Sakhalin Energy Supervisory Board, which includes government representation.

And on the third point, which was around — essentially around liabilities. Well, Gazprom I think we have said are going to enter as though they have been a partner on ground floor terms. And that is the basis. We’re not making any further details of the arrangements public. I think what Jeroen said at a time, it is an acceptable outcome. And what we have indicated is we are pleased to have a strong stake in a project which has a very strong Russian partner, and strong support for a stable position for the project going forward with every opportunity for expansion, which I think is very important.

JEROEN VAN DER VEER: I first go now to the telephone, and then I come back to the middle (indiscernible).

OPERATOR: Bruce Lanni. (technical difficulty)

JEROEN VAN DER VEER: Okay. So let’s [find] what is going on there. I go back to — sorry, first to the back (indiscernible).

JON WRIGHT, ANALYST, CITIGROUP: Jon Wright, Citigroup. You showed on the slide that your capital not in service was about 20%. I wondered if you could give — given the amount of CapEx and the long-term nature of that CapEx, do you have an idea of how that trends over the next few years? And also what that means for your competitiveness of return?

PETER VOSER: It stays pretty stable around that number actually. I think you would expect that obviously to stay at those levels with the kind of organic growth and the kind of CapEx infrastructure projects which we are driving. So up from CapEx heavy in order to actually what I call normally derisk the CapEx flow later on, because it is whilst the resource is facing long-term stable production, etc. So I think it is around the 20% for the rest of this decade. I think actually competitive-wise that is something which is in the ballpark of most competitors.

IRENE HIMONA, ANALYST, EXANE BNP PARIBAS: Irene Himona, Exane BNP Paribas. Two questions if I may. First of all, is it possible to clarify the 106% reserve replacement that we had this year? Roughly how much was the (indiscernible) reserves, which I understand the SEC has taken a positive view towards?

And my second question to Linda, LNG. It seems to us as outsiders that one of the areas where competition has definitely heated up is LNG by virtue of the very fast growth of that space. Apart from scale and track record, what is it that you are actually doing differently in that business to cope with that enhanced competition?

MALCOLM BRINDED: We’re not giving further guidance on the split of the reserve base and how — GTL was an important contributor, but there was lots of other contributors. It was a big one this year, but it not — we’re not going further than that.

LINDA COOK: On the LNG, you’re exactly right. It is very, very competitive. So it has gone from a sector, I think as recent as five or six years ago, where very few people were interested in it, to now a time when every company wants to have an LNG project, if not more than one. So it has really heated up. As a result of I think availability of technology and more markets becoming comfortable with LNG as a gas supply source.

What do you do to maintain the lead? I think first we had some great assets already in the portfolio that have expansion capability, so we are leveraging that. Then I think you can look at the examples of our recent new entries. Qatargas IV is one.

How did we get into Qatar for an LNG project, which was not a homeland for us? I think the Qatari saw us bring a number of things to the table, expertise in LNG, so we could bring operating expertise, our ability to debottleneck plants. Shipping, you can see that we signed this agreement now to provide shipping services to not just the ships for the Shell project, but that all of Qatargas new projects, which involve other major international oil companies as partners. There is definitely shipping expertise.

Then access to new markets for them. So they saw some of the regasification opportunities we had come, our relationship with customers, and thought we could add value in that way.

I think Libya is another example. It doesn’t have an LNG — a new LNG plant there yet. But the deal that was negotiated was access to exploration acreage in return for using Shell’s expertise to rejuvenate their existing LNG project. And in return then we have an opportunity to build a new LNG plant should we find sufficient gas resources [under tenent]. I think it is a whole combination of technology, our track record, our safety track record in LNG, operating experience, as well as the commercial skills we bring.

JEROEN VAN DER VEER: We go now to the last round of questions. I start with you.

JASON KENNEY, ANALYST, ING: Jason Kenney, ING. Three short questions if possible. Firstly for Rob. Oil products tax effects were quite positive in the Q4 period. And I would just wondering if that was the U.S. side of the business, or outside of the U.S.?

Secondly, for Malcolm. I think in May last year you hinted that your rig capacity was subject to negotiation for the early part of the next decade. And you were hoping that rig prices would relax, and you would be able to complete your rig demands and requirements later in the decade. Do you still see that as being the case?

And thirdly maybe for Peter. I was very interested in your country risk analysis, diversifying political risk to ensure stability of earnings, if I interpret it correctly. I just wondered if you had extended that analysis to a fiscal risk analysis or expropriation, that kind of analysis?

ROB ROUTS: On the tax side, there have been of course a number of changes in tax regimes in several countries. What you’re seeing is the net balance of that. But certainly in the Netherlands you had seen a change in corporate taxes and that result.

MALCOLM BRINDED: On the rig coverage. Coverage through ’09 into ’10, ’11 and beyond, but we have got full coverage through to ’09 and less coverage beyond, for exactly the reason I indicated last year. We have taken some additional coverage, but not that much. And where we have it is on good rates.

Actually, I indicated that the coverage we had last year was 30% below the market rates, and that basically is the case going forward through ’08, ’09. We think where very well placed for the competitiveness of our Deepwater rigs because we secured them early and for long-term contracts. 2010, ’11, ’12, we have got some coverage, but we do see that is still a lot of new builds coming onto the market, and we’re just taking additional positions as we think is appropriate and watching closely.

PETER VOSER: On the risk and fiscal side, that is obviously a little bit more difficult one because, for example, what do you do with the UK? Is that an high risk fiscal country or not. Let me put that into the low risk side, still even that they have changed their rate. If I look at that and take maybe the expropriation or the [Southern] backdated fiscal changes as a key measure, then I would say actually the graph is pretty representative also for the fiscal side. So we’re still, given our drive into the North America, for example, given our presence in some other key countries with rather stable fiscal regimes, I think it is pretty similar there. For both — for the ’07 modeling which I show, but also for the [late three years out also].

JON RIGBY, ANALYST, UBS: Two questions. One for Rob and one for Malcolm, I think. Rob, I noticed on your charts of refineries you differentiated between refineries above 100,000 barrels a day and below 100,000 barrels a day. Do we infer anything from that as to how you see the future portfolio of Shell’s refineries, certainly in the Western Hemisphere?

The second one for Malcolm. I feel ever since I was a small boy, you have been stocking (indiscernible), but yet I noticed it disappeared off the arrangement that you had with Gazprom, when you did the Sakhalin transaction. I wondered whether that features in your future aspirations, or does it come in under the [red band] maybe as a political risk analysis that you had now presented to us, which I too, like Jason, are very intrigued by.

ROB ROUTS: First of all, I think we’re doing very pretty good with the kit we have. After all, if you look our unit earnings and unit cash, we’re doing extremely well. But there is still — and thinking about the future and again anticipating if margins will come down, you have to continue to drive efficiency one way or the other.

If I look at our refining system and I compare that to some of our competitors that typically we are lower in size, and we are lower or equal in complexity. Every move we’re making right now is geared to improve that. You’ll see us investing into world scale facilities and do less with the smaller refinery environment. While keeping our eye closely on what the balance of supply and demand is. We cannot walk away from facilities where actually your commercial businesses need that kind of supply. There’s a number of decisions, a number of ingredients in making that decision to get out of the refining system or not.

MALCOLM BRINDED: I think your question was about Zapolyarnoye. Basically when we came to the deal, we decided to go for something that would be quick to resolve, and give us a good footing going forward. And that was much quicker to resolve and get it to a situation where we are now.

I think also in our minds was much more about the opportunity set that we have. So we weren’t desperate to do this as a swap. When it came back that we would rather do it as a cash deal we were quite happy, because we’ve got lots of opportunities around the world, lots of growth projects around the world.

And I just think — I just want to underpin that with a couple of points. One is, you asked several questions about proved reserves. The important measure that we look at as well as proved reserves is are we adding resources to our portfolio, because it is getting resources into production that it is important. And the more than 200% for each of the last two years, additions from our exploration and business development, is hugely important. That is providing the funnel for us to choose from. And we’ve got a great set of LNG opportunities and a great set of Deepwater opportunities and others around the world. We weren’t desperate that this had to be a swap. And went it came to a cash deal, that is what we went for.

That doesn’t mean that we are not going — you then asked me is it because it is in the too much risk area. I think we’ve got a stable arrangement going forward with Sakhalin. We’ve got a good and extremely successful project in Solomon with Western Siberia demonstrating our ability to operate in a company that is 95% Russian. And has really demonstrated how you can outperform in that basin. We will look at other opportunities, because Russia is a very large resource holding.

JEROEN VAN DER VEER: I go to the last question.

LUCAS HERRMANN, ANALYST, DEUTSCHE: Lucas Herrmann, Deutsche. One brief question for Linda. And just you have a wealth of opportunity in LNG. Fantastic legacy portfolio. If I look forward at the next phase it up increasingly requires investing in large projects — Olokola, Gorgon, etc., at a time when the industry is clearly very hot, and where cost pressures are intense. No FIDs were taken [and administered] at all in 2006. How difficult is it for you at the moment to actually take the investment decision on a new LNG project, and where does that leave us on Gorgon and on Nigeria?

LINDA COOK: I wouldn’t say it is difficult to take the decision, because we make decisions all the time about large projects. And I think we’re pretty good at assessing the pluses and minuses and risks when we get to that point.

I think the challenge no doubt has been around the cost environment, the demand on contractors, who are all very, very busy right now. So creating a competitive environment for contractors to bid to actually build the project is important in order to help control your costs. So it is taking time now that the contractors are so busy.

The environmental permit conditions just came through, for example, on Gorgon, which we find acceptable actually — all of the three partners, that requires a little bit of thinking. The other thing we are thinking about is the strength of the Asia-Pacific market at Gorgon. And did we get the size right when we first looked at — when we had the original concept for the project some years ago.

So taking all of the new things into account in the business environment just takes a little bit of time. And for us it is more important that we get the project right than we FID it, sooner rather than later. I think you see us as very measured and careful going forward in a bit challenging business environment. Even with that though we still see growth of 11% per annum over the next few years with the projects we have already under construction.

JEROEN VAN DER VEER: Thank you for coming. Thank you for your questions. The next time you fuel up, do it preferably with V-Power. Thank you.

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