IEEJ：March 2019 © IEEJ2019

SHELL LNG
OUTLOOK
2019
Royal Dutch Shell

IEEJ：March 2019 © IEEJ2019

SHELL LNG OUTLOOK 2019

Cautionary Note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience
where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch Shell plc and its subsidiaries in general or to those whowork for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer toentities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint
operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or
indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.
This presentation contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Royal Dutch
Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s
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Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates,
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and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business indeveloping countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market
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and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking
statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements.
Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20-F for the year ended December 31, 2017 (available at www.shell.com/investor and www.sec.gov). These risk factors also
expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, March 13 & 14,
2019. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In lightof these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. We may have used certain terms, such as resources, in this presentationthat the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 132575, available on the SEC website www.sec.gov.
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Content

01

Growing recognition of the roleof gas and LNG as the world
tackles poor air quality andclimate change
Royal Dutch Shell

02

Asian LNG imports exceed
expectations again in 2018absorbing continued
supply growth

03

Near term supply growth
expected to be absorbed by
Europe and Asia – continued
need for investment in supply tomeet long-term demand growth
3

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01
Royal Dutch Shell

Bunkering of world’s first LNG fuelled cruise ship, AIDAnova

Growing recognition of the role of gas and LNG as
the world tackles poor air quality and climate change

IEEJ：March 2019 © IEEJ2019

SHELL LNG OUTLOOK 2019

The energy challenge
Growing
population

RisingdemandNeed forenergy solutions

Mitigatingclimate change

Improving
air quality

According to United Nations
estimates, the current world
population of 7.6 billion is
expected to reach 8.6 billion in
2030, 9.7 billion in 2050 and
11.2 billion in 2100. Nearly abillion people still live without
electricity while another billion
struggle with unreliable suppliesof electricity.

By 2070 the world is likely to
be using at least 50% moreenergy than it does today as
population grows and people
seek to improve their quality oflife.

According to the International
Energy Agency (IEA), renewablegeneration is expected to underpin
the growth of electricity from 18%
to 50% of energy supply by 2050.
The remaining energy demandthat is difficult to electrify will
still require cleaner solutions.

The world currently emits 33 billion
tonnes of energy-related CO2 eachyear. To limit the rise in global
temperature to 2°C, the IEA has
calculated that energy related
CO2 emissions need to fall toaround 18 billion tonnes a yearby 2040. The challenge is notjust to reduce emissions, but todo this while providing morereliable energy supplies.

Updated World HealthOrganization (WHO) estimates
reveal an alarming death toll of
7 million people every year
caused by outdoor and household
air pollution. According to WHO,
global air pollution is linked toinefficient energy use in every
sector of human activity including
coal-fired power plants, industry,
agriculture and transport.

Royal Dutch Shell

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IEEJ：March 2019 © IEEJ2019

SHELL LNG OUTLOOK 2019Gas and renewables to play a critical role in meeting the energy
challenge
Global energy demand growth by fuel type
BCM
20,00016,000

41%

30%

15%

6%

4%

Gas growth in the energy mix 2018-2035

4%

India

China

12,0008,000

Europe4,000

North America

0Global0%
Energy demand 1% CAGR

Source: Shell interpretation of Wood Mackenzie Q4 2018 data
Royal Dutch Shell

2018

2035

10%

20%

30%

40%

Gas share % in the energy mix

CAGR - Compound annual growth rate
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SHELL LNG OUTLOOK 2019

Government policies being implemented encouraging a cleaner
energy mix
South Korean taxes tofavour gas over coal

Chinese Government
policies target

Tax $/MMBtu
2

BCM
400

1.5

300

1

Gas share

10%

12%
9%

7%

6%
4%

0.5

100

3%

0

0

0%

Coal

Gas

2010

2018

Gas demand€/CO2 tn
30
25
20

200

2013 2014 2015 2016 2017 2018 2019

EU carbon pricing supported
by policy changes

2020(Target)Gas share

15
10
5
0
Jan-17

Jun-17

Nov-17 Apr-18

Sep-18€/CO2 tn

Source: Shell interpretation of IHS Markit and ICE Q4 2018 data and announced public policy
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Gas demand growth not reliant on the power sector

Global gas demand growth by sector 2016 - 2018

Global gas demand growth by sector
BCM

BCM
3,600

5,000
41%

4,000
3,500

29%

25%

5%

Res &
comm

Transport

3,000
2,000

3,400

1,000
3,300

2016

Power

Non
power

2017

Power

Non
power

2018

0

2018

Power

Industry2035

Gas demand 2% CAGR
Source: Shell interpretation of Wood Mackenzie Q4 2018 data
Royal Dutch Shell

Res & Comm – Residential and Commercial
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SHELL LNG OUTLOOK 2019

Coal-to-gas switching in China achieves blue skies and reduces
CO2 emissions
Air quality improvements in Beijing
Air quality ug/m3 PM 2.5
Gas demand (BCM)
200
20
180
18
160
16
140
14
120
12
100
10
80
8
60
6
40
4
20
2
0
0
Feb-09 Jun-10 Oct-11 Feb-13 Jun-14 Oct-15 Feb-17 Jun-18
ug/m3 PM2.5

176 MT CO2 saving from China’s
air quality programme in 2018
CO2 MT/yr
0

-5
-10
-15
-20
-25

-30

Beijing gas demand

Source: Shell interpretation of IHS Markit, Beijing Gas Group and US Embassy Beijing (US State Department) 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

LNG flexibility mitigates demand shocks and meets seasonal needs

Meeting heating demand in UK in 2018
LNG supplied (mcm/d)
100

Total gas demand (mcm/d)
450

80

40

350

35

1-Mar

LNG supply

15-Mar29-Mar

12-AprTotal gas demand (RHS)

26-Apr

0.4

30

250

25

200

20
0.2

15

100

10

50

5

0
15-Feb

Average monthly temperature °C
45
40

150

20

MT
0.6

400
300

60

0
1-Feb

Meeting seasonal cooling demand in Kuwait02009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LNG imports

0

Temperature ◦C

Source: Shell interpretation of National Grid, IHS Markit, Weather Channel 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

New countries choosing LNG for various benefits

BANGLADESH◼ Natural gas meets over halfof total energy demand◼ Declining domestic gas production◼ LNG meeting existing and new gas demand

PANAMAGIBRALTAR◼ Replacing oil-fired power generation◼ Replacing oil-fired power generation◼ Complement renewable power generation◼ Innovative small-scale LNG solution◼ Strategic location of Panama Canal◼ Increases diversity of supply

offers opportunities for LNG bunkering

Source: Shell interpretation of Woodmac Q4 2018 DataRoyal Dutch Shell

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SHELL LNG OUTLOOK 2019

LNG use as a transport fuel set for growth

LNG fuelled vessels

Tugs
Ro-Ro cargo ships
RoPax
Other vessels*
Oil/Chemical tankers
Offshore supply ships
General cargo ships
Multi - gas tankers
Cruise ships
Crude oil tankers
Container ships
Car passenger ferries
Car carriers
Bulk carriers

China LNG fuelled heavy-duty transport
Number of LNG trucks and buses
thousands

In operation
On order400
LNG HD trucks
LNG buses
200

0

10

20

30

40

50

Source : Shell analysis of DNV-GL, SCI & Woodmac data

Royal Dutch Shell

2025

2013

2014

2015

2016

2017

2018

6.7 MT of LNG
consumed in China forroad transport in 2018

40
30
20
10
0
2020

2012

*Other vessels includes fishing vessels, dredgers, etc

Projections for LNG in Marine

MTPA

0

2030

2035

2,552 LNG fuelstations in 201812

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SHELL LNG OUTLOOK 2019

LNG continues to be the fastest-growing gas supply source

Global gas supply by source
BCM
5,000

LNG imports by region
BCM
1,000

34%
62%

4%

BCM
600

800

4,000

LNG imports in Asia

22%

10%

41%

9%

35%

480

59%

3,000

600

360

2,000

400

240

1,000

200

120

0

2018

Domestic Pipeline
production imports

LNG
imports2035

Gas demand 2% CAGR

0

2018

Asia

Europe Americas Mid-East 2035
& Africa

LNG demand 4% CAGR

0

2018

32%

-8%

China

JKT

South
Asia

South
East Asia

2035

Asia LNG demand 3% CAGR

Source: Shell interpretation of Wood Mackenzie Q4 2018 data
Royal Dutch Shell

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02
Royal Dutch Shell

Asian LNG imports exceed expectations again in2018 absorbing continued supply growth

Russia's first LNG plant on Sakhalin

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SHELL LNG OUTLOOK 2019

More than 70% of the current wave of LNG capacity additions online

LNG trade volume

LNG liquefaction capacity additions

MTPA (DES)400

MT (DES)50

Share online
100%

319
300

40

80%

30

60%

20

40%

10

20%

0

0%

200

100

0
2005

2007

2009

2011

2013

2015

2017

2019

2015

2016

2017

Capacity additions (2018 forecast)

2018

2019

2020

2021

Capacity additions (actual/2019 forecast)

Share online (nameplate capacity)
Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Asian LNG demand continues to exceed expectations

Net exports YoY

Net imports YoY

MT (DES)MT (DES)

30

Previous forecast (consensus)

30

Previous forecast (consensus)
Actuals

Actuals
20

20

10

10

0

0
Total

-10

2017

Total

Australia

USA

RussiaRest of
world

2018

Source: Shell interpretation of IHS Markit, Wood Mackenzie and Poten & Partners 2017 and Q4 2018 data
Royal Dutch Shell

Total

-10

2017

Total

North Asia

NW
EuropeS Europe

Rest ofworld

2018
YoY: Year on Year
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SHELL LNG OUTLOOK 2019

LNG imports increased by 27 MT in 2018

Net imports: 2018 YoY
MT (DES)Previous forecast (consensus)

16

Actuals

12
8
4
0

China

South Korea

Pakistan

India

Belgium

Netherlands

ThailandFrancePolandBangladesh

Singapore

TurkeyBrazilIndonesia

UK

Puerto Rico

MexicoTaiwanMalta

Colombia

PanamaPortugal

CanadaItaly

Dom Rep

IsraelJamaica

SwedenFinland

USA

KuwaitNorwayChile

Lithuania

GreeceMalaysia

Argentina

Japan

Jordan

Spain

UAE

Egypt

-4

Source: Shell interpretation of IHS Markit, Wood Mackenzie and Poten & Partners 2017 and Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

LNG imports continued to enable China to meet its growing need forcleaner energy
China energy demand growth by fuelChina gas demand growth by sector

BCM
3,700

BCM
280

16%
35%

3,650

6%

44%

260

BCM

21%

260

11%

240

240

3,550

220

220

3,500

200

200

19%

53%

280

26%

24%

3,600

38%

7%

China gas supply growth by source

Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

LNG provides energy security for India

India gas demand growth by sector

India gas supply growth by source

India city gas distribution areas

BCM
55

BCM
55

Number of geographical areas
250

50

50

200

45

45

150

40

40

100

35

35

50

30

2017

Power

Industry

Res &
comm

2018

30

2017

Domestic

LNG
Imports

2018

0

Existing

Under Awarded in To be
construction 2018
awarded in
2019

Source: Shell interpretation of PPAC and PNGRB Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Resurgence of longer term contracts supports new supply projects

Average contract length

Total LNG contract volumes by seller type

Years
20

MT
1000

16

800

12

600

8

400

4

200

0

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Portfolio

Project

Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Spot prices remained robust

Global Energy prices

Asian spot price$/MMBtu25

JKM as % Brent

20

20%

15

15%

10

10%

5

5%

0
2010

0%

25%

2011 2012 2013 2014 2015
Energy price range
Henry HubNBP
JKM (Platts)
Coal (ARA)

2016

2017
Brent
JLC

2018

Jan

Feb Mar Apr May Jun
Range 2012-2017

Jul

Aug Sep
2017

Oct Nov Dec
2018

Source: Shell interpretation of Japanese customs data (Japan LNG import), S&P Global Platts (JKM), ICE (NBP, Brent, ARA coal), NYMEX (Henry Hub)Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Spot market gains momentum with volume growth

Australia

USA

Qatar

Other

Re-exports% spotJKT
Middle East
% spotChina
Europe

400

120

300

90

200

60

100

30

0

0
2018

2018

2017

2016

2015

2014

0%
2013

0
2012

2018

2017

2016

2015

2014

2013

2012

2011

0%
2010

0

2011

400

10%

400

2010

10%

150

2017

800

800

500

2016

20%

1000 Lots
180

2015

1200

Cargoes
600

2014

20%

Share spot
30%

2013

1200

Cargoes
1600

2012

Share spot
30%

ICE JKM LNG (Platts) futures

2011

Cargoes
1600

Spot LNG deliveries

2010

Spot LNG Supply

South Asia
Americas

Source: Shell interpretation of IHS Markit Q4 2018, S&P Global Platts and the ICE data
Royal Dutch Shell

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03
Royal Dutch Shell

Shell Cardissa fuelling Gagarin Prospect, the world’s first crude oil tanker to be powered by LNG

Near term supply growth expected to be absorbed by Europe and Asia –continued need for investment in supply to meet long-term demand growth

IEEJ：March 2019 © IEEJ2019

SHELL LNG OUTLOOK 2019

New supply expected to be absorbed by Asia as well as Europe
in 2019
LNG supply growth range by country

LNG demand growth range by region

MTPA
35

MTPA
35

30

30

25

25

20

20

15

15

10

10

5

5

0

0

-5

-5
Australia

USA

RussiaRest of world

Asia

EuropeAmericasMiddle East &AfricaSource: Shell interpretation of IHS Markit, Wood Mackenzie, Poten & Partners Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Europe needs more imports to offset declining domestic gas
production
Europe gas supply outlook

Gas supply by source in 2019

BCMA
600

BCMA
600

500
550

400
300

500

200

450

100
0
2010

400
2015

Domestic production
Other pipeline

2020

2025

Norway pipeline
Russian pipeline

2030
Algeria pipeline
LNG

2035

2018

Domestic Algeria
production pipeline

Otherpipeline

Russianpipeline

LNG

2019

Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

European power sector is also capable of absorbing more LNG

Coal and gas-fired generation capacity and utilisation
GW
250

100%

200

80%

150

60%

European power switching economics$/MMbtu
12€/tn CO2
30

9

20

6
100

40%

50

20%

0

0%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Coal Capacity

Gas Capacity

Coal Utilization

Gas Utilization10

3
0
Jan-16

Jul-16

Jan-17

Jul-17Jan-18

Jul-180
Jan-19Range of coal-to-gas switching

TTF Gas $/MMBTUARA Coal $/MMBTU

European carbon price (RHS)

Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Asia has significant potential to take more LNG volumes

2018 Gas-fired power generation capacity and utilisation
87

GW

36

81

26

16

33

15

20

13

12

2018 Coal-fired power generation capacity and utilisation
GW

100%

100%

80%

80%

60%

60%

40%

40%

20%

20%

0%

0%

Unutilised Capacity

Utilised Capacity

Highest utilisation (past 10yrs)

43

42

996

Unutilised Capacity

235

20

Utilised Capacity

5

2

29

11

0.2

Lowest utilisation (past 10yrs)

Source: Shell interpretation of IHS Markit and Wood Mackenzie Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

China and India can double import infrastructure in 5 years

China Regas capacity additions

India Regas capacity additions

MT
160

MT
70

140

60

120

50

100

40

80

30

60

20

40

20

10

0

0

2018

2019
2020
Existing
Under construction

2021
Proposed

2022

2018

2019
2020
Existing
Under construction

2021
Proposed

2022

Source: Shell interpretation of IHS Markit Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Supply investment still needed to meet continued LNG demand
growthEmerging LNG supply-demand gap

Investment in liquefaction capacity

MTPA
700

MT
40

* Assumption- 5 years FID to be onstream

600
2018
outlook
range

500
400

30
20

300
200

10

100
0
2000

0
2005

2010

LNG supply in operation

2015

2020

2025

LNG supply under construction

2030

2035

Demand forecast range

2010

2012

2014
2016
2018
Year of investment decision

FIDs needed for high demand

2020*

2022*

FIDs needed for low demand

Source: Shell interpretation of IHS Markit, Wood Mackenzie, FGE and Poten & Partners Q4 2018 data
Royal Dutch Shell

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SHELL LNG OUTLOOK 2019

Summary

Growing recognition of the role of gas and LNG as
the world tackles poor air quality and climatechange◼ Gas to supply the largest share of energy demand growth, supplying

over 40% of additional demand by 2035
◼ Coal-to-gas switching led to 78% improvement in Beijing winter air

quality over the last five years

Asian LNG imports exceed expectations again in2018 absorbing continued supply growth◼ China became the world’s largest gas importer, with LNG imports

doubling over two years◼ JKM futures trading volume increased ten-fold since 2016

Near term supply growth expected to be absorbed
by Europe and Asia – continued need forinvestment in supply to meet long-term demand
growth◼ 35 MT additional supply expected in 2019
◼ 2018 saw final investment decisions on 21 MT of new capacity

compared to a total of 7 MT in the last two years combined
Royal Dutch Shell

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Royal Dutch Shell

Contact :report@tky.ieej.or.jp