1. Risk Reduction Beyond Insurance
OPERA Presentation
Risk Reduction Beyond Insurance
May 2013

2. DEFINITIONS AND CAUTIONARY NOTE
Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.
Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.
Organic: Our use of the term Organic in this presentation includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.
 The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate 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 subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. In this presentation, joint ventures and associates may also be referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This presentation contains forward-looking statements 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 current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. 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, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental 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 in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. 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 20-F for the year ended December 31, 2012 (available at and ). 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, May 28, 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 light of 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 presentation that 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 , available on the SEC website You can also obtain these forms from the SEC by calling SEC-0330.
May 2013

3. Introduction BEN CALDER Actuarial qualifications
FMCG – Fosters Group
Analysing sales trends
& forecasting
Shell
Global Lubricants
Planning, reporting & strategy
Common that new teams members join “cold” to insurance / risk management - 50:50
Majority R&I leadership team from other backgrounds
Department looks for wide experience to drive risk management program
Shell
Risk & Insurance
Risk management & actuarial
May 2013

4. Shell – Risk & Insurance Department
Executive Summary
Shell – Risk & Insurance Department
A risk management department and more than pure insurance
Compact team yet wide global scope
Being able to quantify the “value add” – prove our worth
Always looking for new opportunities & to “grow” our internal customer base
Reduce risk exposure and help Shell deliver on its promises
May 2013

5. Shell – some big numbers
Majority reserves owned by national oil companies
Plus +$30 billion spent on Capital Expenditure (growth) each year
May 2013

6. Shell – fully integrated company
May 2013

7. Shell – some big investments
Upstream business is not long term run and maintain
Oil/gas fields have a limited life (~30 years)
Need to keep investing to maintain cash flows as well as drive growth
Competitive market and shareholders have high expectations
Continue to deliver on promises
May 2013

8. Shell – big Projects to become even bigger
Less access to “easy oil”
Oil companies now need to go further to reach reserves to meet global demand
Projects becoming grander and more costly in scale
Deeper water, deeper wells
High Pressure High Temperature exposures
Arctic (ice)
Tight/shale plays (low permeability reservoirs)
Deepwater projects
NB diagram (all now in production except Gumusut)
Recent Reuters clipping – 9th May 2013
May 2013

9. Shell – the big projects
Prelude – Floating Liquefied Natural Gas (FLNG)
completion 5-10 years
May 2013

10. Shell – the big projectS
Pearl Qatar– Gas To Liquids (GTL)
Currently ramping up
May 2013

11. Shell – the big projectS
Sakhalin – one of the world’s largest integrated,
export-oriented oil and gas projects
completed 2009
Non-traditional environment
ice and earthquakes
May 2013

12. Shell – new external environment
Estimated Maximum Exposure
Macondo was a complete game changer
USD ??? bln
Service Providers/Contractors Response:
Re-assessment of contractual risk allocation
Oil & Gas Company Response:
Assessment of financial strength of partners
Joint Venture Partner selection
Operating Standards Non-Operated Ventures
Contractual Risk Allocation: full proportionality in case Shell is the Operator
Review & re-evaluation of standards and procedures
Improved emergency response capabilities
Improved mitigations including well capping mechanisms
Regulatory Response:
How can such an event be financed?
Protection of the public purse!
Demonstrate controls & capabilities for managing major incidents
Tighter controls on permits and demonstration of financial responsibility
Revamping of the regulatory authorities and the introduction of many new regulations
Post Macondo
USD ~5bn
Pre Macondo
Market Capacity: USD 2-3bn
May 2013

13. Who is best placed to finance the risk
The world’s largest companies according to Forbes
10 Largest Oil & Gas Companies
10 Largest Insurance Companies
Source: Forbes
NB. Forbes annual ranking of the world’s biggest companies departs from lopsided lists based on a single metric, like sales. Instead Forbes uses an equal weighting of sales, profits, assets and market value to rank companies according to size

14. Shell & use of Insurance
Extract from Shell’s 2012 Annual Report (Risk Factors)
No material 3rd party coverage / reinsurance for potential extreme events
Shell believes it’s risks are best managed by prevention
May 2013

15. SHEll risk & Insurance Department
More than just insurance
RISK
Joint Ventures
Contract Allocation Risk Mgmt
Construction
Risk Solutions
INSURANCE
Operations
Claims
Finance
Backgrounds
Insurance
Finance
Actuarial
Backgrounds
Law
Engineering
Insurance
Actuarial

16. Insurance function
Majority insurance written by “Solen” based in Switzerland
Governed by independent Swiss Regulatory Requirements
Subject to Swiss Solvency Test (SST) – Solvency II equivalent in Switzerland
Benefits
Globally consistent & standardised approach to insurance for Shell’s global Operating
Companies (OpCo’s)
Manage costs & centralise certain risks in one entity (pooling/diversification)
Shell Group to have more visibility over its risks
Track incidents & cost of claims
Use data to reduce and eliminate where possible
Coverage to OpCo’s for potential extreme impacts and protect their ability to remain as a going concern
Shell’s OpCo’s can deal with a single insurer leading to simpler & more efficient processes in respect of claims and renewals
Ensure cover is available to meet the OpCo’s needs even when capacity is limited in the market
Offer greater certainty and shorter turnaround over the settlement of large claims
Reduction in frictional costs (broker and loss adjuster fees)

17. Risk management function
Efficient risk management solutions to the OpCo’s
Centralised
Global view / expertise
Consistent / standardised
Specialist teams helping with
Contractual agreements
Joint Venture arrangements
Large Construction projects
Risk Identification => Quantification => Mitigation

18. Risk management teams - CARM
Contract Allocation Risk Management (CARM)
Many 3rd party contracts within Shell
i.e. suppliers, contractors
Develop mandatory Group requirements for the allocation of hazard risks in contracts
Consistent approach globally for risks agreed to contractually (and closure of gaps)
Embed CARM requirements in contract templates
Advice on bespoke contracts
Resolving negative departures from CARM
Deliver training on Contractual Allocation of Risk to the business

19. Risk management teams - JV
Joint Ventures (JVs)
Most larger Oil & Gas operations today are Joint Ventures
Majority resources held by national oil companies which require 3rd party input
Also helps share the current increasing costs/risks and to diversify
JV partners should share the upside as well as the downside
Operators particularly prone to “downside risk” or disproportionate risk
Team’s primary focus is to protect Shell’s interests in JV arrangements plus merger acquisition & divestment activities
JV partner risk assessment
Arrange effective & cost efficient insurance solutions to facilitate deals with financially weaker counterparties
Ensure Non – Operated JV is likely to be conducted consistent with Shell standards

20. Risk management teams - Construction
As previously mentioned new projects getting bigger in scope (i.e. increase in risk)
Many parties involved to achieve successful completion
Apply best practice Risk Management to Capital Projects to minimise the cost of risk
Project hazard risk properly recognised in project economics
Design / Risk engineering input – identify/reduce exposures
Ensure project meets all of Shell’s CARM & JV (where applicable) risk allocation requirements
Compliance with all applicable laws, regulations & contractual obligations with respect to hazard risk/liability management & insurance

21. Risk management teams - RIS
Risk Solutions
The technical team in R&I
Develop solutions to drive risk based thinking and help decision making
Looks at quantifying risk and using information for mitigation activities
Global Asset Risk Survey Program
Non-Technical Risks (i.e. political, supplier, hazard) in project economics
New Risks – analysing new/upcoming risks i.e. Fraccing, Carbon Capture & Storage
Aggregation analysis – key “hot spots”
Maintain database of Shell assets i.e. Replacement Value, EML, % share

22. Risk solutions – examples of work
Risk Survey Program – What is it?
Working with 3rd party global Risk Engineering practice
Typically risk engineers involved in insurance reports for underwriters
For Shell assets, insurance is essentially guaranteed by Solen
Focus on exposure quantification & risk improvement as against detailed asset information
Move from “balanced” insurance surveys to a “warts and all” survey
Extract as much “value” out of every visit as possible i.e. reduce risk exposure
Need to quantify each recommendation/improvement
Look at all risks
3rd Party
Profit Impact
Property Damage
3rd Party
Profit Impact
Property Damage
INSURANCE SURVEY
RISK SURVEY

23. Risk solutions – examples of work
Risk Survey Program – Quantifying recommendations
Marsh ranks all sites
between 0 and 4
Risk = Consequence x Frequency
The consequence is determined by evaluating various scenarios and the associated asset damage, consequential loss and third party liability
The frequency is determined by a combination of industry data and using the Marsh Risk Ranking during the site survey
EML Estimate

24. Risk solutions – examples of work
Risk Survey Program – Quantifying recommendations
After analysis & 3rd party verification below is a rough breakdown of Insurance Premiums and cost of risk
Premiums
Cost of Risk
33%
33%
High Impact/ Lower Frequency (EML)
Cost of Risk
33%
Cost of Capital/Reserves
Lower Impact / Higher Frequency (Under the Curve)
33%
67%
Cost of Overheads/Profits

25. Risk solutions – examples of work
Risk Survey Program – Quantifying recommendations
During our analysis, we equated a change in frequencies with change in Marsh’s Risk Ranking using a curve determined by various mathematical formulas
An increase in Marsh Risk Ranking from RRa to RRb would move the site from point A to point B, giving us a decrease in frequency from Fa to Fb A Fa B Fb
RRa
RRb

26. Risk solutions – examples of work
Risk Survey Program – Quantifying recommendations
When incorporating the expected cost of each recommendation we can perform a cost benefit analysis

28. Q & A
May 2013