殼牌 (SHEL) 2006 Q1 法說會逐字稿

Ladies and gentlemen, welcome.

We just had our media presentation.

Now we have the strategy update.

The first since September 2004.

If I compare the position now between those days in the middle of 2004 and now, I think we have had quite some achievements.

At the same time I would say more work to do.

How are we going to do it?

The disclaimer statement.

Did you read that?

Yes, okay, thank you.

Now we go to the agenda.

The agenda is over there.

You see I start with a short introduction;

E&P by Malcolm Brinded;

Linda Cook, the Gas & Power; oil products by Rob Routs; the financial framework by Peter, and I come back at the conclusion.

There is quite some material, but we try to help you through all those presentations in a bit more than half an hour.

My introduction.

We have achieved a lot in two years.

More to do.

I think that the unification, which we had not a clue where two years ago how to go to do that, is in the meantime implemented.

I think it works simpler.

It works clearer.

It feels like that there more accountability, and it enables us to work with more urgency.

We delivered record profits, cash flow and returns over 2005.

And you just have seen the 2006 figures for the first quarter, $6 billion, up 12%, CCS earnings, $0.94.

That was up 15%.

And we increased our dividend -- Peter will come back to that -- but we had a 9% dividend increase in euros from $0.23 to $0.25.

Our strategy, which we formulate now for already two years and four worlds more upstream, a profitable downstream.

It is unchanged and on track.

I am really pleased that it is unchanged, because I think a good strategy that changes every year is not a good strategy.

If I then go to the investment framework, how we do it.

At the height of this slide is competitive returns.

I mean competitive returns from our ongoing operations, projects, or for shareholder returns for that matter.

Those are the cornerstones around those competitive returns.

At the right hand side you see our strategy, more upstream, profitable downstream.

Thanks to hard work and thanks to some -- that we have good technologies in-house, we have portfolio choices.

And of course we come back to that how we were in the field of more upstream and profitable downstream, how we prioritize our portfolio choices.

If I go to (indiscernible), priorities on delivery and growth, the one I would like to emphasize is whatever we execute, whether our operations or projects, the aim is to beat the first quartile performer.

In the key performance indicators for that activity we like to rank within the 21st, 25 of the hundred.

And then if I go to the left hand, you can see we expect growth and energy demand.

That is a no-brainer.

But if you have the combination of the portfolio choices and execution okay, according to top quartile principle, then you'll have a lot of cash generation. 2005, we had $35 billion of cash generation, and 9 billion of cash in the first quarter.

At the same time, what to you do with that cash?

You can reinvest or it to return to the shareholders.

For me, that is about the balance.

If I look first at the reinvestment side, we did $15.5 billion of investment last year.

Our aim is to do this year 19 billion.

And in the later presentations we will come back on that that we aim for 21 billion of reinvestment in the year 2007.

Why is that such a high figure?

Because we have good opportunities in our own portfolio to do so.

At the same time, we do not forget the shareholder.

Last year we returned 17 billion in a combination of dividend and buybacks to the shareholders.

And this year, as I just said, we have a sizable 9% increase of our dividend.

If I then look at strategic context, the strategic context first of all is the very high oil price of today.

We're not going to predict oil price, apart from that we say we expect to be at [quartile].

In the media conference we just said you have to look at the fundamentals of the oil market at this moment.

There's not any reason to panic, if we look at the stock and inventory positions.

So it is all to do about anticipation.

You say in the future capacity in the world and how about geopolitical tensions?

But let me say that if we look at our investments, and you see here the graph about our business developments and what we have in the construction, then if we rank our projects, we look, of course, that if the prices are relatively high, the [lower] we are today, do we have our share of the upside?

But at the same time we test all our projects at much lower oil prices.

We come back to that later in the presentation.

So the present prices are not a guide for the investment decisions.

The present oil and gas prices, as we see today in the market, are not a guide for our investment decisions.

Of course, we keep to the capital discipline, as I just explained.

If you translate all those financial figures, and what we do at this moment, that means that we have 50 major projects at this moment under construction -- half under construction.

Sorry, 50 major projects, half is under construction.

And including the other half, we bring them on stream by 2009.

And basically those 50 projects, where we're busy with this, are either on the construction or in design stage, is the underpinning of our production forecast for 2009, between 3.8 and 4 million barrels per day.

After that we have more options.

We work on that.

And if we combine that we stick to our aspiration that in the year 2014 (indiscernible), we would like to be between 4.5 and 5 million barrels per day.

At the same time I have to say we see pressure on the industry -- on industry costs.

We see cost inflation.

And we have to take into account that we would like to rework certain designs, or we would like to consider time of various projects, but that will not affect our 2009 guidance for the production.

We think that emphasis on technology -- how can we win in the future, is the basic question.

We think that to win in the future one of the cornerstones is to keep a key competitive advantage with the help of technology.

For instance, to give you some examples what we try to do with technology is to make sure that we get a high recovery out of conventional hydrocarbons, so that we can develop the fields in a way that we get out a maximum percentage of oil, of gas, out of that field.

And of course we look at unconventionals, think about heavy oil and oil shales.

But it is not only upstream.

In the downstream we work at better fuels.

We work on biofuels, on cleaner fuels.

And of course we have our eye on the eyes of carbon dioxide.

Can we made fossil fuels relative greener?

That is some modesty there, I think we should say.

Or can we capture C02?

So for instance, this coal technology that your [cat] power is less CO2.

And we try to make one renewables business.

That is the right hand corner.

We try to make at least one renewable business in a big sizable business over the longer term.

If I look at the global reach and track record, very important for us.

We think global reach and to work in many countries, and over many projects balances our risks.

Here you see with examples.

I like to highlight that in Nanhai, the $4.3 billion project, we started on time, on budget, and it was a flawless start up.

We deliver now 11 LNG trains since '99.

Nearly all of that work on time and on budget.

We're delivering 16 deepwater projects in five countries since the year 2000.

And we have created integrated Athabasca oil sands and upgraders in Canada.

Of course we work not only in those new projects and operations, we work to have this top quartile performance in our operations, so we look at refinery down times and at reliability.

If I then look at -- if we have all those ambitions then how can we implement that?

This is all about not having, let's say, the technology and the capabilities.

They are embedded in people.

We have to make sure that we have enough professionals in our industry.

We have certain demographics that the average age of the industry is not that young at all.

And at the same time, we have this ambition of this huge capital program and (indiscernible) perfect operations.

What you see in this graph, we have 2,700 new hires, partly -- for a greater part I have to say that (indiscernible) accomplished this already last year.

We think we were ahead of the competition by recruiting so many people.

But I'm convinced we are going to enjoy that, because to have the right professionalism, capabilities and experience in our industry can be quite a key for our industry in the near future.

This is my introduction.

And I hand now to Malcolm.

Good afternoon, ladies and gentlemen.

Our EP strategy that we have been pursuing consistently for the last two years is unchanged.

We're working to unlock our 60 billion barrel discovered resource base, and to build on our strengths.

On the bottom right of the chart you see the key areas we're focusing on for performance improvement.

And on the top right we said we would drive our portfolio toward higher price and volume upsides, and that is what we have been doing.

On performance, I think in our world of accounting complexity, the best guide to competitive performance is sustained, long-term unit cash generation.

And in 2005 we were near the top of the pack of the five largest IOCs for the fourth year.

We also take 10 major final investment decisions.

We accessed seven new exploration basins.

We strengthened our LNG and unconventional opportunity set, which are actually both unmatched in the industry.

And despite cost pressures and tax increases, we're still capturing price upsides.

And you'll see that in our first quarter results, which where our unit earnings are up 35% in the upstream compared with Brent up 29%.

Now delivering production in tough environments is of course a key capability.

In 2005 we stayed on track and within the range expected despite the hurricanes.

We have also taken radical action to improve our project delivery performance, which is an area I acknowledged a couple of years ago as something we had to focus on.

And that is the examples here.

I think they are all important and their own way.

On Bonga we had another flawless start up.

And we achieved nameplate production and water injection capacity just 11 weeks after we started up.

And this platform has been averaging around 200,000 barrels a day over the last two months.

In Pinedale, in the Rocky Mountains, we have cut drilling times dramatically, down 36% since 2002.

And we're very much the industry best in class in that region in that tight gas.

And in western Siberia, in our Salym development, we brought that downstream in just two years.

It is an operating company with over 800 people, 90% of them Russian.

And we have actually cut drilling times in half to a record 11 to 13 days, which is far below the Russian operator average in the region.

In terms of our outlook for 2006, let me start with hurricane Katrina and the impact that it had on Mars, which as you see on the top left chart was pretty dramatic.

I have been really proud of our response to the hurricane, both in an operational sense, and also in the way we just the people issues and the community issues.

Of course it has been a huge engineering feat to actually lift the tangled wreckage there, and then get into the replacement and rebuilding.

We also conducted the deepest ever underwater pipeline repairs, some 3,000 foot below sea level.

Mars will be onstream in the next few weeks.

And it will ramp up to its pre-Katrina production levels by the end of June.

We're expecting 3.5 to 3.6 million barrels of production this year.

That assumes that we get fairly significant production back from Nigeria around the middle of year.

Of course the Q1 Nigerian impact was about 112,000 barrels a day.

And we have currently, as you know, got 165,000 barrels a day, [Chouche] shut-in.

And we expect to restart that, but we will only do so when it is safe to enter and do so.

Now of course, the EP environment has changed significantly.

The headline oil price of course, but the changes go much deeper.

Costs have increased, and contractor capacity in particular is very constrained.

There are other changes as well.

There is new entrants in the market, which increased competition on the one hand, but they do also bring new opportunities, because we have been working in partnerships with NOCs for decades in the downstream with Saudi Aramco] and Penex, and more recently now, for example, in the upstream with [Synapeck and No NGC].

Our focus in those partnerships is on adding value and showing we can add value to the partnership through technology, through our ability to undertake large-scale projects, and also particularly in the development of national staff and the development of local supply chains.

And those are all key capabilities.

Oil prices, of course, increase the ambitions of suppliers, but also of governments.

And we have been very successful actually in this period in accessing new acreage.

But in doing so we have tried to stay away from what some would call irrational exuberance.

So we plan very much for the long-term.

And we have seen some recent bids in some places which we would view as simply unsustainable.

For example, in one country we entered when the production allocation to operators was around 30 to 40% a couple of years ago.

We saw it going up to -- down to 10 to 20% the following year.

And at that point we said, we don't want to bid in that for my environment at those levels.

The bottom line in our view is we can build our acreage position.

We can take the opportunities.

We have enough opportunities to only take those that we see good value in.

Now of course, as I have said, the industry sees great cost escalations.

There is some examples here, and you see in some cases -- in the case of mobile rigs for example, it is up to 400% over the last four years.

And I will show you a bit more on the next slide about mobile rigs.

You see there is a real strong correlation between additions to the fleet and daily rig rates.

In the mid-90s rates went up -- that is in the green dots -- Stimulating the orders you see a couple of years later.

Then by the end of the decade rates went down in response to all those new builds entering the market, and of course the oil price slumped.

So then orders slumped.

Then we see in 2004 oil prices going up and demand for rigs going up.

But with few having been built in this period, you see that massive hike in rates in the green dots we've seen in the last two years.

Again with another wave of new orders.

So what is going to come next?

And my view is fairly simple.

That is why we have committed and got the rigs we need for 2006 to 2008.

But beyond that I see it as likely the rates will ease, as all these new builds enter the market.

And this is important, not just in when we are contracting rigs, but also in thinking about the timing of new projects.

What is our response to this changing world?

First of all, we're focusing investment on long life and low decline projects.

Projects that include unconventionals, such as gas to liquids, and oil sands, which we think will become increasingly important.

We've got a strong and growing pipeline of opportunities and we can pick and choose which ones we want to go.

And we think that ability to select is going to be crucial, especially in the overheated market.

For example, in our global Deepwater portfolio, we've got a lot of projects.

And several of them we may choose to delay by one or a few years, and that may depend partly on rig rates.

And an example is in the Gulf of Mexico near Mars, which we were planning another Mars South minihub, and that is one of those that we are going to delay.

The priority we have is on value, and if we see value in waiting and more value from waiting, then we will do so.

We will also continue to refresh the portfolio, capturing value from divestments or swaps of non core assets, and taking advantage of the current price environment in order to maximize value.

I think in terms of capability, we see our competitive edge, what is fundamental to that is technology, integration and partnerships.

I think on technology this year to illustrate in E&P we will be spending three times as much on R&D as we did in 2002.

We're also opening the new technology center in Bangalore in India.

And as (indiscernible) showed, in terms of capability we have moved quickly and had real success.

And I think one of the biggest drives for recruitment of talent the industry has seen.

Now resource base is strong.

As I said, we have around 60 billion barrels of oil equivalent of producible, discovered resources in our acreage today.

That excludes the undiscovered resources in this acreage.

And there we have added many important new positions over the last two years where we do expect that drilling will add significant discoveries.

I also expect to see major potential for growth from unconventional resources.

For example, there's nothing yet included here from the very large heavy oil resource base we recently bought in Canada.

Now last year we added over 2 billion barrels of resources from exploration and from entering new positions.

That is shown on the top right.

And you can see that is over 50% above our annual production.

And looking ahead we previously forecast SEC reserves replacement over the 2004 '08 period to average 100%.

And we still have a fair prospect of achieving that.

However, the industry is seeing marked increases in material costs and contract rates.

And our requirements for competitive returns means that, as I have said, we will probably hold back some of our longer-term projects until the supply and contracting market cools down.

Which in turn would make achieving our replacement forecast less likely than it was.

So we now SEC reserves replacement across the '04/'08 period as an outcome of our investment choices rather than as a forecast, because we don't want that target to drive the wrong business decisions.

And that is either in the timing of projects or the type of resources that we prioritize.

Our projects portfolio is robust and it is growing, with an important contribution coming from integrated gas and from unconventionals.

And so through time I expect this to provide full replacement of our production, simply put adding at least one barrel to each of those two left-hand columns of resources and reserves for every barrel we produce.

Now as I said two years ago, we manage our business primarily on the basis of this the 60 billion barrel overall resource base.

And unlocking these resources with new facilities to achieve production growth is our prime goal.

And over the last two years we have had real success actually in building an excellent set of growth opportunities.

Indeed, we're building projects, and we will take investment decisions by the end of the decade which together will have opened up some 20 billion barrels since 2004.

And that is equivalent to around 15 years of current production levels.

This 20 billion barrels includes many long life fields, which will underpin our production and our profitability for many years to come.

Here is a breakdown of our major project funnel.

By major projects, we mean those where capital investments exceed $100 million Shell share.

Now the resources from projects in blue are the ones that underpin our 2009 production.

And as you see, the majority are already under construction.

In red you see the amount of quality options that we have available, which we can develop selectively at the right pace and time, and that will grow our production post 2009.

In terms of production, I have mentioned last year and this, and I expect in 2007 to see an increase.

We're quoting a range at the moment of 3.5 to 3.8 million barrels a day and that assumes $50 a barrel.

And we are on track to meet our production outlook for 2009 of 3.8 to 4 million barrels a day.

And in that we're assuming $35 a barrel.

So it is the same production outlook as we have set two years ago when we were actually assuming a $10 less basis price.

I should also stress our aspiration for 2014 is unchanged at 4.5 to 5 million barrels a day.

Now underpinning these production targets we have a strong funnel of major projects.

And you see that here, and you see it covers all our major portfolio themes.

You can also see in black italics that 12 of the major new projects that will be onstream by the end of 2008, and that really support that 2009 production.

And of course it includes mega projects that you are familiar with, like Sakhalin, but there is some very important smaller, but highly profitable projects, like Pohokura, which is going to start up later this year.

Now as I have said, we focus on investing in low decline, long life projects.

And existing positions also make a significant contribution to our long-term production.

We actually, as this graph shows, expect steadily growing output from this core of long life projects and positions.

What is important though is I also expect to maintain our very competitive position in terms of unit cash, where I indicated earlier we're at or near the top.

And you see here the average unit cash flow from operations from all the new projects is expected to exceed that of our current portfolio, and that is at $35 a barrel.

And in fact some 70% of the investment in new projects is going into areas which offer high-priced upsides.

And a last comment on the slide is that our development costs, $4 to $8 a barrel, we see as very competitive.

And that is the typical for our upstreams projects.

I would like to focus a bit on unconventional oil and in Canada, where we recently bought 10 parcels of heavy oil acreage, which we aim to unlock using enhanced and new heavy oil recovery technologies, which we have been working on in R&D for many years.

We believe there is over 30 billion barrels in place in this acreage -- 30 billion.

That is a huge prize.

Of course, we're appraising it soon in order to fully understand that resource.

I would highlight, of course, we already have production in heavy oil in Peace River, where we have 7 billon barrels of oil in place, and a potential for 100,000 barrels a day of production.

In the oil sands at Athabasca we have been very successful.

And Shell Canada has over 6.5 billion barrels of recoverable bitumen there.

And that is not including the new acreage they added in December, which as you can see, is more than 50% of their existing acreage.

In Athabasca we still expect a three-phase development to expand production to around 500,000 barrels a day by 2015 or so.

This is an example of a project we're looking closely at in terms of the immediate expansion plans in the light of the overheated supply market.

Now so we have a good set of options, and we're adding to them I think very successfully with exploration in particular, where we have focused over the last three years on larger opportunities in fewer countries.

In 2005 we actually had 93 discoveries.

That is a 67% success rate.

And we drilled in fact 7 big cats.

That is discoveries with over 100 million barrels of oil equivalent, Shell share.

We drilled 7 big cats out of the 15 that we drilled.

Overall from exploration we added over 2 billion barrels of discovered resources.

We're going to maintain exploration expenditure at around $2 billion per annum.

And from that we have a long-term unit finding cost, which we think is very competitive, and a good way of adding resources at around $1 to $2 per barrel of oil equivalent.

Not only did we have good results on the drilling side, we had a really good year in acreage.

We added in 14 countries 7 new basins.

And that is places such as Ukraine, Alaska, Algeria, Libya and Australia.

And just while we're on the chart, I hope you notice last week we increased our share of BC-10 in Brazil.

That is heavy oil in deepwater.

That is a play we think will be very important, and we're pleased to be operators of that project.

And that increase takes us up to 50% share.

My priority is to continue to improve EP performance.

Our underlying skills and capabilities in EP have always been strong, but I think we lack focus, and so we have changed.

First, we have a roadmap and priorities that are very clear and absolutely understood globally.

Second, I have brought nine new people into my leadership team of 13, because the first priority is get the right people in the right jobs.

And third, we are very much changing the performance culture of the business.

Much more clarity as to who is accountable for what.

I have regular face-to-face performance reviews, each of them goes down the line in each organization.

I do that with every region and every operating unit.

And now globally they are looking at the same set of metrics for performance.

It is a big shift.

And we focus on our top 46 producing assets, each of which has clear plans to get them to top quartile for their basins.

I also focus on our top 70 growth projects, and particularly the milestones to stay on track in terms of budget and schedule.

As well as performance today, we're building our capabilities for tomorrow.

And that is particularly around deepening technical professionalism, which we see as central to our competitive edge, and central to our value as a partner for host governments and NOCs.

If I can sum up, in this transformed EP environment we think we are well placed to win.

We are on track to 3.8 to 4 million barrels a day of production in 2009.

And with our strong cash performance, that will result in world-class cash generation.

We've got a stronger funnel of projects underpinning that growth, from which we will only select the best value opportunities to sustain that strong unit cash performance.

It is a simple formula.

It is about careful choices, and top performance.

And that is what is going to deliver the best returns to the Company and enable best returns to the shareholder.

Overall, we have had an interesting past couple of years, but I'm extremely pleased with where we are now in terms of our portfolio, our opportunities and the asset base we have.

And we're setting out on a path of sustained production growth that I expect to last well beyond 2014.

Thank you.

I would like to hand over now to Linda.

Good afternoon.

Today I am going to focus on our traditional natural gas business in Shell.

I will cover progress over the last two years.

I will say a few words just about the global trends we seen in LNG in general.

I will provide an update on our strategy and portfolio.

And then at the end I will say a few words about Shell conversion technologies.

And we include in that gas to liquids, but also some new technologies related to coal.

Over the last 18 months we have made significant progress I think in Gas & Power and execution of our strategy.

We have brought three new trains of LNG onstream.

We have five new trains in addition to that under construction, as we speak.

And five additional trains have entered the design phase.

We've also made progress in LNG market access, which is becoming even more important, as we see the trends in LNG worldwide.

This includes a North America and India.

And also in the next few weeks we will be delivering what will be the first cargo of LNG ever to China.

We've also completed a major portfolio management program, including divestment of our European midstream business, as well as [Intergen].

Financial performance has also been strong.

And I am pleased to say we are off to an excellent start in 2006.

The LNG segment continues to be by far the largest contributor to earnings, as well as to the growth in our earnings.

This is driven by of course high commodity prices, but also the new volumes we're bringing onstream, and also operational excellence.

LNG also delivers strong returns for us in Shell.

ROCI over the past 20 -- over the period shown, sorry, is over 20%, even with a very high rate of investment.

It is important to think about that when you think about returns over 20%.

Turning to our growth target, we remain committed in Shell to our target of 14% average annual increase in LNG capacity from 2004 to 2009.

This is based on projects that are already under construction.

And with the construction complete now on the fourth and fifth trains in Nigeria and also the Qalhat project in Oman, we have made good progress against this in the last few months.

This growth rate should ensure that we maintain or grow market share in what is a sector with a fairly high rate of growth.

And it should also help us maintain our lead over the major competitors.

Now I think just a few words maybe on the LNG sector in general, because I get a lot of questions about this.

By 2020 LNG supply could meet over 20% of the world's natural gas demand.

So it is changing in terms of growing at quite a fast rate, but it is changing in more ways than just size.

In 1990 LNG was considered a niche, capital intensive -- some people considered risky business -- focused on the northeast Asia region.

I think today customers around the world see LNG as a cost competitive way to diversify their gas supply.

Looking ahead there are opportunities for further progress through things such as larger LNG trains, larger ships, and increased flexibility in the marketing of LNG around the world.

Our strategy then in this dynamic business environment though remains essentially unchanged.

Basically it is about linking together three things.

First, a set of leading global technical and commercial capabilities.

Second, a global portfolio of supply.

And third, a leading presence in both established and emerging markets around the world.

This strategy is what has enabled our successful growth in volumes over the past few years, and helped us develop a portfolio -- a strong portfolio of new opportunities for the future.

First let me just say a few words about the capabilities.

In a capital intensive business it is important that we can deliver major projects successfully.

And since 1999, as Jeroen mentioned, we have built 11 new trains of LNG.

This is more than any other company.

And we delivered them overall on time and within budget.

The most recent example is the Qalhat project in Oman.

It was delivered at an EPC cost of less than $150 per ton per annum, which set a new record around the world.

And it also started up in just nine days.

So first LNG in just nine days from the completion of construction, another world record, beating unfortunately for us, our Northwest shelf project in Australia.

So they were sad to see -- losing that record.

We also have a strong operating track record.

Last year Shell LNG joint ventures produced about 40% of the world's LNG.

And we did so at a plant reliability of 97%, which is better than the average of the competitors.

By matching Shell's performance, the other projects over the the periods shown could have produced more than 500 additional cargoes of LNG.

And at today's spot price, a cargo is worth about $30 million.

So you can imagine the sorts of money that was left on the table.

And it just highlights I think the importance of operational excellence and maximizing utilization.

Let's look at the supply portfolio, and I'm going to start with our new project in Qatar, Qatargas 4.

Shell was offered entry into this important natural gas resource holder because we were seen to bring two things to the table that differentiate us from other companies.

First, we had access, or we were able to offer access, to a premium market outlet in Elba Island.

Elba Island import terminal is located on the East Coast of the United States.

And it provides better net backs to the Middle than what I refer to as generic Gulf of Mexico LNG import capacity.

Second, we were seen to bring leading expertise in LNG project management, operations, and also in shipping.

The Qatargas 4 project continues to move at quite a fast pace.

Less than 10 months from signing the heads of agreement with the government, we were able to start construction of the project at the end of last year.

Next, Nigeria.

Nigeria LNG produced its first cargo in 1999.

And since then it has already become the world's fourth largest LNG producer.

Train six is under construction.

It will take capacity to more than 22 million tons per annum.

And plans for train seven are underway.

We're also now pursuing a second LNG project in the country.

It is called Olokola LNG.

It is designed to be delivered in two phases, a total of four trains, a total capacity of over 20 million tons per annum.

And like Nigeria LNG, the first project in the country.

It will be well positioned to serve the growing markets in both Europe and North America.

Turning to Asia Pacific and Australia.

We have several projects -- Shell projects in the country that are moving forward.

First, construction of the fifth train at the Northwest Shelf project.

We have design underway for the Gorgon project, as well as in Woodside, the Pluto project.

And we have exploration at our new block in the Browse Basin.

There is no doubt that Australia has its challenges.

And for example, we see those in Gorgon with high CO2 content, distance from market, and also other environmental sensitivities.

But Australia has its advantages as well with a stable fiscal regime, stable government.

And importantly, in Shell we have enough resources in Australia to more than quadruple our current LNG producing capacity in the country.

If we couple this with our strong outlook for LNG demand in the Asia-Pacific, I think in the long term I think we say we are optimistic about our prospects in the country.

One final example on the supply side then is Libya.

One year ago we reached an agreement with the Libyan National Oil Company that included three things.

First, a major exploration license in the [Cert] Basin, where seismic activity is already underway.

Second, the rejuvenation of Libya's existing LNG project at Marsal al Brega.

And third, should exploration be successful, the possibility of expanding the existing plant at Brega of building a new LNG project in the country.

We see this as just another example of the value of Shell's LNG capabilities enabling for us a new upstream position.

These are just four examples of the growth potential for of our LNG resource base.

Overall, it provides a huge set of opportunities, including expansions of existing projects, as well as new greenfield positions in some of the most important natural gas resource holders in the world.

As shown on the chart, the opportunities should enable us to extend our growth beyond 2009, and well into the next decade.

I have touched now on the global capabilities and also on the supply side, now let me just say if you words about marketing.

We're the only international oil company with a top three position in the world's three key natural gas markets, Europe, North America and Asia-Pacific.

In addition, we're the only company with LNG sales to both India and China, important emerging new markets for LNG.

We're positioned for the long term and in a way that complement and is strategically linked to our upstream position.

An example of this is what we do with LNG import capacity or regasification commitments around the world.

We currently hold LNG capacity rights on the East and West Coasts of North America, in Spain and in India, and we're developing a number of other projects.

But we're pretty selective.

We don't invest in regas capacity for the sake of being in the regas business.

To be of interest to us, new regas positions must provide one of two things.

First, they must give superior net backs to one of our supply positions, or they must enable proprietary access to emerging markets.

And then we use these assets to optimize the value of our existing supply position or to gain access to new upstream positions around world, like we did in Qatargas 4.

Regas positions also support our growing portfolio of Shell marketed LNG.

Through this we create value by accessing higher value markets for our supply portfolio.

And also we help optimize shipping for our joint ventures.

One example is shown on the chart.

It is the diversion of Northwest Shell volumes from their original intended market in North America to what were at the time higher value markets in Europe and in Asia.

Another recent example involved shifting, or moving, a cargo from Nigeria to Spain.

This enabled us to diverge a cargo from Oman originally intended to Spain, to our Hazira terminal in India, enabling higher net backs to all of those projects, and then a margin as well for our marketing company.

Again, a very successful way where we leverage our global supply, our global market positions and our capabilities to the benefit, not only of Shell, but also our LNG joint ventures and our customers around the world.

And then just a final bit on LNG.

The shift we're making with respect to diversification of our markets overall over across the whole portfolio.

In the past years 3/4 of our LNG sales were to Asian markets under long-term contracts.

But with the growth of our African and Middle Eastern supplies, we will broaden that exposure in the coming years.

This will add value by giving us a better balanced portfolio, as a company more exposure to Henry Hub pricing and upside in the North American gas market, and also importantly an overall greater degree freedom of flexibility in the portfolio.

Now just a few words about what we refer to as to conversion technologies.

I think you're familiar with gas to liquids.

We have ten years of operating experience now in Bintulu in Malaysia.

And we are already marketing GTL diesel blends in more than 3,000 retail sites in seven countries around the world.

We also have only one of four commercial coal gasification processes.

We have not talked much about this externally before, but the process converts coal, as Jeroen said, to synthetic gas that can be used in power generation or as a chemical feedstock.

It can also be used in a gas to liquids plant to create clean liquid transport fuels from coal, or a process we call CTL, or coal to liquids.

And then there's the potential for BTL.

It is not a sandwich. it is changing -- going from biomass to liquids.

And Rob will say a bit more about that later.

So first GTL.

The Pearl GTL project in Qatar continues to make steady progress.

We have now completed drilling two appraisal wells.

Based on data from these wells, we've increased our forecast of total production -- liquid production from the project to over 240,000 barrels per day.

We also completed projects scope and detailed design.

And in light of the current cost environment, we have rephased the construction schedule and we rerevised our contracting strategy.

We're now in the process of receiving final bids for the project.

And we're in discussions with a variety of contractors.

We hope to be in a position for a final investment decision later this year for what we continue to believe has the opportunity to be a very exciting project for Shell.

Finally, coal.

Finding better ways to utilize the domestic coal resources of countries like India and China is very, very important.

With more than ten years of operating experience, Shell's coal gasification technology reduces CO2 emissions in power generation by 15% when compared to conventional coal-fired power.

If you go one more step then and sequester the CO2 from that process, you end up with CO2 emissions free coal-fired power.

And at today's oil and coal prices, going the next step in converting coal to liquids is actually commercially viable, while very capital intensive.

We have already sold 14 licenses for our coal gasification technology in China.

The construction of our Dongting joint venture project with Sinopec in China is nearing completion.

And we are in discussions with many, many governments and companies about possible new opportunities.

So while not a large contributor to earnings today, the technology has great potential for the future.

To wrap up the business environment for natural gas, and for LNG in particular, remains very, very strong.

We're building on a successful track record in Shell, successful major project delivery, strong portfolio management, strong financial performance and growth.

We have a proven strategy, I believe, a very strong portfolio of new opportunities, and some exciting new technology, leaving us very well positioned for the future.

I look forward to your questions later.

I will turn it over to Rob now to talk about the downstream.

Good afternoon everybody.

I am glad to be here to give you an update on the downstream.

Our aim remains to be a downstream leader wherever we choose to operate.

Increasing profitability is our focus.

We try to do that in four ways.

Number one is restating reshaping the portfolio.

And that means divesting of assets that are either not profitable or of no strategic fit for the portfolio.

We have selective investments going on, and we also have tried to access those very fast-growing markets.

Customers are our lifeblood, so we try to focus on the customers in a major way through A., keeping our position where it is today, being the preferred brand, and also being first and remaining first in differentiated fuels and lubricants.

Operational excellence is the heart of our business, and that is the way we try to make money.

A huge element of that, and I have explained that to you a while ago, is what we call the Downstream One agenda.

It is a total restructuring of the downstream organizationally, plus bringing in new processes and standardization through systems.

Its main aim is simplification and standardization of the total business in both oil products and chemicals.

In that people, technology and innovation are key.

Also, maximizing value of integration is extremely important to us.

And I'll give you a couple of examples of that.

In the meantime, our capital spending remains restricted and very focused.

Let me tell you then about what we have done in those several areas.

First of all, I will show you the result of our competitive position at this point.

We have also added -- other than unit earnings -- we have added the unit cash flow.

Here you can see that we are clear leaders in this business.

Also I am very pleased to say that again in the first quarter of this year we actually in absolute terms had the best earnings in the downstream when we look at our competitors.

So 2005 was a record year for us.

And we want to continue to beat the competition.

In discrete quarter one earnings we were $2.27 verus ExxonMobil at $2.20, so still well ahead of some of the competition.

In cash flow, as you can see, almost 10% higher than the strongest competitor.

Jeroen mentioned Nanhai.

I will give you some more detail on that.

We are very proud actually that we have been able to pull off a project in China.

It is the biggest, the largest sign of foreign investment that has ever been done up to now.

And it serves a very fast-growing Chinese market.

And it actually demonstrates clear success that we are able to build a strong business in a high-growth emerging market.

It shows that we can execute major projects in a profitable way.

And it builds, that is very, very important for the future, and it has been said in number of times before, it builds very strong partnerships.

Like forecasts on oil price, I am and very often asked on forecasts on refining margins.

As we're not going to give you those, but I can give you some inkling as to what is happening, because there's a lot of stories out there in the market about the golden age of refining and refining margins running up.

This is the picture that we're looking at right now.

We're looking at an addition of close to 11 million barrels a day of refining capacity from here to 2010.

Most of that is east of Suez, in the Middle East, in India, in China almost an addition of 22%.

In U.S. we see some growth of 6%, mainly in complexity.

And then there is some complexity addition in Europe, but not much.

There also fundamental changes in the demand picture.

Dieselization in Europe continues to be very -- come very fast.

Plus the fact that biofuels, of course, are now mandated through the energy bill in the U.S., and also the European Commission has put a target of 5.75% for 2010 on the table.

Those ethanols and other biofuels will take the place of hydrocarbons.

All that actually in the future, all those are factors that will put pressure on the margin.

Talk about portfolio.

Here's a demonstration of that.

The red dots and circles are areas where we have actually divested out of in the world, and the green areas that we're growing.

There is significant activity across the globe.

We have divested more than $8 billion of assets over the past couple of years.

In the meantime, we have kept our strong positions in our portfolio in the heartland markets.

Now it is the time to start grabbing those opportunities in the areas such that show high growth.

Nanhai is an example of that.

We used, as I said earlier, some partnerships in the downstream in order to build that.

And an other focus area for growth for us is actually bringing the GTL that Linda mentioned, to market but also starting to concentrate on biofuels.

We have a lot of partnerships in our downstream business.

An old ones, a long-standing one is the one with Saudi Aramco, the Al Jubail refinery.

We have Motiva, the East Coast operations in the U.S., and of course Saudi Aramco has bought 15% of our Shell shore operations.

We have a chemical business with them in Saudi Arabia, SASREF.

And that is together with SADAF.

And in Deer Park in the U.S. we have a huge cooperation with Pemex in refinery.

All of those areas are actually subject to study now for a change in investments.

You have heard not too long ago that we are on our way with plans, and that we're studying the possible expansion in Port Arthur, which would pick Port Arthur refinery in Texas, the biggest refinery in the U.S.

And of course the latest technology and all the upgrading that it needs in order to be competitive in that market.

We're looking at a Deer Park investment together with Pemex in order to again add to its upgrading facilities.

You have read about a memo of understanding that we have signed with Q8 Petroleum in order to study worldwide projects that we can do with them.

And we have actually identified a number of areas where we can meaningfully work together.

Finally, we have announced that we're studying the feasibility of a petrochemical complex together with Qatar Petroleum, connected to our LNG and GTL facilities.

When we're looking east in terms of our investment, the last time we spoke we said we had a strategy of moving our business from West to East.

You see a number of geographies that are very attractive and interesting for us.

First of all, China.

China will be the second biggest downstream market by 2010.

We have announced a retail venture with Sinopec that will rise from 200 stations today to 500 in the next 12 to 24 months.

Our lubricants business in the last three years in China has doubled.

And we're actually expanding it because it is the third market for Shell on lubricants already today.

We have done a bitumen acquisition.

We bought the bitumen business from Coke in China.

And it actually more than doubles our bitumen business in the country.

We're very interested in a refining position in the country as well, and we're talking to a number of parties about that.

India, we're the only one international oil company today that has a retail license and marketing.

And we're studying to grow quickly.

Today we have 13 sites open, and there's another 90 sites that we're actually building, designing, (indiscernible) acquired the land.

In Indonesia -- Indonesia is very short on pumping capacity.

And we have actually opened up our first three stations in and around Jakarta as the first international oil company.

Turkey, we have formed a joint venture with [Turk Gas].

And we will actually operate more than 1,200 stations in the country that is going extremely fast in terms of fuel consumption.

And we have taken a small position in the acquisition of [Tupris by Coach].

In retail we remain the brand leader.

We have the highest brand preference.

And I have to remind you that brand preference basically means that when people are asked about where they preferably want to fill up their tank, given the same location price, they named the one company.

And you can see in most cases that is Shell.

Our brands out there.

It is very strong, and it is a key asset for us.

It is strong we believe because of our very strong technological leadership.

It is all about innovation.

People believe that we have high fuel quality, and that the choice program that we're offering in terms of differentiated fuels is great.

In a number of countries our relationship with Ferrari is very much appreciated.

We continue to work on the consistency and clarity of our offer.

We concentrate on the key markets.

And we have a relentless focus on competitiveness, and that is the way we intend to stay in that leadership position.

We talked about integration of the business.

And this is an example of the oil chemicals interface that we started to talk about actually in 2003.

It has created a lot of value for us.

Co-location of refineries, petrochemical plants and upstream facilities is extremely important in this game.

Securing advantaged feedstocks and the interplay between the plans and optimizing the hydrocarbons flows delivers a lot of cash.

It also gives us a lot of operational flexibility to go forward on.

Then there are logistics, the services and infrastructure that we can combine between the two businesses.

It adds a lot of value to our business, and over and above the technology applications in chemicals, often also apply to the refining business.

Trading, we will not today, and have never disclosed any trading numbers.

But this picture shows you actually where our trading strengths lie.

It is the integration of upstream and downstream.

We have one trading organization for the Company, and it trades all the trading that has to go on.

There's a lot of embedded optionality in our business and in our hydrocarbons flows.

Also it gives us one single interface to the market.

It has actually tripled its earnings in 2005 over the 2000 levels.

It has become a great contributor to the bottom line.

It is a strong organization.

It has a 11 offices.

It trades 24/7, and deals move around the world as daylight moves around the world.

Very high-volume base, 11 million barrels a day that are being traded.

And it brings in a very strong international operating logistics and shipping expertise.

Other than crude oil and products, which is the 11 million barrels I talked about, we also trade chemicals, power and CO2.

Another area where we have significant opportunities still is in refining.

We have been in this game for a long, long time, but we keep on surprising ourselves by finding smart ways of doing things.

And here you look at the very structured approach.

We have now teams going across our 50 refinery systems and our chemical plants.

They are actually on-site for a number of months to define what the opportunities are.

And those then become the prime focus and priority of the refinery management.

They focus on health and safety, on availability, on nonenergy cash costs, on the energy bill that we incur in the refinery, but also on organizational effectiveness and the leadership in those plants.

You see there is an opportunity, $1.7 billion on the table here. 700 of that has been captured over the last couple of years.

And on this slide you can see the areas where actually the -- this kind of cash can be realized.

To give you an example, in one of our refineries down time -- in the U.S. down time was reduced by 70%.

And in a market that was so hot last year around product demand and less refining capacity in the U.S., it is certainly very helpful.

Also, the increased crude flexibility where we run more than 210 crews across our system is important for the bottom line.

The same kind of discipline across the business.

Not only in the refining business, but in the marketing business as well.

In retail, Jeroen said we were operating in over 140 companies, and we have more models in retail than actually anybody could dream up today.

So we have actually in our standardizations efforts and taken the complexity out of the business, we have moved from 150 operating models worldwide to four.

We focus on the customer basics.

They are extremely important for us.

We're looking at over $500 million in returning benefits by 2007.

A lot of that is it in operations costs.

If you look at your graph at the right hand topside, it shows 19% bigger network efficiency.

That means more fuel through the station. 23% higher throughputs, 38% higher brand presence of Shell in the U.S. because of the Texaco rebranding, and certainly reduced overhead costs of close to 5%.

And in the U.S., which is the most competitive market we have, it is extremely important.

On the growth side I mentioned biofuels.

And here you see actually the biofuel component in ethanol and FAME that we're moving across the world at this point.

Also ethanol has become an important component of trading.

We're trying to actually not only lead the way in terms of volume and logistics (indiscernible) in the production business today.

But we also try to give some attention to biofuel technologies that we believe are going to be helpful in the future for climate change.

And those technologies actually have much better CO2 reductions.

You're looking at compared to hydrocarbons close to 90%.

Plus the fact that they don't ingress and intrude on the food chain, which might become a problem if corn-based and sugar-based -- sugar cane-based ethanol goes into big quantities.

For countries that are short on hydrocarbons they are also a solution to their security of supply situation.

Two major components that we're chasing now.

Iogen, big joint venture in enzyme technology, where we have a good ownership percentage.

It is converting straw into ethanol for gasoline engines.

And Choren, which is the biomass to liquids piece that Linda mentioned, where we actually use the Shell [fishatrub] technology in order to create a very, very clean diesel.

And I have to remind you, you saw a picture of that diesel car on one of Linda's slides, that we're going to participate with the first diesel car ever in the Le Mans race, which actually a couple of weeks ago won the 12 hour race in Sebring in Florida.

You might see a first on GTL again in the future.

Let me then try to summarize.

We will continue to reshape our portfolio, maintain our industry leadership, and we will be in the markets where we desire to be.

We have the complex responding capacity in order to capture the margins that are there today.

And we're trying to position ourselves for the changes that are going to come.

We will remain to have a very strong customer focus.

We are a consumer business.

Simplification and standardization are key for our business, and that will continue to be that in the next couple of years.

We have opportunities to invest in selectively, and we will deliver the maximum shareholder value, without expanding the asset base in a major way.

I think we are delivering to you the profitable downstream piece.

Thank you.

And Peter, I think you're next.

Good afternoon, ladies and gentlemen.

And also good morning to the ones listening in from the U.S.

Let me start with the first quarter results.

They were robust, despite some operational challenges which we faced.

CCS earnings of $6 billion were up 12%.

And earnings per share on a CCS basis were $0.94, and up 15%.

Cash flow from operations was again over $9 billion.

We are comfortable with these results and our operating performance.

The first quarter dividend of EUR0.25 per share was up 9%.

Looking at the different businesses.

Exploration and production earnings of $3.7 billion were up 27%, reflecting strong oil and gas price realizations, partly offset by lower volumes and higher costs.

Production of [3,746,000] boes a day reflect the Nigerian shutdowns and hurricane damage in the Gulf of Mexico.

On the line production volumes were firm, 1% up if you exclude hurricanes and the [BSC] price effect.

Gas and power earnings of $765 million were up 61%.

LNG results benefited from strong prices, trading earnings and record volumes of 3 million tons.

Oil product, CCS earnings of $1.3 billion were down 8%.

These exclude $427 million net gain in Q1 '05.

They were affected by lower refining margins and reduced utilization, partly offset by higher profits from integrated trading and marketing earnings.

In chemicals, we've started to disclose CCS earnings to be consistent with OP.

On the basis earnings were -- our basic earnings were $139 million.

This was as a result of significantly lower margins, as well as some $60 million for Nanhai start up costs.

This was partially offset by higher trading earnings in chemicals.

Jeroen discussed our investment framework.

Mirrored here is our financial framework.

The context is three requirements, superior cash generation to fund growth and returns, discipline to reinvestment, and competitive costs.

Our strategy is based on robust project economics, investing through the cycle, continuing portfolio renewal.

Our cash priorities are dividends.

Our planned capital expenditure to deliver growth, and balancing spare cash between incremental opportunities to grow and pay out.

Let me take you through how we performed against this framework.

Our '05 profitability and cash flow growth was extremely competitive, and these trends continue into the first quarter of 2006.

We look at a range of financial measures, but focus on higher returns and strong cash generation.

We intend to remain competitive on these measures through the cycle.

We also intend to maintain gross spending, rather than the stop and start approach which some times diminished our progress in the past.

Both the upstream and downstream are returning net cash to the businesses.

As we continue to reinvest cash in upstream growth, we focus on capital choices and capital discipline, balancing profitable growth and returns to shareholders.

Major technology plays require long lead time funding.

That is how we build up our global LNG leadership, and how we will pursue new plays, such as GTL and unconventionals.

Both Jeroen and Linda touched on those.

Cash generation from our current asset base is funding future cash delivery and the development of shareholder value.

Our portfolio approach is not just about capital spending.

We are continuously reviewing and challenging our assets.

We sold some $14 billion of assets in '04 and '05, using the higher-than-expected proceeds for organic growth and extra distribution to shareholders.

Divestments included EP positions where we saw no value in investing in declines of further development potential, robust OP and chemicals businesses with insufficient potential for market growth or performance, a mix in gas and power assets that didn't fit our strategy.

We continue to review our portfolio and expect to make $2 to $3 billion a year of asset sales and swaps on average through the cycle.

Turning to our record on dividends, our policy is unchanged.

We aim for euro dividends growth at least in line with inflation over time.

The chart shows our strong record in achieving this.

And we intend to pay competitive dividends in the future.

The dividend announced today of EUR0.25 per share shows our commitment to growing dividends for shareholders.

It is an increase of 9% over the Q1 dividends in '05.

With continuing high oil prices and robust cash flows, we now expect our '06 buybacks to -- share buybacks -- to exceed the announced $5 billion.

And we expect buybacks to continue, subject to market conditions and our capital needs.

Looking at our competitive positioning.

We have the best track record on dividend payout ratio in our peer group.

The 2005 payout was over $17 billion, including the payment to minority shareholders.

This compares with $15.6 billion of capital spending and underlines our continuing commitment to shareholders.

We are clearly competitive on total payout, as you can see, combining dividends and share buybacks.

Our investment strategy is aimed at organic growth.

We're building up our capital spending in stages, depending on our portfolio and capabilities.

We continue to grow our development opportunities, undertaking many more projects.

More than 70 are underway in '06.

And you can see how the number has been growing.

We plan around $19 billion in organic spending in 2006.

Let me be clear, we could spend more on the right opportunities that meet our -- but we will only do so when they need our screening and portfolio criteria.

We have already announced around $0.5 billion of additional investment, including an acreage in Canada already referred to, and Brazil also Malcolm mentioned that.

We continue to look at other opportunities.

We expect to sustain high capital spending as we focus on value creation from organic growth, and have been clear that spending in '06 is not the peak.

We plan to spend around $21 billion in '07, as our growth investments continue.

Looking at how our portfolio is developing, our options set is growing strongly.

That is not just concepts, but real opportunities to invest in profitable growth.

We're creating a genuine internal competition for funds.

And as a CFO, I am responsible for disciplined capital allocation throughout the group.

We do this with global project ranking and capital allocation and centrally imposed spending limits.

We will also make value choices on project timings, and may dilute or swap major projects to optimize their capital efficiency.

I feel this is a comfortable position to be in.

Let me turn to the balance sheet.

It is strong.

It is strong enough to meet dividends and the spending needs for growth through the cycle.

Our gearing, which includes off balance sheet liabilities, was 12% at the end of the first quarter, which is unchanged for the year end '05.

We're in the business of making long-term capital heavy investments.

The '06 capital spending plan is almost 60% higher than in the 2005 DD&A, and amounts to 17% of 2005 capital employed.

We expect upstream capital employed to account for roughly 60% of the group early next decade, compared with some 50% today.

This is what shapes our balance sheet philosophy.

We aim for an average 20 to 25% gearing through the cycle, fluctuating according to oil prices, spending and other factors.

Summarizing the financial framework, we emphasize organic investments and growth to create most value for shareholders.

We generate strong returns and cash generation to fund returns to shareholders and invest in new growth.

We develop portfolio choices in advanced technologies to enable this growth.

We take a long-term view on projects and economics.

And we allocate capital and rank projects centrally to maximize capital efficiency and value creation.

I believe this is a strong financial framework on which we intend to go forward.

On that note, let me hand back to Jeroen for closing.

We're nearly at the end of the presentations and ready to take your questions.

Let me summarize by to say what is my vision for Shell.

What kind of company are we?

We are in oil and gas.

We have chemicals because it adds value to our refineries.

And we are in clean technologies, and we try to get one alternative energy a sizable commercial business over time.

So oil and gas, base chemicals, clean coal technologies, and one alternative energy.

We focus is in those fields on organic growth.

And we can do that because we have good opportunities.

We take sustainability at our heart.

Sustainability to minimize our environmental social footprint, if that is a negative footprint around our operations, for the [sole] sustainability, because we are CO2 and we have to keep our eyes on that.

What can we do with that?

How can we have less CO2 in our operations?

What can we do about cleaner fuels?

And we see that as an opportunity, rather than as a strategy because we are good in technology, and we think we have possibilities to integrate CO2 in our -- we have possibilities to integrate CO2 solutions.

And doing all that, you need to have technology today and technology for tomorrow.

So that is development of technology.

We need to have any good people.

And as I said, we're very glad that we went strong on recruiting, and you must have discipline about execution.

If I don't come to the slightest -- how does that look on our portfolio.

We have a truly global portfolio.

We have many projects.

We will build on that portfolio in a disciplined way.

And we will make sure that we have the capabilities to apply our advanced technologies.

A global portfolio in many countries.

We work in 140 countries spread over many projects and operations, upstream and downstream.

We think that is the best way to balance risks in a world which turns out, if we look around, to be quite difficult at this moment.

We work in all regions.

And if you look at our staff, if you look at top 100 or the top 1,000 or our 100,000 direct Shell employees, we have a very diverse workforce.

Let me then come to the last slide.

I go back to my investment framework.

Our strategy is a very clear strategy.

It gives a lot of focus for our people, more upstream, profitable downstream.

Short term that means that we increase our production from the 3.5, 3.6, as we have indicated for this year, to 3.8 and 4 million barrels per day.

The projects for that are underway, and we're not delaying those projects.

We don't forget the downstream.

As described by Rob, we are selective in the downstream in our investments.

We invest there as well.

And LNG, I can't improve the story of Linda, which shows how enthusiastic we are about that business.

Or to say it differently, in this slide, you know your strategy.

We have enough opportunity in the pipeline.

We don't complain about the lack of opportunity.

We have even to rank our investments, so there is choice.

If you have the combination of a clear strategy, opportunity, and the delivery capacity to execute that, I am convinced you're back in the middle circle, then we deliver competitive returns.

And what do we do with competitive returns, we balance further growth and return to the shareholders as we described.

I am ready for your questions.

And I invite the team members down here.

Okay.

How many fingers do we see?

Shall I start?

I start over there and then we work our way there.

And we make sure that you get all a turn.

Go ahead.

[Tim Westgrit] with Lehman Brothers.

I have a question for Peter and a question from Malcolm.

Peter, you and some of your team talked about strong unit cash flow.

In fact you also have a higher reinvestment rate than most of your peers.

Can you comment on your reinvestment rates going forward, particularly given that you expect your CapEx budget to rise?

And, Malcolm, this relates to slide number 21, where you showed your 60 billion barrels of total resources.

It looks to me that it is about potentially 10 million barrels of projects that you expect FID by 2009.

So it suggests to me that you're being quite cautious about reserves replacement.

Could you remind us of your expectation on reserves replacement, whether indeed you have been cautious relative to what that slide seems to imply?

I take the first one.

Yes, I put a lot of emphasis on current strong cash flow.

You also heard from Malcolm and from Linda, to that extent also from Rob, but the projects which are they are planning and bringing onstream do actually generate higher cash earnings in the future than what we have today.

So that justifies the investments which we are seeing at the moment.

We are getting production growth for that, 3.8 to 4 by the end of this decade or '09 going further up later on, and we're investing for that.

The main theme which we are pursuing is competitive returns for the business and competitive returns for the shareholders.

And we will keep that in the balance.

And is that is why we're growing our CapEx in stages rather than in one big gulp.

And indeed we indicated that we expect to bring onstream the major facilities, or to take FID on around 20 billion barrels of resources by the end of 2009.

That is really what underpins our production growth in 2009, and of course beyond.

And in terms of reserves, I think what is important is to recognize we have got some important technologies in terms of unconventionals.

I think Jeroen indicated -- he indicated earlier, they don't necessarily contribute to the SEC reserves figure.

But we do expect to replace every barrel of our resources and every barrel of our reserves, including those unconventionals.

As far as the SEC target is concerned, because you asked about in relation to that.

Essentially what we're saying is that is going to be a outturn of our investment choices.

In a sense, also, the question of how much of that 20 billion will be onstream, or will be still in progress, that is also a question of making the timing decisions on projects, getting that right, and I have talked about that.

It is Neil Perry from Morgan Stanley.

I've got one question for Peter and then another one for Rob.

Peter, you talk about competitive shareholder returns, but with the buyback somewhat in excess 5 billion, you're talking about a quarter of the Exxon buyback or one-third of the BP buyback.

And it is also at a time when you're quite radically degearing.

Can you give us an indication of where you would like to see gearing at the end of 2006?

And then, on the downstream, perhaps Rob could split out the profitability of the refining from marketing, given that most of your growth options appear to be in the retail part of the business, which seem to me to be a bit more stable.

A few points.

We're not strongly degearing at the moment, because the two gearing rates end year, and now at the end of Q1 was actually the same.

Just to have that very clear.

We are pursuing a shareholder return -- a competitive shareholder return, which consists of dividend and a buyback.

We have a clear dividend policy which is growing in line at least with inflation.

And you have seen what we have done in the first quarter.

And we have removed the cap on the 5 billion.

We have said we most likely will exceed, and we will make that actually subject to market conditions and to our capital requirements to grow the business.

I would therefore not agree with your calculations against Exxon and BP.

Because you take the two things into account, dividends and the buybacks, and I think we're very competitive on those.

I'm not going to give you a gearing target for the end of 2006.

That depends on how oil and gas prices moves, how much we're actually pushing some of the investments and the buybacks and the dividends.

I think you can judge us at the end of year of what we have done.

You know our framework.

And we're committed to optimize the returns for shareholders and the business.

You know the last time that we split marketing and refining out is about a year ago in May of 2005.

And we did that actually looking back.

We haven't presented those numbers for 2005 yet.

But they haven't changed all that much, so you might have a look at that chart.

Typically our marketing earnings where we look back over the last five years are anywhere between 2 and $3 billion, and the balance is refining.

And refining over the years has been between zero and losing money, and a year like last year where it was gangbusters.

So the retail end of it, the marketing end of it is much more stable in its delivering of cash and earnings than the refining business would be.

It is [John Reitz] of Citigroup.

Two questions please.

The first one CapEx.

I wondered if we could get a little bit more clarity on the longer-term expectations.

You have highlighted 21 billion, is that a sort of ongoing level or do see that as a peak?

Then perhaps more on the gas and power and upstream areas, I wondered if we could get some more details on the timing and cost of some of your major developments, in particular for I'm thinking of Sakhalin, Gorgon, OK LNG and Peal GTL?

I start with the capital question.

Our philosophy is that you should not yo-yo the capital program.

So going up-and-down.

Why is that?

Because to have the capabilities to people to do quality executions around the world, when you have a program for 19 for 21 billion that it requires a lot of organization, pretty perfect organization.

When I see you in four weeks, we have spent a (indiscernible) billion.

It is that kind of thing.

If you yo-yo that, you'll never get it right.

So you build a kind of -- I sometimes call that a machine of people and systems, where you have the ability to do that.

So basically the philosophy, if we bring up our capital in certain steps and then your fuel forward is how to keep it at that level, or let's say relative small changes from there.

That is the basic philosophy.

On the specific projects, Sakhalin, of course, is already under construction.

So Malcolm may want to say a few more words about that.

But Gorgon LNG, OK LNG, or Olokola LNG in Nigeria, and then Pearl, those projects are all still pre-investment decisions.

So they all three have been in the sort of design phase right now.

We don't have a firm date for the investment decision for any of those, nor do we have a startup time.

Until we make the decision, it is a bit hard to say when they're going to startup.

But all of them are making progress.

On Sakhalin, there is no change to what we have said before.

The project is actually going well.

I was there a few weeks ago.

We are over 70% complete, and we're on schedule for the second half of 2008, and our estimate the still around $20 billion.

It is Jason Kenney from ING.

Two questions if I may.

One a broad strategy question and one on R&D.

Is it fair to say that Royal Dutch Shell is focused on investment for the next commodity cycle, rather than the current cycle?

And that the Company is therefore pinning its hopes on the fact that the commodity cycle will still support returns from new play types and unconventionals way out in the future?

Secondly on LNG, I just wondered if there was any more clarity on the difference between base load earnings progress, and maybe the contribution of trading and the upsides of diversions of cargo, for instance?

The first question, that was how are we positioned for the commodity cycles, is that you can look at what kind of (indiscernible) we make today.

But basically it is the whole story I try to get over at the beginning of my presentation that we look at all our activities and the range of prices -- high prices, low prices -- and then you look at the total portfolio.

You have to realize that in our industry it is not only the commodity prices that play a role, but all the tax regimes how they react on that at high prices and low prices.

And that is even not of course a static picture, that may be quite dynamic as well.

Of course, we tried to build all the time robust earnings, and with all those uncertainties around us.

Linda, how about the LNG?

Actually, the LNG business is getting more and more exciting I think each year as we move through it.

What you will see I think over the coming years is an increasing contribution from our activities.

We don't necessarily call them trading, we call them marketing or optimization, because there's little risk in it.

We're taking cargoes and moving them to higher value markets.

But we don't split that out.

But I will say with these new projects coming on soon and the increasing flexibility that we have built into our portfolio over the pass several years actually, we should be able to see higher value contribution from that, continuing as we go forward.

We already saw a bit in Q1.

It is Jon Rigby from UBS.

Questions on the upstream gas and power.

On the two projects that you highlighted a little bit, Athabasca and Pearl GTL, are the reasons that you are relooking at those a little more closely to do with the fact that you're unhappy with the costs that are currently being quoted to support you in developing those projects, or that those services are just not available frankly at the moment?

And just also interested in terms of Qalhat specifically why you're able to go ahead so quickly with the LNG project, but rather delayed on the GTL project?

Second question is on Athabasca.

Is it the intention still to build out Athabasca in 100,000 barrel a day increments, and all -- the three increments that I think you talked about included in your two 2014 aspiration?

Thirdly, in terms of your aspiration and indeed your target for 2009, is that changeable depending on what happens with the Sakhalin minority and/or the swap into [Sapa]?

Sorry for the lengthy question.

You must take them all the three.

If I can remember them by now.

Sorry, Jeroen.

Let me start first with the question about Pearl and the cost.

So you said are we happy with the cost.

I'm never happy with cost.

Every time I spend a dollar on cost it is a dollar less available for shareholders or other things.

So never happy with cost.

But there is no doubt on the current cost environments having an impact on a project as big and complex as the Pearl GTL project.

Malcolm shows rig rates, steel prices, all those things that come through on that project.

Like they do on every other project around the world, it is not just a Shell phenomenon that we are seeing.

We see it in projects that other people operate of which we are a part.

So, Pearl course, is not immune from that.

We're taking our time with the contractors.

We have revised the contracting strategy and done a few other things to take into account the fact that we are seeing that they are a bit overstretched.

In particular at [Rosafon] City where I have been now a few times, a number of projects are under construction there.

All I can say is we can assure you we're taking all that into account, as well as the good things that have happened with the project.

So an increase in the liquids forecast, some marketing success and other things, we will take that all into account when they get to the point where we are making a decision.

Why did the LNG project sort of leap frog the gas to liquids project, if you will?

The LNG project uses the basic design that is being used for the other large [cater] gas projects.

So we were essentially able to skip a lot of the detailed engineering and design because we're just part of a series of projects that are under construction there.

It is much more straightforward.

We have done LNG before.

Pearl GTL of course is much more complex, and we're taking our time to make sure we do a proper job.

On Athabasca, I think the situation is very similar to what Linda has described.

We are at a similar stage with contractor bids in for most elements, not for all elements, and a strong focus on what that is going to mean, and what the right timing and optimum approach to the project is.

In relation to, I think you asked the question, is it included in our 2014 and how are we going to expand.

We're still confident that there is a very robust resource there.

Our first plant has demonstrated that we really know how to both run a mine, run an upgrader, run the whole integrated operation, and get a lot of value from that value chain.

We still expect that we will get to 500,000 barrels a day by the middle of the next decade.

And yes, the intention will be in design once, build three times, those 100,000 barrel a day upgrades.

I think you asked then a question on Sakhalin and the swap.

And is to say, yes, our 2009 target that is robust in that context, whichever way the swap goes.

I think 2014 is sort of a different question really, which is we have this great opportunity set.

We want to unlock it, but the actual decisions of when we take FIDs and what the projects look like, there is still a lot to play for there.

And if we see the value in those opportunities, I think we will be able to move forward and very much hit our aspiration.

But I don't think the Sakhalin, [Sapa] thing will be particularly material in that.

Let me just highlight that that is -- we've have got a great asset in Sakhalin.

It is something that looks increasingly strategically well-positioned in that whole fast growth Asia-Pacific environment.

But at the same time the swap still makes strategic sense, we think, for both partners, and given what is happening and the growth in the European market and in the Asia-Pacific market.

Colin Smith from Dresdner.

Two questions as well.

First of all on gearing, I have always understood the 20 to 25% range to be a sort of target that you wanted to be within.

But I think you have been stressing quite strongly that is a through the cycle number.

Should I assume that that is sort of a range that you would expect to average through the cycle?

And if that is true, what sort of level are you comfortable at at the lower end, or to the higher end?

And how long is the cycle that you're thinking about?

Question one.

And I'm afraid, yet another question on Pearl, because it is your single largest contributor to upstream volume.

I believe when it was originally announced the first part of it was due onstream in 2009.

It would contribute to the 2009 target that you have just reaffirmed today.

Can you just say that whether if it gets sanctioned this year, phase 1 will be completed by then, or what the risk is to a delay?

And if there is a delay to it, does that effect the view on the production target?

Peter?

The gearing is -- yes, it is through the cycle.

It is an average.

I'm not going to go on the [saynise] and start to actually quote how long the cycle is, and when I do get to [work].

I think this is a reference framework where we can together communicate on how we are driving that over the years.

It will be key for us as a framework to optimize our competitive returns on the business side and to the shareholders.

I have always said I am keen to get to those levels.

And we will do that over time, and it is subject to market conditions, and how we grow the business.

You have to be with me on this one a little bit.

Timing on Pearl GTL, well, we don't give start up dates for projects, especially that are pre-FID, and especially for ones that are as complex as this.

But I will say now that we're almost in the middle of '06, I think it would be unlikely that it is onstream in 2009, given the size and complexity.

But I don't know, Malcolm, if you want to address the production target.

The production target is the production target, taking to account what Linda has just said.

Is not to say the project is not moving forward because they're still making good progress.

Okay, any right-wingers left?

No?

We shift then to the middle.

Neil McMahon the Sanford Bernstein.

Two questions.

The first is I'm surprised that two projects or MOUs aren't for discussion today in the strategy presentation.

First with ONGC, and the second is the Corrib field in Ireland, which seems to have dropped off the projects somewhat strangely, since you have already completed a fair degree of that.

I was wondering if you could give an update on both, and really a future outlook, in particular for Corrib.

The second is when you look at your 2009 and 2014 production guidance levels, the 2009 is indicated at $35 per barrel. 2014, I can only assume is at $35 per barrel as well.

But I don't know.

That is a question.

What is the flexibility on that if we end up with prices that are near double that in terms of production sharing agreement effects?

How much does that wipe off your growth, or indeed is that production growth reasonably stable?

Linda, and then Malcolm.

I will take the India question, as India is part of my regional responsibilities, which include Asia-Pacific.

No, we didn't mention it today.

It is not because we're not excited about it, but because I only had 15 minutes, and I think we already had 80 slides in total.

We always hear from you we use too many slides.

So it was left on the editing room floor, if you will.

But it is an MOU we are excited about.

It is wide ranging.

It covers activities I think in every business in the whole group, if I think about them, including renewables and things related to CO2, and even coal.

But we will see.

It is an MOU we are excited about, but as I told the Chairman of ONGC, the important thing is that real things happen as a result of that.

And a lot of work going on.

I think in particular on clean coal.

I think some of the bitumen are sort of -- bitumen in particular and Rob's business and a lot in Malcolm's business -- maybe Malcolm wants to say a few words about that.

I saw the Chairman a couple of weeks ago in weeks ago in Dubai -- of ONGC.

And I think excellent cooperation across a range of opportunities.

And we are looking particularly at enhanced recovery cooperation with them.

On your question on Corrib.

Indeed, obviously an important project, but one that we have had some challenges on in terms of actually being able to proceed with the work because of stakeholder issues in the communities.

Yes, there was an important milestone.

I don't know if you saw, but the minister there published the results of the safety review.

And in the safety review essentially validated a lot of the choices we had made, but at the same time made some important recommendations.

And our response today is we're going to accommodate -- adopt those recommendations.

And we welcome the report.

And we hope that the project can now move forward.

And what we are expecting very much to see is that the focus really on improved communication and dialogue with the community in the neighborhood.

I think that with the issues around safety, hopefully, removed we can move forward for a project that will supply 60% of Ireland's gas needs.

So we see it as a project that is strategically very important for Ireland.

And one, of course, we would like to proceed with.

In 2014.

2014.

Thank you.

Price.

The question around 2009 and 2014.

Thanks.

In 2009 the $35 a barrel guidance, you asked if $10 a barrel difference, or you actually said what if it doubled.

Well, basically, at about $35 a barrel the linearity I think, or the change, in terms of production sharing contracts is about 20,000 barrels a day for every $10.

For 2014 I wouldn't hang it so much on a price.

It is going to be dependent on all of these choices about projects that we have to make between now and then.

And as I have said, there's a lot to play for, but we've got a great set of opportunities.

A question for Rob on your U.S. chemicals business.

I think Exxon has around $5 billion of capital employed in that business.

And over the last four quarters has managed to earn just over $1 billion.

I estimate you looked after around 3 billion of capital employed in that business, and over the same period have not made any money at all.

I just wondered if you ever think you can close that performance gap?

The second question is on Sakhalin.

Where are you with your negotiations with the Russian government with regards garnering their approval for cost recovery on the higher CapEx number?

And is there any truth to the rumor that as part of those negotiations, you are now talking about much higher recovery reserves on the project?

Much higher --?

Recoverable reserves on the project.

Thanks for the challenge on the chemical business.

That is going to help me to get the message across to the U.S. at the same time.

There is really two things in the U.S. that we need to look at.

First of all, Exxon mostly has gas crackers -- basically ethane-based crackers, and we have liquid crackers.

If you look at the differential between gas feed and liquid feed in the U.S., you see a lot of the explanation right there.

Oil prices have gone through the roof, and gas prices in the U.S. actually after Katrina have come down to that $6 to $7 level.

There is a major competitive disadvantage that we have at this point that is in our asset-base, and that will not be easy to change.

On the other hand, there is a bit of self-inflicted wounds as well, because crackers haven't been operating at the reliability where they should be.

It is a bit like where we used to be with refining in the U.S.

There's a lot of learnings out of the refining system going into the chemical crackers at this point in order to get them to the same level there over a period of two to three to four years being able to get the refineries.

Those two pieces are differentiators.

If gas prices ever -- if the gas/oil ratio ever is going to change in terms of its cost -- feedstock cost.

That being said, we're looking at (indiscernible) oil/chemical synergy that you were looking at is actually bringing things like dirty condensates -- black condensates and lower valued feed stock into our U.S. crackers in order to address that situation.

On Sakhalin, in terms of cost recovery negotiations in discussions, they're going basically as we expect.

There is a huge amount of data that has to be absorbed and discussed.

And that is the process that has started and is going to the timetable we expected.

You asked a question about resources and reserves there.

I think the key point is that we've always seen a 4 billion barrel -- the total resource base approaching that.

Which is why we have talked in terms of it being still very competitive at $5 to $6 dollars a barrel in terms of development cost on a total resource basis.

What I would say is that the base in there, the whole sort of Sakhalin area, we are looking at something like 40 billion barrels in the wider Sakhalin Basin.

So it is a huge resource basin.

We're very pleased to be building the infrastructure that will create the first export hub for LNG.

As I said earlier, they deliver into a very important LNG market.

We see the scope for expansions, which is maybe what you alluded to.

I think it looks increasingly positive all the time.

Two or three questions, if I may.

First of all, to Rob, you painted quite a cautious picture on the outlook for refining, despite your industry-leading position in that area.

That compares to an asset market, corporate market and IPO market that seems to be suggesting and those are prepared to believe in a much higher margin environment long term.

What would make you consider a more radical approach to your portfolio to potentially capture some of that upside for your shareholders?

And a question for Malcolm.

On E&P you indicated this morning and today potentially delay to some projects because of cost inflation.

Can you may be put a little bit of flesh around those bones?

What projects are we talking about and does it affect?

What type of volumes are we talking about?

Does it affect your -- it doesn't appear to (indiscernible) as if it is affecting your medium-term growth target.

And what would your CapEx have been if those projects had been included?

Finally, one for Peter, if I can.

A couple times in the presentation you mentioned testing projects in the 20s.

I really don't understand what that means.

Is that lower 20s, mid-20s, higher 20s?

Is the test around weighted average cost of capital, cost of debt, cost of equity?

What is the test?

What kind of return can you make and whatever price environment that is?

The strategy on refining is the one that I just showed you.

And basically if you have that kind of money on the table, we have 700 million delivered, another 1 billion on the table that we actually can access with very little capital.

To me that is a much more exciting opportunity for the shareholder than investing big money in refining at this point.

What we're doing is a fair share, I think, by one of the criticisms that the investors have had on Shell in the U.S. is that we didn't have size.

We are having to size in Port Arthur, and we're trying to add to complexity, and that is where we will keep it.

In terms of the upstreams capital and what projects will we delay, and I think you asked about target and what would CapEx have been.

I think as I indicated we're looking at -- particularly I think here's some projects in every area that we're looking at and saying, maybe we better hang back on that one.

But the example I gave was around the deepwater, and that particularly reflects the mobile rig rates that I showed you that you can see them at an all-time high.

Yet huge amount of new builds coming on to the market in a couple of years.

So we're looking at several of those projects rather closely.

But one example where we have just taken a decision to hold back on it was the minihub in Mars South in the Gulf that I mentioned.

It won't -- those decisions won't affect our 2009 target, as I have indicated, because they're more the longer-term projects, the ones we would be taking in the next year or two that would really deliver beyond that.

So to a certain extent when we look at 2014 that is very much a function of choices.

I think the question, what would CapEx -- what would it have been, that depends a bit on how much Peter would have opened his wallet.

But we have a lot of opportunities, but I think we recognize it is important to be selective.

We have more opportunities, but we're selecting on the basis of returns and also on the basis of doability.

We want to make sure we have got enough people and there's enough contractive capacity to execute them with confidence.

What I would say, and I think it is important to stress, is the quality of the projects that we are able to undertake going forward, and that is why I stressed this point about, yes, they will sustain growth, but they are also very competitive in returns, cash generation.

And the portfolio we have in unit cash generation terms is going to be stronger at $35 a barrel than our current portfolio, which as I showed you, is already today very much top quartile.

And so we're being selective, which is a good position to be in.

Testing.

Yes, I call it stress testing.

I think you mentioned a few.

I can add a few more.

It is the full set, the full sweep of performance indicators you look at.

Cash is certainly a key driver, but others as well.

I've got a very simple agreement with my boss, and that is we work on the assumption we don't lose our shirt in the 20s, and that is how we drive it.

Lucas Herrmann of Deutsche.

Three questions if I might.

First, very simply, OK LNG, what terms do you expect to be able to obtain the gas on?

Will they be similar to those that you see with NLNG?

Secondly, I just wondered whether perhaps one of you would like to comment on the Advocate General's comments at the end of April about withholding tax and dividends, and that was unfair to discriminate between the citizens of different European territories as to the degree to which withholding taxes is held back.

Maybe that is one for you, Peter.

And thirdly, just at the year end, or at the time of your capital review or capital investment review in December, you commented on the breakeven cost per barrel running -- for your business running at somewhat over $30 or so per barrel.

If you are not willing to give us some idea of what the gearing framework is, or certainly what the cycle looks like in your eyes, can at least give us some indication of how long you think you're going to be running at north of $30 in terms of a breakeven cost on production at present time, given the very heavy CapEx spend that you foresee over the next few years?

Linda will do the first about OK LNG.

The third is for Peter, maybe the second.

We will work it out between us.

Okay.

LNG.

The commercial framework, the details of it are not yet been agreed between the government and the partners.

So still a bit too early to say.

But I would say we look forward to that projects giving us more flexibility, I would say, in terms of optionality in the European and North American market.

So exciting from that standpoint.

On the withholding tax, were you referring to Holland?

I guess so.

I'm referring to the European Advocate General issued an opinion on the 27th of April re the [Denkavik] case, basically stipulating that in his opinion withholding tax on dividends do indeed contravene European law.

And with the various and European tax regimes should not discriminate between shareholders of different states, which is obviously relevant to RDSA.

Okay.

I take it straight to Holland.

As you know we have these discussions when we are to unification.

It is the reason why we have got the dual share structure, A and B. We have just seen two weeks ago that it was announced that it goes down to 15% now in Holland.

I think, if I judge the public statements of the government, I think they have seen the point and they are working on the issue over time.

And I think that will be also a benefit over time.

I think on the breakeven one, I don't like to have all these numbers always flying around.

I think the strong point here is clearly from our side.

We are positioning ourselves for long-term growth, for long-term better profitability from a cash point of view.

And that is the way we're positioning our Company.

We're also positioning the Company for a higher oil price scenario.

There is no doubt about that, but with the stress testing to the lower end.

We will judge the opportunities which we have going forward in the environments where we are.

We're taking the long term into account.

And that will drive the way we're actually setting our financial framework, and how we are setting our return hurdles and return targets for the Company.

I think that is as far as I will go.

I look around.

Questions?

We have to start again.

I have a question about your view on acquisitions.

I think with the guidance you had given in the past is things up to $10 billion may be considered, but things about that weren't really on your radar screen.

There is still this gap in terms of the gearing target, so I think the market might make its own presumptions as to what your intentions are, unless you are prepared to clarify it for us.

I learned my lesson.

I tried to have in the past a balanced answer, but whatever I said it got mixed up in all kind of quotes.

What I say today is the basic line is the best is that we don't comment on acquisitions.

Having said that, I would like if you will listen to our presentations, basically of all five of us, we use many times the word organic growth.

Why do we do that?

Because we have plenty of opportunities.

And even at a lot lower oil and gas prices, they give very good returns or even the best returns in the present market circumstances.

So you're not planning any acquisitions in the near future?

No, I said I don't comment on that.

Any more or shall we --?

It is [Neil Morton from Mann Group].

Just the one question.

You have talked about growing the organic funnel, increasing investment next year to $21 billion.

And you clearly have the capital resource, i.e., the cash to do so.

But in terms of human capability, you are hiring heavily at trading people.

I just wondered how confident you are in the near term before this training schedule is completed, as to how efficiently you hope to invest that $21 billion.

Presumably at $15 million a couple of years ago your people weren't shirking.

They had enough work on their plate.

First of all, we take a lot of -- in the balance, if you go back ten years, our main graduate intake were young graduate straight from universities.

You may have the occasional tax expert, but that was -- we grew our own timber.

Now we work very carefully, as we did over the past year, how many midcareer hires and what kind of experience base compared to the young candidates.

We set up as well, an example there, as many training courses that onboard it goes better.

For instance we have now a project academy that is not only for the young persons having to go through the various ranks of if you would like to become a project manager, a project director probably you have to be in the future various times to the project academy.

Having time to get an additional stripe.

And we spent a lot of time on this whole on-boarding.

If you look at the track record of our projects, of course I know what happens with recycling.

But if you look at the total track record in our Company, as mentioned both by Malcolm, Linda on LNG, and Rob Routs on the downstream, think about normal hires.

We have many projects, large projects in difficult environments delivered on time and on schedule.

If you would like to go to the Institute of Project Analysis, which are the benchmarkers of the world, you will see that various best of cost projects are Shell projects.

So just basically for us, get the people with the right experience.

We have our eyes on the on-boarding and making sure that we have the global learnings.

Having said that, I think if you look at ambitious programs, we expect a tight human talent situation in our industry.

And we're aware of that.

Any more questions?

I look around.

Yes.

Another.

And then we come to rounding off.

[Stefan Forgo] from Société Générale.

A question regarding Athabasca oil sands.

You mentioned you have to see all your projects at $20 per barrel.

What does that look like for the Athabasca oil sands these $20 per barrel test?

And second question, the $21 billion CapEx for next year, is that including minor Shell [recycling] or excluding?

The second one is easy.

It is excluding.

Malcolm?

On the first, I think that the comment there is we talk about in the 20s and we talk about stress testing.

We still haven't finalized our decision on Athabasca of going forward.

We said we don't really know quite how that looks.

But I think it is very important that we do keep that discipline.

And it is good that we've got a portfolio of projects that enables us to be selective and make sure in general that we can pass that test of not losing our shirts.

I would like to round off this strategy update.

Thank you very much for your questions.

I hope you see you have here a team which is in rolling up sleeves mode.

We have enough organic opportunities I say, and we go for it.

Thank you very much.