Shell E&P

Capex

Shell reports that capital expenditure would be between $28 billion and 29 billion in 2008, excluding acquisitions. The company spent $26.6 billion on projects last year, excluding its minority share of Sakhalin.

Future Plans

Strategy Update - March 2008

Shell is rejuvenating its portfolio for a world of higher and more volatile commodity prices, increased competition, and higher costs. As part of the annual review of strategy, Shell said it is building over 50 large projects, that will underpin new cash flows for decades to come. Upstream, Shell has over 10 billion barrels of oil equivalent (boe) resources under construction, which will add ~1 million boe/d of production. Shell’s industry-leading fuels and lubricants portfolio is being positioned into growth markets. The company is also building significant new petrochemicals facilities, and new refining and downstream gas-to-liquids (GTL) capacity totaling ~300,000 b/d for Shell.

Major investments underway today include:
• Investment in some 10 billion boe of resources that will deliver ~1 million boe/d of oil & gas, and are the foundation for long-term growth potential of 2-3%/year
• 60,000 b/d of oil sands capacity, an increase of more than 60% from today’s levels
• Over 7 million tonnes per year of new liquefied natural gas (LNG) capacity, an increase of 50%
• New refining and downstream GTL assets, totaling ~300,000 barrels per day of downstream capacity for Shell, an increase of some 8%.
• Positioning Shell’s leading fuels and lubricants marketing businesses in new growth markets
• 800,000 tonnes per year of ethylene and 750,000 tonnes per year of mono-ethylene glycol. This is a 13% increase in Shell’s ethylene capacity and a ~ 60% increase in its mono-ethylene glycol capacity
• Over 100 MW of new wind power capacity. Renewables investment continues, with particular focus on wind power and next generation biofuels.

Looking beyond the portfolio that is currently under construction, Shell has significant additional resources that could be developed for production, and exploration portfolios in some 14 focus basins. Over 20 potential new projects are being designed, that could commercialize over 6 billion boe of discovered resources, and produce ~0.8 million boe/d. There is particular potential in North America heavy oil and tight gas, and LNG in Australia.

Group oil and gas resources estimates have been increased to some 66 billion boe, with a resources life of some 55 years. This improvement reflects exploration performance, where Shell added 1.4 billion boe in 2007.

Total net reserves attributable to Shell shareholders at end-2007 were 11.9 billion boe, unchanged from year ago levels.

Organic reserves additions for 2007, excluding acquisitions, divestments and year-end price effects, were 1.5 billion boe, compared to 1.2 billion boe of production, and reserves replacement was 124%. Organic reserves replacement, including year-end price effects, was 109%.

Production

2007 full year production was 3,234 thousand barrels of oil equivalent per day compared to 3,391 thousand barrels of oil equivalent per day in 2006. Total crude oil production (excluding oil sands bitumen production) was down 7% and total natural gas production was down 2% when compared to the full year 2006. Full year 2007 production was impacted by a reduction of 13 thousand barrels of oil equivalent per day due to the resolution of contractual issues. Full year 2006 production benefited by 27 thousand barrels of oil equivalent per day also related to the resolution of contractual issues.

Production compared to 2006 included increased volumes from Erha (Shell share 44%) in Nigeria, E8 and B12 (Shell share 50%) in Malaysia, West Salym (Shell share 50%) in Russia, Pohokura (Shell share 48%) in New Zealand, Changbei (Shell share 50%) in China, Merganser (Shell share 44%) in the United Kingdom, Enfield in Australia (indirect Shell share 21%), Stybarrow in Australia (indirect Shell share 17.1%) and Deimos (Shell share 71.5%) in the USA.

2006 production was 3,473 thousand boe per day compared to 3,518 thousand boe per day a year ago. Production benefited by 27 thousand boe per day due to the resolution of contractual issues. 2006 included negative PSC effects on production of 18 thousand boe per day from higher oil and gas prices. Excluding the impact of security concerns in Nigeria, PSC impacts from higher oil and gas prices, and hurricane damage in the Gulf of Mexico in 2005, production was around 3% higher than last year or 2% also excluding the impact of the resolution of contractual issues.

Reserves

Total net reserves at end-2007 were 11.9 billion boe, unchanged from year ago levels.

Group oil and gas resources estimates have been increased to some 66 billion boe, with a resources life of some 55 years. This improvement reflects exploration performance, where Shell added 1.4 billion boe in 2007.

Organic reserves additions for 2007, excluding acquisitions, divestments and year-end price effects, were 1.5 billion boe, compared to 1.2 billion boe of production, and reserves replacement was 124%. Organic reserves replacement, including year-end price effects, was 109%.

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