Shell News – 2010

News summaries from Shell press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

- The Ministry of Oil of the Republic of Iraq, Royal Dutch Shell plc (“Shell”) and Petronas Carigali (“Petronas”) signed a 20-year contract to provide technical assistance in the development of the Majnoon oilfield. Shell, as lead operator, will hold a 45% share, with partner Petronas holding 30%. The Iraqi state holds 25% of the participating interests in all licences. The consortium targets a production plateau of 1.8 million barrels of oil per day, up from a current level of approximately 45,000 barrels of oil per day. Majnoon, located in southern Iraq, is one of the world’s largest oil fields. The signing follows the contract award on December 11, 2009 and the approval of the Iraqi Council of Ministers on January 5, 2010.

- The Shell Petroleum Development Company of Nigeria Limited (SPDC) agreed to transfer its interest in three production licences and related equipment in the Niger Delta to a consortium led by two Nigerian companies. The agreement covers Shell’s 30% interest in oil mining leases 4, 38 and 41 covering approximately 2,650 square kilometres in the north western Niger Delta. The buyer is Seplat Petroleum Company Limited, a Nigerian company jointly held by two Nigerian firms, Platform Petroleum Limited and Shebah Petroleum Development Company Ltd, along with Maurel & Prom of France. The agreement is subject to the approval of the Federal Government of Nigeria and the national oil company, the Nigerian National Petroleum Corporation (NNPC). SPDC is the operator of the joint venture between NNPC (55%), Shell (30%), Total E&P Nigeria Limited (10%), and Nigeria Agip Oil Company (5%). Total E&P Nigeria Ltd and Nigeria Agip Oil Company will also transfer their interest in the three oil mining leases. The area includes about 30 wells with a production capacity of approximately 50,000 barrels of oil equivalent per day. The wells also produce natural gas for domestic and industrial use. Crude production is currently shut down awaiting completion of repairs to an export pipeline damaged in late 2008.

- A militant group’s announcement that it was ending a cease-fire in Nigeria is linked to the government’s failure to keep promises to the oil-producing region, analysts and activists said. Despite pledges of retraining for thousands of militants and development aid for the impoverished Niger Delta region, little has been done since the government announced an amnesty program for militants in August, they said. The militant group, the Movement for the Emancipation of the Niger Delta, or MEND, warned that it would resume attacks on oil company pipelines and personnel, a threat analysts said was credible. Royal Dutch Shell announced that a crude oil pipeline in the delta had been sabotaged the day before. No one has claimed responsibility for the attack. “It is a quite predictable but unfortunate development,” said Ledum Mitee, president of the Movement for the Survival of the Ogoni People, an activist group in the region. “There has been a growing frustration as to a lack of any discernible program. No attempt has been made to deal with the fundamentals.” Thousands of fighters from MEND and other militant groups ostensibly laid down their weapons last fall in return for cash payments from the government. But now, analysts said, there is a risk they will return to the 43,000-square-mile region, from which as much as 12 percent of United States crude oil comes, to continue crippling attacks on the oil industry. The analysts put much of the blame on the prolonged absence of President Umaru Yar’Adua, who is being treated in Saudi Arabia for a heart ailment and has been gone since late November. “The amnesty agenda of the federal government is neither here nor there,” said Anyakwee Nsirimovu, executive director of the Institute of Human Rights and Humanitarian Law in the delta’s main city, Port Harcourt, and a former member of a special government committee set up to study the region’s problems. “Since the departure of the president, nothing has happened. No progress has been made.” Bestman Nnwoka, a member of the presidential amnesty panel, said the program was “still being worked out” when the president left the country. “We are faced now with the absence of the president, which has delayed implementation,” he said. He called for MEND and other militant groups to “be a little more patient.” “Any resumption of hostilities would be uncalled for and may prejudice other attempts on resolving militancy in the region,” he said. Attacks on oil company facilities and kidnappings of workers have been going on for years in the restive region; MEND is one of the newer groups, and it is unclear how many militants it controls, or whether nonaffiliated groups are also considering resumption of attacks. Perhaps as many as 15,000 militants may never have disarmed at all. In a statement, the group warned of more pipeline attacks, saying that if oil companies did not halt operations, “any operational installation attacked will be burnt to the ground.” The statement also chastised the government for doing too little for the region. “It is sufficiently clear at this point in time that the government of Nigeria has no intentions of considering the demands made by this group for the control of the resources and land of the Niger Delta,” it said. Last summer’s peace overtures by government and rebels aside, little has changed in the delta’s underlying conflict, activists in the region said in interviews on Sunday. “The so-called repentant militants, they can be tempted to go back to their former life because of the failure of the amnesty process,” said Patrick Naagbanton of the Center for Environment, Human Rights and Development, in Port Harcourt.

• Downstream news:

• Business/Finance news:

February

• Upstream news:

- In the last couple of years, the research laboratories at companies like Hewlett-Packard and Intel have been working on the next generation of digital sensors. They are smarter, smaller, consume less energy, and they can communicate wirelessly. Their promise, writ large, is to help link the digital world of computing to the physical world as never before. The payoff would be to bring data-rich measurement, more intelligence and higher levels of optimization to all sorts of fields – including energy, traffic management, food distribution and health care. Lots of companies are working on parts of the broad vision, and I.B.M.’s “Smarter Planet” advertising campaign is the probably clearest articulation of the vision. Royal Dutch Shell and Hewlett-Packard are announcing a step toward the mainstream use of next-generation sensor technology. The application – on-land oil and gas exploration – points toward the potential gains from advanced sensing systems. No dollar figure is attached to the multiyear agreement, and Shell isn’t saying where it plans to first try this high-tech prospecting. But the oil company says the vastly more detailed seismic data collection and analysis should help it pinpoint new oil and gas reserves in difficult areas like under salt formations in the Middle East and deep pockets of natural gas in the North America. Sensors are only one tool among the set of technologies needed in any number of industries. To make complex physical systems smarter also requires advances in storage, networking, data mining and analytics software. Still, the sensors are the vital measurement, data-harvesting and communications technology in the physical world – the digital eyes, ears and nose out there. The sensors may be an ingredient, but an essential one – just as the microprocessor may not be everything in computing, but it is the gateway technology that makes everything else possible. In seismic prospecting for oil, big “thumper trucks” pound the ground to make sound waves that above-ground sensors then monitor. Today, 10,000 or 20,000 sensors, connected by wires, might be spread over an area 25 miles by 25 miles. With the Shell-H.P. sensing system, hundreds of thousands, up to a million, wireless sensors – about 3 inches by 4 inches – can be spread across a similar area. Each sensor, listening to the underground seismic echoes, is a data channel. Hundreds of times more data will be generated with the new system. The raw data will be collected, mined and analyzed to create pictures of the geological formations and petroleum finds deep in the Earth. Using the new technology, scientists say, opens the door to new levels of clarity – as in the difference between watching “Avatar” in 3-D or a regular theater screen. The benefits, Mr. Walk says, should be more efficient oil production, with fewer dry wells and reduced environmental damage from drilling. Recent advances in sensors, networking, storage and software, says Jeff Wacker, an H.P. fellow in the company’s services group, have made the H.P.-Shell venture practical.

• Downstream news:

- Shell International Petroleum Company Limited (Shell) and Cosan S.A. (Cosan) announced they have signed a non-binding memorandum of understanding (MoU), with the intention to form a circa $12 billion joint venture (JV) in Brazil for the production of ethanol, sugar and power, and the supply, distribution and retail of transportation fuels. Under the terms of the MoU, both companies would contribute certain existing Brazilian assets to the JV (see notes to editors). In addition, Shell would contribute a total of $1.625 billion in cash, payable over two years. The JV would enable Shell and Cosan to establish a scalable and profitable position in sustainable biofuels – one of the most realistic commercial solutions to take carbon out of the transport fuels sector over the next twenty years – by building a market-leading position in the most efficient ethanol producing country in the world. With annual production capacity of about 2 billion litres and significant growth aspirations, the JV would be one of the world’s largest ethanol producers. In addition, the inclusion of Shell’s equity interests in Iogen and Codexis would potentially enable the JV to deploy next generation biofuels technologies in the future. The deal would also enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil. With a network of about 4,500 retail sites and a total annual throughput of about 17 billion litres, the JV would have a leading position in the fuels retailing market in Brazil, with strong potential for synergy capture and future growth. The two parties will now maintain exclusive negotiations towards a binding joint venture agreement, which shall be subject to final transactional documentation, due diligence, agreement between the two parties on important sustainability issues, regulatory approvals and respective corporate approvals.

• Business/Finance news:

- At 07.00 GMT (08.00 CET and 02.00 EST) on Thursday 4 February, 2010 Royal Dutch Shell plc released its fourth quarter and full year results and fourth quarter interim dividend announcement for 2009. Royal Dutch Shell Chief Executive Officer Peter Voser commented: “Our fourth quarter 2009 results were impacted by the weak global economy. Oil prices have increased compared to a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels. We are not assuming that there will be a quick recovery, and the outlook for 2010 is uncertain. Our strategy is on track, although the near-term industry outlook does remain challenging. We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years. We are making good progress on our plans to raise Shell’s competitive performance ..."

- On Tuesday, 16 March 2010 Royal Dutch Shell plc will give an update on Royal Dutch Shell Group Strategy. All related materials will be posted on www.shell.com/investor on 16 March 2010. Two live audio webcasts will be hosted on Tuesday, 16 March: a Media webcast and an Analyst webcast.

March

• Upstream news:

- Shell Energy Holdings Australia Ltd. (Shell), a subsidiary of Royal Dutch Shell plc, confirmed it is participating in discussions to acquire Arrow Energy Limited (Arrow), excluding its international assets. These discussions may or may not lead to an agreed transaction.

- Shell would like to provide further information to accurately describe our oil sands activities, economics, and the steps Shell is taking to manage and mitigate environmental and social impacts. Development of Canadian oil sands resources has received increasing attention from shareholders, the media and non-governmental organisations. This has included a resolution tabled at our 2010 Annual General Meeting by certain shareholders, requesting that the company produce a report for our 2011 Annual Report regarding the context and assumptions behind Shell’s investments in oil sands. We wish to emphasise that we share many of the same environmental and economic concerns raised by the group of shareholders who submitted the resolution. We are committed to ongoing dialogue with all stakeholders concerning the development of the oil sands. Given these shareholder concerns, we are disclosing all relevant information here, subject to appropriate competition sensitive considerations on oil sands, rather than waiting until the publication of next year’s Annual Report, and a year earlier than the proposal in this oil sands resolution. Shell has a 60% stake in the Athabasca Oil Sands Project (AOSP), a mining operation, with partners Chevron and Marathon. Shell also has acreage covering in-situ oil sands reservoirs, with production and potential from wells and future drilling. Shell’s oil sands mining produced 78,000 barrels per day in 2009, or 2.5% of our production. Shell’s oil sands mining production should increase to around 150,000 barrels per day, or about 4% of production in the next few years, as a new expansion project comes on stream. In 2009, our production from oil sands through in-situ recovery was some 20,000 barrels per day, or 0.6% of our total oil & gas production. There is potential to expand production from both in-situ and mining activities for the benefit of Canada and Shell’s shareholders, subject to future investment decisions by Shell. The timing of new development, such as lower capital intensive mining and upgrading debottleneck opportunities, will be driven by economic and environmental factors in Alberta, and the ranking of these opportunities in Shell’s world-wide portfolio. All aspects of oil price outlook, oil demand, regulatory framework, cost of CO2 and industry cost structure will be taken into account when such investment decisions are considered. Potential future investments in oil sands are subject to the same rigorous screening as all of our investments worldwide. Demand for energy, including oil, is expected to grow significantly in the next decades as a result of population and wealth growth. The world will need many sources of supply, including coal, oil, gas, nuclear and alternative energies, to meet this energy demand. The International Energy Agency (IEA) expects significantly higher nominal oil prices over the long term under all its scenarios, taking into account climate change. Canada’s oil sands are one of the world’s largest accumulations of crude oil, and should be an important part of the global energy supply equation. Oil sands mining activities require high upfront capital investment to build long-term positions that then produce for several decades. Shell expects the cash-flows from oil sands to cover these up-front capital costs and to create returns for shareholders for many years. Short term volatility of oil prices is less important to Shell than long term trends. In 2007, the Alberta Government introduced legislation (Alberta Specified Gas Emitters Regulation managed by the Climate Change & Emissions Management Act) for all facilities emitting more than 100 kilo tonnes per annum of specified gases (on a CO2 equivalent basis) to reduce their emissions. The legislation mandates a payment of C$15 per tonne for every tonne emitted above a set reduction target. This legislation applies to most of our large facilities in Alberta and is set to expire on September 1st 2014 for the purpose of ensuring that it is reviewed for ongoing relevancy and necessity. 2009 compliance cost for Shell is expected to be US$2 million to US$3 million, subject to final review and approval. Potential future legislation is under discussion by the governments of Alberta and Canada, however the outcome of this is not certain. Shell actively monitors developments and provides input to regulators. Shell includes an expected price of CO2 in its economic assessments which is higher than the current CO2 price in Alberta, anticipating that potential future greenhouse gas regulation could lead to a higher CO2 price. Shell expects oil prices in the range US$50- US$90/barrel, and screens the economics of all its projects, including oil sands, inside this range. Oil sands mining projects are designed to produce around 40 years, and this very long asset life provides cash flows for returns to shareholders, and to recoup the up front development cost, the on-going operating cost, and the cost of environmental remediation throughout and at the end of the project life. Shell believes that its oil sands mining activities provide an attractive return for shareholders. The initial capital investment in our mining operation on stream was recovered in less than 5 years after start-up. During this period oil prices averaged around US$54/barrel. Oil sands earnings per barrel are typically higher than Shell Upstream averages. Over the period 2005-2009 average earnings for oil sands mining were around US$20/barrel, compared to Shell upstream (excluding oil sands) averages of around US$12/barrel. Over the same period, oil sands mining contributed US$3.1 billion to Shell’s earnings and US$5.6 billion to cash flow from operations. Shell has a new oil sands expansion project under construction. Despite cost inflation in Alberta, a new royalty framework and a new tailings directive, the economic outlook for this project remains attractive with oil prices higher than US$70/barrel to US$75/barrel over the life of the project. The Board of Royal Dutch Shell plc requires that the company adheres to strict Business Principles, which include our contribution to sustainable development. Performance on sustainable development is a key feature of management targets and remuneration. Oil sands mining and extraction operations are strictly regulated by Alberta Environment under the Environmental Protection and Enhancement Act and the Alberta Water Act as well as by the Canadian Federal Department of Fisheries and Oceans. We report regularly on our environmental progress to regulators, our Aboriginal neighbours and other stakeholders through meetings, monitoring bodies and company publications available below. Since our oil sands development started, we have actively taken steps to predict, manage, mitigate and monitor the environmental, socio-economic and cultural effects of our oil sands projects in consultation with our Aboriginal neighbours and other local stakeholders. We believe these measures are key to the success of our operations. Shell is committed to starting large-scale reclamation of our mined areas within 20 years from the day of first land disturbance, allowing progressive reclamation over the life of the mine rather than waiting until all mining has been completed. Shell believes in rigorous environmental evaluation and is working toward creating a landscape that shares similar landforms, topography, drainage and biodiverse vegetation as land that has not been disturbed. Recently-introduced legislation, in the form of a tailings directive, also serves to drive a higher pace of reclamation by operators. Shell does not return any process water to the Athabasca River, and 85% of all water needs are met with recycled water. Shell has permits to withdraw 0.6% of the total annual water flow from the Athabasca River for oil sands mining, and about a quarter of this allowance is actually taken up. Whilst greenhouse gas emissions from oil & gas production are an important issue, when greenhouse gas emissions (GHG) are viewed on a life-cycle basis, the emissions released during the combustion of refined products by automobiles and other customers make up 70% to 80% of total emissions. On a life-cycle basis, oil sands-based fuels are around 5% to 15% more CO2 intensive than fuel from the average barrel of oil consumed in the United States. On this life-cycle basis oil sands based fuels are not the most CO2 intensive fuels. Shell seeks to reduce the emissions profile of our oil sands operations further through energy efficiency projects such as the Shell EnhanceTM high temperature froth treatment process being implemented at our expansion project under construction. This project and others will help to reduce or even close the gap with fuel produced by competing ‘conventional’ oil on a life-cycle basis. Shell has taken a number of initiatives from the start of our oil sands activities, including technology selection, design optimization, energy efficiency investments and exploring the potential for carbon capture and storage. As a result of our actions, Shell is one of the lowest CO2 intensity operators among all mineable oil sands projects.

- Shell announces a significant new oil discovery in the deepwater eastern Gulf of Mexico, adding to discoveries in the area from 2009. The discovery is located at the Appomattox prospect in 2,200 metres (7,217 feet) of water in Mississippi Canyon blocks 391 and 392. Shell drilled the discovery well, located on Mississippi Canyon block 392, to a depth of 7,643 metres (25,077 feet) and encountered approximately 162 metres (530-feet) of oil pay. Shell then drilled an appraisal sidetrack to 7,910 metres (25,950-feet) and encountered approximately 116 metres (380-feet) of oil pay. Additional appraisal activities are planned for later in the year.

- Shell Energy Holdings Australia Ltd. (Shell), a subsidiary of Royal Dutch Shell plc, and PetroChina International Investment Company Ltd (PetroChina), a subsidiary of PetroChina Company Limited, welcome the announcement by the Board of Arrow Energy Limited (Arrow) to unanimously recommend its shareholders vote in favour of the joint proposal to acquire 100% of Arrow shares(*). CS CSG (Australia) Pty Ltd, the 50/50 joint venture company owned by Shell and a subsidiary of PetroChina, has entered into an agreement with Arrow for the proposed acquisition under which it has agreed to pay A$4.70 cash per share for all of the shares in Arrow, representing a total consideration of A$3.5 billion. This allows Arrow shareholders to crystallise the value of the Queensland Coal Seam Gas (CSG) assets and realise a significant premium for their shares. The offer is subject to customary conditions including regulatory approvals and Arrow shareholder approval. Arrow has also announced its intention to make a pro-rata share distribution to its shareholders relating to the international assets and certain other interests. This enables Arrow’s shareholders to retain exposure to, and benefit from, any potential future growth in those holdings. On successful completion of the acquisition, the joint venture would own Arrow’s Queensland CSG assets and domestic power business as well as Shell’s Queensland CSG assets and its site for a proposed liquefied natural gas (LNG) plant on Curtis Island at Gladstone. Shell and PetroChina bring technical capabilities, capital backing, major project experience and LNG marketing ability which will facilitate the growth of Queensland’s CSG and LNG industry, and help to further develop Australia’s LNG sector.

- China National Petroleum Corporation (CNPC) and Royal Dutch Shell plc (Shell) announced plans to jointly develop and produce natural gas in China’s Sichuan basin. The companies have submitted a production sharing contract to the Chinese central government for approval. Under the 30-year contract, Shell and CNPC would appraise and potentially develop tight gas (basin-centred gas) reservoirs in an area of approximately 4,000-square-kilometre in the Jinqiu block of central Sichuan Province. Tight gas is natural gas contained in rock that must be fractured or broken open before it can flow easily to production wells.

- Perdido smashes the water depth record for an offshore oil drilling and production platform by over 50%. On March 31, 2010 first oil flowed to the platform that is moored in 2,450 metres (8,000 feet) of water, preparing the way for full production. The drive is on to produce oil and gas from harsh frontier environments, including ever deeper waters of the open sea. Perdido is the world’s deepest offshore oil field development and the remotest offshore platform in the Gulf of Mexico. Powerful hurricanes sweep the ocean surface while extreme pressures and near freezing temperatures pose challenges on the rugged seabed. Producing oil and gas in these conditions has required one of the most challenging engineering feats ever achieved. The Perdido oil and gas platform is located 320 kilometres (200 miles) off the coast of Texas in the Gulf of Mexico, further from land — or another installation — than any other offshore production platform. It sits on top of a giant floating steel cylinder — or spar — designed to stay upright in storms. Nine mooring lines hold the structure in place. They are each more than three kilometres (1.9 miles) long. Beneath the spar a vast network of 35 wells and pipelines on the seabed connects three separate fields in the near-freezing water under immense pressure. Oil and gas are separated on the seabed before powerful pumps push them up from the low-pressure reservoirs to the surface.

• Downstream news:

- Shell announced that the 2010 season Formula One fuel supplied for Scuderia Ferrari contains an advanced biofuels component derived from cellulosic ethanol, an advanced biofuel made from straw. This will be the first time an advanced biofuel has been used in the Shell V-Power race fuel used by technical partner Ferrari, in Formula One. Cellulosic ethanol, as an end fuel, is identical to ethanol but it can offer up to 90% less lifecycle CO2 emissions than gasoline. It is a key part of Shell’s strategic investment and development programme in sustainable biofuels. The cellulosic ethanol was produced at Iogen Energy’s demonstration plant in Ottawa, Canada, using non-food wheat straw and advanced conversion processes. Shell and Iogen are partners in the plant, which produced more than 500,000 litres of cellulosic ethanol last year. Shell has been working closely together with Scuderia Ferrari since the middle of last year to develop a fuel that meets the new FIA regulations and maximises performance for the 2010 season. Shell and Iogen Energy are working towards construction of a full-scale commercial cellulosic ethanol plant in Saskatchewan Canada. The proposed project has met a number of significant milestones and the feasibility and design assessment work are well advanced.

- Virent Energy Systems, Inc., (Virent®) and Shell announced the successful start of production at the world’s first demonstration plant converting plant sugars into gasoline and gasoline blend components, rather than ethanol. The demonstration plant, located at Virent’s facilities in Madison, Wisconsin USA, is the latest step in a joint biogasoline research and development effort, announced by both companies in March 2008. The demonstration plant has the capacity to produce up to 38,000 litres (10,000 U.S. gallons) per year, which will be used for engine and fleet testing. This new biofuel can be blended with gasoline in high concentrations for use in standard gasoline engines. The new product has the potential to eliminate the need for specialized infrastructure, engine modifications, and blending equipment necessary for the use of gasoline containing more than 10% ethanol. Virent’s patented BioForming® platform technology uses catalysts to convert plant sugars into hydrocarbon molecules like those produced at a petroleum refinery. Traditionally, sugars have been fermented into ethanol and distilled. Virent’s ‘biogasoline’ fuel molecules have higher energy content than ethanol and deliver better fuel economy. They can be blended seamlessly to make conventional gasoline or combined with gasoline containing ethanol. The sugars can be sourced from non-food feedstocks such as corn stover, wheat straw and sugarcane pulp, in addition to conventional biofuel feedstocks such as wheat, corn and sugarcane. The demonstration plant is currently using beet sugar.

- Royal Dutch Shell plc (Shell) announced it has signed a sale and purchase agreement to sell its downstream business in New Zealand to a consortium of Infratil and the Guardians of New Zealand Superannuation. The deal includes all of Shell’s downstream assets in New Zealand (see notes to editors) but does not include the company’s upstream activities in the country. As part of the agreement, Shell will sell its 17.1% shareholding in the 104,000-barrel per day refinery at Marsden Point and also its network of more than 220 retail stations. The business will be sold to the consortium as a going concern and Shell will receive a cash payment of NZ$696.5 million together with a working capital adjustment. In addition, the companies have signed an agreement for Shell to continue to provide crude oil and refined products. The parties have also entered into a trademark licensing agreement which entitles the consortium to operate retail service stations under the Shell brand.

• Business/Finance news:

- The Board of Royal Dutch Shell plc (the Company) (NYSE: RDS.A, NYSE: RDS.B) announces its intention to propose to the 2010 Annual General Meeting that Mr. Charles ("Chad") Holliday jr, be elected a non-executive director of the Company with effect from September 1st, 2010. Mr. Holliday has served as CEO and chairman of the board of DuPont since January 1, 1999. He retired as CEO on January 31, 2009 and as chairman of the board of DuPont on December 31, 2009. Mr. Holliday started at DuPont in the summer of 1970 at DuPont's Old Hickory site after receiving a B.S. in industrial engineering from the University of Tennessee. Under Holliday’s leadership, DuPont established a goal of achieving sustainable growth - increasing shareholder and societal value while simultaneously decreasing DuPont's environmental footprint. As a result, DuPont has shifted from being a chemical company to being a science-based products and services company.

- Arrow Energy of Australia said that it had received a takeover offer worth about $3 billion from a company owned by Royal Dutch Shell and PetroChina, the state-run gas and oil giant. The Queensland company, which produces natural gas from coal beds, called the offer of 3.3 billion Australian dollars “nonbinding” and “conditional,” and recommended that its shareholders wait before taking action. Shell confirmed that it was in talks to buy Arrow, with the exception of its international business, in which Shell already holds a small stake. Through a jointly owned company, Shell and PetroChina are offering 4.45 Australian dollars per Arrow share, as well as one share in a new company that would be made up of Arrow’s international operations. Arrow shares were at 3.48 dollars on Friday, but started trading above the bid in Sydney and rose 1.63 dollars, or 46.8 percent, to 5.11 dollars, suggesting that the market expects the final offer to be higher. As early as last summer, Arrow had to respond to rumors that it was targeted by Chinese interests and was discussing a potential takeover. In an August filing with the Australian Securities Exchange, it said it was in “ discussions with parties with respect to the potential monetization options for its considerable coal seam gas resources,” and cited a “potential change of control.” Arrow said Citigroup and UBS were acting as its financial advisers for the talks. This would be PetroChina’s first stake in the coalbed methane sector in Australia, an industry that has attracted huge investments in recent years from firms like ConocoPhillips, BG Group of Britain and Shell itself, which already owns part of Arrow’s coalbed grounds. Beijing has had trouble with previous deals in Australia, which may explain the collaboration with Shell. In the last few months, talks collapsed between PetroChina and Woodside Petroleum over a deal for the Chinese company to buy up to $40 billion in liquefied natural gas, and last summer, Rio Tinto abandoned a deal worth almost $20 billion with Chinalco, which was seeking access to its copper and iron ore. The Rio Tinto deal showed how sensitive Australians could be to ceding too much control of their natural resources to Chinese state-run companies. The conservative opposition turned it into a cause célèbre, claiming in a television campaign that Prime Minister Kevin Rudd, who speaks Mandarin fluently, was bearing “gifts to the Chinese military regime by allowing control of strategic mineral resources in Australia.” In Australia, the Foreign Investment Review Board examines all major acquisitions by foreign companies and advises the government on whether they conform to its investment policy.

- On Tuesday, 16 March 2010 Royal Dutch Shell plc gave an update on the Royal Dutch Shell plc strategy. Watch the video and listen to the webcasts. Shell said it was entering a new period of growth, and outlined plans to sharpen up performance and reduce costs. Upstream production is expected to reach 3.5 million barrels of oil equivalent per day (mboe/d) in 2012, an increase of 11% from 2009. In addition, the company is assessing over 35 new projects from some 8 billion barrels of oil equivalent resources (boe), which should underpin Upstream growth to 2020. Downstream continues to focus on profitability, with plans to exit 15% of refining capacity and 35% of retail markets, and growth investment to enhance the quality of manufacturing and marketing portfolios. As new projects come on stream, the company expects cash flow from operations will increase by around 50% from 2009 to 2012 in a $60/bbl oil price world, and by over 80% with $80/bbl oil prices.

- On March 16, 2010 Royal Dutch Shell plc (the “Company”) published its Annual Report and Form 20-F for the year ended December 31, 2009. The 2009 Annual Report and Form 20-F can be downloaded from www.shell.com/annualreport. Separately, the 2009 Annual Review including Summary Financial Statements can be downloaded from www.shell.com/annualreport. Printed copies of the 2009 Annual Report and Form 20-F and 2009 Annual Review will be available from April 16, 2010 and can be requested, free of charge, at www.shell.com/annualreport. The Annual Report and Accounts will be submitted to the Annual General Meeting of the Company, which will be held on May 18, 2010.

April

• Upstream news:

• Downstream news:

- Shell Oil Products Africa (Shell) announced it is reviewing ownership options for its downstream businesses in 21 countries in Africa (see notes to editors). While a number of options are being considered, the preferred outcome is the sale of most businesses in scope as going concerns, subject to successful negotiations, and any necessary regulatory and final company approvals. Shell’s fuels, lubricants and refining activities in South Africa are not affected by the review. The company’s exploration and production businesses, liquefied natural gas interests and most international trading activities in Africa are also out of scope.

- Shell’s Floating Liquefied Natural Gas (FLNG) technology has been selected as the Sunrise Joint Venture’s preferred option for developing the Greater Sunrise gas fields in the Timor Sea. Subject to final detailed agreements, government approvals and a final investment decision Shell will operate the FLNG facility and manage the design and build phases of the FLNG project for the Sunrise Joint Venture participants. The Sunrise project would be the second deployment of Shell’s proprietary FLNG design, following Shell’s Prelude FLNG development in the Browse basin, offshore Western Australia. The Sunrise FLNG facility would produce around 4.0 million tonnes per annum of LNG as well as condensate.

• Business/Finance news:

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Wednesday 28 April, 2010 Royal Dutch Shell plc will release its first quarter results and first quarter interim dividend announcement for 2010. These announcements will be available on http://www.shell.com/investor. Two live audio webcasts will be hosted on Wednesday April 28,2010.

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Wednesday April 28, 2010 Royal Dutch Shell plc released its first quarter results and its first quarter interim dividend announcement for 2010. Royal Dutch Shell Chief Executive Officer Peter Voser commented: “Our results have improved considerably compared with year-ago levels, and our profitability has increased from the low levels we saw in the fourth quarter 2009. This has been driven by higher energy prices, operational and production performance and Shell’s growth programmes. We are making good progress in improving our near-term performance, delivering a new wave of production growth and maturing next generation project options. Our results reflected the successful ramp-up of our new upstream projects in Russia and Brazil, supporting a 6% increase in our production volumes and a 38% increase in sales volumes, in our industry-leading LNG business. Downstream asset sales programmes are on track ... "

May

• Upstream news:

- Qatar Petroleum (QP) on behalf of the Government of the State of Qatar has signed a new Exploration and Production Sharing Agreement (EPSA) with Shell and PetroChina Company Limited (PetroChina) for Qatar Block D. The agreement was signed in Doha by His Excellency Abdulla bin Hamad Al-Attiyah, Deputy Prime Minister and Minister of Energy and Industry, Peter Voser, Chief Executive Officer of Royal Dutch Shell plc, and Mr. Zhao Dong, Chief Financial Officer of PetroChina International Investment Company Limited. Under the agreement, the partners will jointly explore for natural gas in Block D. Block D covers an area of 8,089 square kilometres onshore and offshore Qatar and is located close to Ras Laffan. The Block D concession is for pre-Khuff geological intervals. The overlying Khuff horizon contains the super-giant North Field. Part of the Block D concession extends beneath the North Field. The total term of this agreement is 30 years and starts with a five year First Exploration Period. During the exploration period, Shell and PetroChina will implement a work programme including exploration technical studies, 2D and 3D seismic acquisition, processing, re-processing and interpretation, and drilling a number of exploration wells to the pre-Khuff formation. Shell, as operator, will hold a 75 per cent equity share with PetroChina holding a 25 per cent share. In a success case, Shell and PetroChina will produce the natural gas under Qatar Petroleum’s supervision. Under the agreement QP will be the off-taker of any potential gas produced.

- Shell and the China National Petroleum Corporation (CNPC) have concluded an agreement under which CNPC has acquired a 35% interest in Syria Shell Petroleum Development (SSPD), currently 100% owned by Shell. SSPD has interests in three production licences including Deir-Ez-Zor, Fourth Annex and Ash Sham that are operated by the Al Furat Petroleum Company (AFPC) (Shell interest 31.25%). The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria’s upstream industry. The licences cover some 40 oil fields, production in 2009 was 23 thousand boe/d (Shell share). Shell has a long history in Syria. It has had a presence in the country since the 1940s and been a shareholder in AFPC for some 25 years. CNPC already has an interest in the production licences and in AFPC through its 50% ownership of Himalaya Energy Syria BV.

- Royal Dutch Shell plc (“Shell”) continues to build a leading portfolio in North America tight gas, with new positions in high potential US shale gas acreage, in the Marcellus and Eagle Ford plays. Shell has agreed to acquire subsidiaries which own substantially all of the business of East Resources, Inc (“East Resources”) for a cash consideration of $4.7 billion, from East Resources, its private equity investor, Kohlberg Kravis Roberts & Co. and its advisors Jefferies & Company. The transaction is subject to certain regulatory approvals. East Resources is a privately-owned business with its primary activity focused on the Marcellus shale, in the northeastern US. East Resources has some 650,000 net acres (2,600 square kilometers) of highly contiguous, operated acreage in the Marcellus, and 1.05 million net acres (4,250 square kilometers) of acreage overall. East Resources has some 60 mmscfe/d (10,000 barrels oil equivalent per day) of production, predominantly in natural gas, with substantial medium-term growth potential. In addition, as part of its on-going acreage build strategy, Shell has acquired ~250,000 net acres (1,000 square kilometers) of mineral rights in the Eagle Ford shale play, in South Texas, in 2010. These undeveloped acreage positions are in the liquids rich window of the Eagle Ford play. Shell will be the operator in this highly contiguous acreage, and will be able to integrate these new assets into its existing South Texas operations, where Shell has been active for many years. All together in 2010, Shell has added some 1.3 million acres (5,250 square kilometers) of North America tight gas acreage. Shell estimates that these new positions have the potential to yield over 16 trillion cubic feet of gas equivalent (tcfe) of resources (>2.7 billion boe).

- Royal Dutch Shell, the Anglo-Dutch oil and gas producer, said that it had struck a deal to buy most of the assets of East Resources for $4.7 billion in cash, moving into the coveted sector of natural gas contained in shale deposits. The Shell deal is with East Resources, an independent oil and gas company, its private equity backer Kohlberg Kravis Roberts and its financial adviser Jefferies. “The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth,” said Peter Voser, chief executive of Shell, calling the East Resources assets “the premier shale gas play in the Northeast U.S.” Shell is getting 1.05 million acres of so-called tight gas properties in North America, in the northeastern states and the Rockies, which will make up most of the 1.3 million gas acres it is acquiring on the continent this year, and which it expects will produce 16 trillion cubic feet of gas in total. “The U.S. tight gas resource base has allowed it to become self-sufficient in natural gas supply long-term,” said Jason Kenney, oil and gas analyst at ING in Edinburgh. “A couple of years ago that wasn’t the case. The technological boundaries have been pushed back.” The Shell announcement comes in the wake of the BP oil leak in the Gulf of Mexico, and as the oil and gas industry is subject to increasing scrutiny. Secretary of the Interior Ken Salazar said he would delay considering Shell’s request to drill five exploratory wells in the Arctic in the coming months. Shell, the largest oil and gas producer in Europe, saw its shares rise 6.5 pence, or 0.36 percent, to 1,822 pence in late morning trading in London. East Resources’s activities in the northeastern United States have centered around the Marcellus Shale area, extending south from New York through Pennsylvania into Appalachia. The area is known to contain tight gas, or gas held in shale formations that make it difficult to extract. While small and mid-level players like East Resources have solid access to the gas deposits, they cannot always afford to exploit them to the full. “You have to throw a lot of capex at drilling,” Mr. Kenney said, referring to capital expenditures. While natural gas prices are modest in the United States now, he added, they are expected to rise. That has prompted Shell’s rivals to enter the tight gas sector as well. Exxon Mobil agreed in December to buy XTO Energy, which was then the largest domestic natural gas producer in the United States, for $31 billion. BP also holds huge North American gas assets. And Britain-based BG Group said this month that was entering a joint venture with Exco to exploit its natural gas assets in the southern states.

• Downstream news:

- The Shell Eastern Petrochemicals Complex (SEPC) project in Singapore has created Shell’s largest, fully-integrated refinery and petrochemicals hub. Shell announced the successful completion of the Shell Eastern Petrochemicals Complex (SEPC) project in Singapore. SEPC is Shell’s largest petrochemicals investment to date and the second world-scale petrochemicals project the company has completed in Asia in four years. The completion of the project reinforces Shell’s intention to remain a leading player in the expanding Asian petrochemicals market.

- Shell announced it is in discussions with third parties as part of a review of ownership options for most of the company’s liquefied petroleum gas (LPG) businesses (see notes to editors). The preferred outcome of the review is the sale of the Shell Gas (LPG) businesses in scope as going concerns, through a number of phased portfolio actions. This review is consistent with Shell’s strategy to concentrate its global Downstream footprint on a smaller number of assets and markets. In addition to today’s announcement, Shell has recently announced Downstream reviews in Finland, Sweden and Africa, proposed sales in Germany and the United Kingdom, and completed sales in France and New Zealand. Shell completed the sale of its LPG business in India in April 2010 and has confirmed its intention to sell its major shareholding in the Pakistan LPG business.

- Shell unveiled a package of innovations, dubbed "Smarter Mobility", aimed at speeding up the global shift to cleaner, more energy-efficient road transport. Shell launched the concept at Michelin’s Challenge Bibendum sustainable mobility conference.

• Business/Finance news:

June

• Upstream news:

• Downstream news:

- Shell said that developed countries should be well down the road towards the target of zero emission transport systems by 2050. Tan Chong Meng, Shell’s Executive Vice President for B2B and Lubricants, made the statement as he took part in a panel on “Energy, Climate and Transport Scenarios” at Michelin’s Challenge Bibendum sustainable mobility conference. He added that the development and uptake of new technologies is a big part of the challenge: “Shell’s research found that in the twentieth century, it took 30 years for new energy types to capture 1% of the market due to the time it takes to hone production methods and build sufficient human and industrial capacity. It should in principle be possible to speed up the deployment of new technology, but this requires government support. With the two-degree objective in mind, countries must use all economic, regulatory and educational levers at their disposal.” Chong Meng acknowledged that industry, too, has a key role to play. “As one of the world’s largest transport fuel and lubricant providers, we are doing what we can to help customers use less fuel and emit less today,” he said. “We are calling our strategic response to the challenge of sustainable transport ‘smarter mobility’.” Smarter mobility comprises a range of innovations in three key areas: smarter products, smarter use and smarter infrastructure. Among the smarter mobility innovations is Shell FuelSave, a new fuel formula launched by Shell in 2009 which helps drivers save up to one litre per tank, based on a 50-litre fill up. Shell also launched FuelSave Partner this year, a new fuel management solution for commercial transport fleets which helps them manage fuel consumption, save as much as 10% of fuel, and emit less CO2. Chong Meng also unveiled Shell’s latest innovation in the smarter mobility package: Shell Ecobox™. This is an alternative to traditional plastic packaging, delivering oil to customers more efficiently and resulting in 89% less plastic landfill waste.

- Royal Dutch Shell plc announced that Shell has taken an equity stake in Virent Energy Systems, Inc., (Virent) and begun a joint technology programme seeking to convert plant sugars directly into diesel. Since 2007, Shell and Virent have been conducting a joint research and development effort to make biogasoline from plant sugars, culminating late last year in the start-up of a pilot plant. As part of an expanded relationship, Shell has become an investor in Virent and taken a seat on Virent’s board of directors. The existing joint research and development agreement will also be expanded to include research into the production of diesel. Traditionally, biodiesel has been made from vegetable oils. This new joint technology programme will investigate Virent’s BioForming® process as a means for converting plant sugars directly into diesel. The sugars could eventually be sourced from a range of non-food feedstocks such as sugarcane bagasse, corn stover and other agricultural residues. Diesel produced with the BioForming® technology process would have the same properties as conventional diesel. It would not require specialised infrastructure and could be transported through existing pipelines. The fuel could also be blended with conventional diesel in higher concentrations than conventional biodiesel.

- Shell and Motor Oil (Hellas) Corinth Refineries S.A announced the completed sale of Shell’s downstream businesses in Greece and an agreement for the continued use of the Shell brand in the Greek market. The sale includes Shell’s retail, commercial fuels, bitumen, chemicals, supply and distribution, and liquefied petroleum gas (LPG) businesses, as well as a lubricants oil blending plant. The purchase price is €245.6million (around $300million). With the completion of the agreement Shell Hellas A.E.’s company name will change to Coral A.E.

• Business/Finance news:

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 29 July, 2010 Royal Dutch Shell plc will release its second quarter results and second quarter interim dividend announcement for 2010. These announcements will be available on http://www.shell.com/investor. Two live audio webcasts will be hosted on Thursday July 29 2010.

July

• Upstream news:

- The Shell Petroleum Development Company of Nigeria (SPDC) has begun producing oil and gas from the Gbaran-Ubie project in the Niger Delta, providing an important new source of energy for export and domestic markets. When fully operational next year, it will be capable of producing 1 billion standard cubic feet of gas a day (scf/d), equivalent to about a quarter of the gas currently produced for export and domestic use in Nigeria. It will also produce as much as 70,000 barrels of oil per day. The project’s gas processing plant is now producing 200 million scf/d from the first two wells out of a planned total of 33.

- A plan to build and deploy a rapid response system that will be available to capture and contain oil in the event of a potential future underwater well blowout in the deepwater Gulf of Mexico was announced by Chevron, ConocoPhillips, ExxonMobil and Shell. The new system will be flexible, adaptable and able to begin mobilization within 24 hours and can be used on a wide range of well designs and equipment, oil and natural gas flow rates and weather conditions. The new system will be engineered to be used in deepwater depths up to 10,000 feet and have initial capacity to contain 100,000 barrels per day with potential for expansion. The companies have committed $1 billion to fund the initial costs of the system. Additional operational and maintenance costs for the subsea and modular processing equipment, contracts with existing operating vessels in the Gulf of Mexico and any potential new vessels that may be constructed will increase this cost commitment. This system offers key advantages to the current response equipment in that it will be pre-engineered, constructed, tested and ready for rapid deployment in the deepwater Gulf of Mexico. It is being developed by a team of marine, subsea and construction engineers from the four companies. The system will include specially designed subsea containment equipment connected by manifolds, jumpers and risers to capture vessels that will store and offload the oil. Dedicated crews will ensure regular maintenance, inspection and readiness of the facilities and subsea equipment. The four companies will form a non-profit organization, the Marine Well Containment Company, to operate and maintain this system. Other companies will be invited and encouraged to participate in this organization. Work on this new containment system is being accelerated to enhance deepwater safety and environmental protection in the Gulf of Mexico, which accounts for 30 percent of U.S. oil and gas production and supports more than 170,000 American jobs. The sponsor companies will proceed immediately with the engineering, procurement and construction of equipment and vessels for the system. ExxonMobil will lead this effort on behalf of the four sponsor companies. The companies are also actively involved in significant industry efforts to improve prevention, well intervention and spill response. This includes rig inspections and implementation of new requirements on blowout preventer certification and well design. The industry has proactively formed several multi-disciplinary task forces to further develop improved prevention, containment and recovery plans. The companies have reviewed the system with key officials in the federal Administration and Congress and will conduct briefings with other key stakeholders.

• Downstream news:

• Business/Finance news:

- The seven-member commission assembled by President Obama to investigate the BP spill has hired Richard A. Sears, a longtime Royal Dutch Shell scientist, engineer and offshore drilling expert, to be its chief technical adviser. Mr. Sears is on loan to the Massachusetts Institute of Technology as a visiting scientist at the university’s Laboratory for Energy and the Environment. Mr. Sears, whose most recent title at Shell before his retirement last year was vice president and external research coordinator, has broad experience with offshore oil operations. He has been a senior Shell executive on deepwater exploration, a project manager on operations in the Gulf of Mexico and head of exploration evaluation for the North Sea in England and Scotland. He has written and spoken frequently about the search for alternative fuels as well as the challenges of ultra-deepwater drilling. Mr. Sears lives in Houston and describes his current position as “consultant/gamechanger” at LeadingEnergyNow, a consulting firm in the energy industry.

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 29 July, 2010 Royal Dutch Shell plc released its second quarter and half year 2010 results and second quarter interim dividend announcement for 2010. Royal Dutch Shell Chief Executive Officer Peter Voser commented: “We are delivering on our strategy. Shell’s cost programmes have delivered over $3.5 billion of annualised underlying savings. Our investments have underpinned a 5% increase in oil and gas production for the quarter, a 34% increase in LNG sales volumes, and an 18% increase in chemicals sales volumes. This is a good performance from Shell, despite today’s challenging macro economic conditions. We are on track for growth. We are making good progress on delivering performance improvement, a new wave of production growth, and maturing the next generation of growth options for shareholders.

- The Board of Royal Dutch Shell plc announced the appointment of Guy Elliott, Chief Financial Officer of Rio Tinto since 2002, as non executive director and member of the Audit Committee of the Board, with effect from 1st September 2010. Mr Elliott will together with other directors stand for election at the Annual General Meeting in 2011. Prior to becoming CFO of Rio Tinto, Guy occupied a number of positions in marketing, strategy and general management at Rio Tinto and served as president of Rio Tinto Brazil. He has been a non-executive director, chairman of the audit committee and senior independent director of Cadbury plc prior to the acquisition by Kraft.

August

• Upstream news:

- Shell and PetroChina welcomed the successful completion of their joint acquisition of Australian coal seam gas company, Arrow Energy Limited. The acquisition follows an offer in March 2010 to purchase 100% of the shares of Arrow by CS CSG (Australia) Pty Ltd, a 50/50 joint venture company owned by Shell Energy Holdings Australia Limited and a subsidiary of PetroChina Company Limited. CS CSG (Australia) Pty Ltd agreed to pay A$4.70 cash per share for all of the shares in Arrow, representing a total consideration of approximately A$3.5 billion.

• Downstream news:

- Shell announced a binding agreement for the sale of Shell’s (100%-owned) Heide refinery (90 thousand barrels per day capacity) and associated local infrastructure and businesses in Germany to Klesch. The transaction is subject to regulatory approval. The agreement with Klesch marks the latest step in Shell’s Downstream strategy to reduce net refining capacity by 15%, to reduce our marketing footprint, and focus the portfolio on profitability and growth potential.

- A US$12-billion joint venture between Shell International Petroleum Company Limited (Shell) and Cosan S.A. (Cosan) moved closer to reality when the two companies signed binding agreements. The proposed joint venture, which still requires regulatory approval, will produce and commercialise ethanol and power from sugar cane and distribute a variety of industrial and transportation fuels through a combined distribution and retail network in Brazil. It will also explore business opportunities to produce and sell ethanol and sugar globally.

• Business/Finance news:

- In a remote reach of the Gulf of Mexico, nearly 200 miles from shore, a floating oil platform thrusts its tentacles deep into the ocean like a giant steel octopus. The $3 billion rig, called Perdido, can pump oil from dozens of wells nearly two miles under the sea while simultaneously drilling new ones. It is part of a wave of ultra-deep platforms — all far more sophisticated than the rig that was used to drill the ill-fated BP well that blew up in April. These platforms have sprung up far from shore and have pushed the frontiers of technology in the gulf, a region that now accounts for a quarter of the nation’s oil output. Major offshore accidents are not common. But whether through equipment failure or human error, the risks increase as the rigs get larger and more complicated. Yet even as regulators investigate the causes of the Deepwater Horizon disaster, the broader dangers posed by the industry’s push into deeper waters have gone largely unscrutinized. “Our ability to manage risks hasn’t caught up with our ability to explore and produce in deep water,” said Edward C. Chow, a former industry executive who is now a senior fellow at the Center for Strategic and International Studies. “The question now is, how are we going to protect against a blowout as well as all of the other associated risks offshore?” Dangers do not directly increase with greater depth, according to experts like Mr. Chow. But they do rise as exploration and production rigs become more complex and more remote. Perdido, for example, is more than a 20-hour supply boat journey from shore — far enough out that a major fire could burn out of control before assistance arrived. Hurricanes regularly batter the region with giant waves and winds exceeding 100 miles an hour. Underwater, both powerful currents and mudslides play havoc with delicate equipment and the pipelines that bring oil and gas back to shore. The water temperature, which hovers at just above freezing at depths below 3,000 feet, can harden natural gas into crystallike structures called hydrates that can clog pipelines and other equipment. And because the wells are deeper than human divers can go, oil companies must rely on remote-controlled submarines to maintain their equipment or perform repairs. Oil industry officials, while acknowledging the risks, say safety concerns are overblown. Chris Smith, a senior manager at Royal Dutch Shell in charge of running Perdido’s production, said that projects like Perdido were engineered with multiple safety barriers and redundant systems. Perdido, which means “lost” in Spanish, is at the cutting edge. The deepest offshore platform in the world, it is intended to pump oil from 35 wells over the next two decades. Like dozens of other deepwater facilities that have sprung up in the gulf in recent years with names like Blind Faith, Mad Dog and Atlantis, Perdido uses the latest technology to tap offshore oil fields that were previously inaccessible. In contrast to the Deepwater Horizon, a floating rig that was focused on drilling new wells, the Perdido platform is a vast hub that can drill and pump oil from wells across 30 miles of ocean floor. Below it is a subsea cityscape of pumps, pipes, valves, manifolds, wellheads and blowout preventers — all painted a bright yellow so as to be visible to the floodlights of the remote-controlled submarines that maintain it. Shell, in reducing the weight of the platform, which can produce up to 130,000 barrels of oil a day, is among the first companies to use a new technique: instead of pumping the drilled liquid to the platform and separating the oil, gas and water there, as is typically done, engineers installed new separation equipment directly on the sea floor. While that improves efficiency, the equipment is also more difficult to monitor and fix than if it were on the platform. Thomas M. Leschine, a marine expert at the University of Washington, Seattle, said oil companies and regulators have become complacent about the growing risks of offshore drilling because accidents are so rare. “It’s clearly in the interest of the industry to believe their activities are safe,” said Mr. Leschine, who testified before Congress about safety issues in June. Engineering innovations during the 1990s, like better seismic imaging technology, greatly pushed the boundaries of deepwater production — traditionally defined as deeper than 1,000 feet of water. More than 20 percent of all bids in the gulf last year were for leases in water deeper than 6,500 feet. The deepest well in production in the gulf — Perdido’s Tobago well — lies in 9,600 feet of water. Meanwhile, new ships that can drill in 12,000 feet of water have recently arrived in the gulf. Problems are more common than the industry likes to admit. For example, BP’s Thunder Horse platform, the company’s flagship project in the gulf, ran into one unexpected engineering problem after another before it even began production in 2008. Examples included a backward valve that nearly flooded the facility and faulty welding on subsea equipment that left pipes with dangerous cracks. Repairs delayed the project by three years. Hurricanes are a constant menace. Hundreds of offshore platforms and pipelines were destroyed by hurricanes Rita and Katrina in 2005, shutting down the gulf’s entire oil and gas production for weeks. A Shell platform called Mars was badly damaged when its drilling rig tumbled over in Hurricane Katrina, shattering equipment, living quarters and the steel pipes that girdle all facilities. The two pipelines that take Mars’s oil and natural gas to shore were also badly damaged. Since the 1980s, the industry’s drive offshore has been encouraged by presidents and lawmakers of both parties who were seeking to expand domestic sources of energy and reap royalties from oil leases. After the BP accident, the Obama administration imposed a six-month ban on deepwater drilling, and it is now considering how to allow operations to resume while improving safety. The administration is also reorganizing the agency that oversees deepwater drilling, which was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement. The agency’s new director, Michael R. Bromwich, is currently hosting forums with energy experts to examine “the different challenges” of offshore drilling, said a spokesman, Nicholas Pardi. But after years of lax oversight, critics say regulators must take a much closer look at the industry’s activities offshore. For instance, they say, the government must increase the number of platform inspections and carefully vet emergency response plans. “There was an overreliance on the industry’s representation that they could drill ultra-deep and ultra-safe,” said Representative Edward J. Markey, the Massachusetts Democrat who is chairman of the House Subcommittee on Energy and Environment. “The era of assuming an accident couldn’t happen is over.” Oil companies insist that offshore drilling is often safer than land-based drilling because the investments involved are far larger and the safety procedures far more rigorous. They say that they have drilled more than 4,000 wells in the gulf’s deep waters, including 700 in waters deeper than 5,000 feet. Before the BP accident, just 1,800 barrels of oil were spilled in blowouts from 1979 to 2009, according to the Interior Department. Company executives have repeatedly cautioned against government overreaction to the BP spill, which they say resulted from a doomsday situation unlikely to repeat itself. “The industry approach is that we always focus on prevention,” said Rex W. Tillerson, the chief executive of Exxon Mobil. However, during Congressional hearings in June, the industry’s titans acknowledged their inability to contain a deepwater spill and vowed to create a new response system. Under a $1 billion initiative announced in July, four oil majors — Chevron, ConocoPhillips, Exxon and Shell — said they would design and build equipment that could be used to contain and cap well blowouts at depths of up to 10,000 feet. However, they say the new devices will not be tested and ready for 18 months, and the plan is not likely to work in places outside the gulf, like Alaska, where conditions differ. Some experts worry that everyone is focusing too much on the causes of the recent crisis, not the next one. After the 1989 Exxon Valdez disaster, the industry concentrated on preventing another tanker spill. That plan was essentially useless in the BP accident. “This is symptomatic of fighting the last war,” said Mr. Chow. “The industry is going to have to examine all of the offshore risks. There is a lot of catching up to do.”

September

• Upstream news:

- Shell, as operator of the Athabasca Oil Sands Project (AOSP), announced the successful start of production of a 100,000 barrels per day expansion of its oil sands operations in Canada. The new Jackpine Mine will combine with existing production from the Muskeg River Mine to feed the Scotford Upgrader, which processes the oil sands bitumen – heavy oil – for refined oil products. Construction for an expansion of the Scotford Upgrader is underway, and will come on-stream in 2011. The Jackpine Mine adds capacity of 100,000 barrels of oil equivalent (boe) per day to the existing Muskeg River Mine capacity of 155,000 boe per day. Once the Upgrader expansion is online early next year production will rise towards capacity over 2011. This AOSP expansion is one of a sequence of major projects that should raise Shell’s global oil & gas production by 11% over the 2009 - 2012 period. The construction of the Jackpine Mine in northern Alberta took around five years, with more than 6,500 employees and contractors involved on site at its peak. With some 255,000 barrels per day of capacity now in hand, next steps will include the efficiency improvements that can come from integrating and operating these assets together, with incremental growth potential from debottlenecking investment.

- Shell agreed to sell its interests in the Statfjord field and associated satellite fields in the Norwegian sector of the North Sea to Centrica Resources (Norge) AS (“Centrica”). The Statfjord field produces gas plus some oil and natural gas liquids. The sale for NOK 1,370 million ($225 million) by 100%-owned subsidiary A/S Norske Shell, and its subsidiary Enterprise Oil Norge AS, contributes to Shell’s target of selling $7-8 billion-worth of assets over 2010-2011 as part of its focus on major growth projects. Shell’s share of production from the mature Statfjord field was 13,300 barrels of oil equivalent a day (boe/d) in 2009.

- Royal Dutch Shell says it has agreed to sell its stake in the Statfjord oil field in the Norwegian North Sea and several related assets to Centrica Resources for $225 million, The Associated Press reported. Shell said its share in the mature field, 9.4 percent, produced 13,300 barrels of oil a day last year. Other major owners include Statoil, ExxonMobil and ConocoPhilips. Shell said it was selling the asset as part of a plan to raise at least $7 billion by 2011 to reinvest in growth projects. Shell remains active in several other projects in Norway, including some that are still being built.

• Downstream news:

- Shell has been named the No.1 global lubricants supplier for the fourth consecutive year in an annual research study carried out by Kline & Company (”Kline”)* . Despite one of the toughest operating environments since the Great Depression, Shell Lubricants trumped a tumultuous 2009, growing its global market share to 13.4% from 12.7% in 2008. It also widened its lead over its nearest competitor to 2.5%, up from 1.6% the year before. These figures are especially significant, given that 2009 worldwide lubricant demand declined 8.4% over 2008 to 35 million tonnes.

• Business/Finance news:

- Beginning with its third quarter interim dividend for 2010, Royal Dutch Shell plc (“Shell”) intends to provide shareholders with a choice to receive dividends in cash or in shares via a Scrip Dividend Programme (the “Programme”). Under the Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends if declared by Shell. Only new A Shares will be issued under the Programme, including to shareholders who currently hold B Shares. Joining the Programme may offer a tax advantage in some countries compared with receiving cash dividends. In particular, dividends paid out as shares will not be subject to Dutch dividend withholding tax (currently 15 per cent) and will not generally be taxed on receipt by a UK shareholder or a Dutch corporate shareholder. Shareholders who elect to join the Programme will increase the number of shares held in Shell without having to buy existing shares in the market, thereby avoiding associated dealing costs. When the Programme is introduced, the Dividend Reinvestment Plans currently provided by Equiniti and Royal Bank of Scotland N.V. will be withdrawn; the dividend reinvestment feature of the plan currently provided by The Bank of New York Mellon will likewise be withdrawn. Shareholders who participate in one of these plans will in most cases not automatically be enrolled in the Programme and will in most cases need to elect to join.

- Royal Dutch Shell plc. (Shell) pledged $6 million to support a global initiative to prevent deaths and cut greenhouse gas emissions caused by the smoke from traditional cooking stoves. The toxic fumes from open fires and traditional burning stoves, the main tool for heating and cooking in the developing world, currently cause 1.9 million premature deaths from respiratory diseases every year, according to the World Health Organization. They also create unnecessary CO2 emissions. The internationally recognised most viable solution is to encourage cleaner cooking stoves, which require significantly less fuel and reduce emissions.

- An appeals court dismissed a case against Royal Dutch Shell in which the company was accused of helping Nigerian authorities violently suppress protests against oil exploration in the 1990s. A three-judge panel of the United States Court of Appeals for the Second Circuit ruled 2 to 1 that until the Supreme Court deemed otherwise, corporations could not be held liable in United States courts for violations of international human rights law. The dissenting judge, Pierre N. Leval, called the decision “a substantial blow to international law.” The case was brought under a 1789 law, the Alien Tort Statute, by families of seven Nigerians who were executed by a former military government for protesting Shell’s exploration and development. Shell has denied accusations of involvement in human rights abuses. Jonathan Drimmer, a partner of Steptoe & Johnson in Washington and an authority on the statute, said the strong dissent suggested further appeals. He said the ruling’s effect would be confined to those against corporations in the same court. One of those is a complaint seeking to hold corporations like Ford Motor, General Motors and I.B.M. liable for aiding and abetting authorities in South Africa under apartheid. The accusations against Shell included violations connected with the 1995 hangings of the prominent activist Ken Saro-Wiwa and eight other protesters by Nigeria’s military government at the time. The families had sought to make the company the first foreign corporation found liable in a United States court for aiding human rights violations abroad under the statute. Chief Judge Dennis G. Jacobs and Judge José A. Cabranes said in a written ruling that the trial judge, who declined to dismiss some claims against Shell, should have thrown out all claims. The opinion noted that no corporation has ever been subject to any form of civil or criminal liability under the international law of human rights. “We hold that corporate liability is not a discernible — much less universally recognized — norm of customary international law that we may apply” pursuant to the Alien Tort Statute, the ruling said.

- Royal Dutch Shell plc (“Shell”) reconfirmed strong momentum in its businesses in the Americas for a group of shareholders and analysts, visiting Upstream assets in Canada. Shell’s oil & gas production in the region could reach 1 million barrels of oil equivalent per day in 2014, an increase of some 40% on current levels, subject to the pace of investment, which could be some $40 billion for the 2011-14 period. Shell’s world-wide strategic framework is set around three distinct themes: performance focus, delivering growth, and maturing new project options. The “Transition 2009” reorganisation, now completed, created the Upstream Americas division, simplifying Shell’s businesses, and underpinning some $1 billion of Upstream cost reduction achievement. Upstream Americas is now organised along four strategic lines, namely heavy oil, onshore gas, deep water and exploration. This has created a strong platform for new performance focus, capital efficiency, and faster implementation of strategy. Shell has invested over $60 billion in Upstream Americas since 2004 including development of new fields, new exploration leases, and acquisitions of undeveloped resources positions. Development and rationalisation of this portfolio continues, with an emphasis on asset quality, profitable growth and capital efficiency. Upstream Americas asset sales proceeds are expected to exceed $2 billion in 2010-11, part of Shell’s world-wide plans for $7-8 billion of disposals. In heavy oil, the recent start-up of the Jackpine Mine takes the Athabasca Oil Sands Project (“AOSP”, Shell 60%) to a total capacity of 255,000 bbl/d, developing over 3 billion barrels of resources. After a period of rapid growth in the last decade, AOSP’s next focus is on delivering operating synergies and debottlenecking these facilities, whilst retaining longer-term options for additional expansion. Shell has a strong track record in cold production and enhanced oil recovery in California, and growth potential in Canada, where studies are underway for an 80,000 bbl/d in-situ project at Carmon Creek. Shell is set for strong growth in tight gas, with North America resources potential of around 40 tcfe, following a series of acquisitions and acreage deals. Shell now has an opportunity to deploy technology and drilling know-how at a large scale, to grow production and to reduce unit costs. Shell’s North America tight gas production could double from 2009 to 2015, with the potential to reach over 400,000 barrels of oil equivalent per day (boe/d), subject to the pace of investment. The outlook for deep water remains positive, despite the current drilling moratorium in the Gulf of Mexico. Shell is today announcing the final investment decision on a 100,000 boe/d tension leg platform in the Gulf, called Mars B (Shell 71.5%), part of Shell’s post-2014 growth potential. Exploration performance continues apace, with Gulf of Mexico drilling activities in 2009 and 2010 adding over 500 million boe for Shell, including the 2010 Appomattox discovery, which has total resources in excess of 250 million boe, where Shell has an 80% share. These finds are part of a portfolio with >250,000 boe/d of production potential for Shell in the Gulf of Mexico. The exploration outlook is positive, with a substantial inventory of new prospects, including plans to drill in Alaska in 2011.

October

• Upstream news:

- Shell announces investment to support phase II of the prolific Parque das Conchas (BC-10) project more than 100 kilometres (62 miles) off the coast of Brazil. This significant investment develops the fourth field in the BC-10 block and continues a successful wave of production growth in Shell’s Upstream Americas business. The full project delivers an energy resource of approximately 300 million barrels of oil equivalent, with facilities production capacity of some 100,000 barrels of oil equivalent per day. Shell began production from the first phase of Parque das Conchas in 2009 with production from nine wells in three fields – Abalone, Ostra, and Argonauta B-West. Phase II for the project includes seven additional development wells, which will reach total depths of approximately 1,100 metres (3,600 feet) below the seabed. Production from the first phase of Parque das Conchas is currently above expectations. Parque das Conchas was the first full-field development to separate and pump oil and gas from the seabed. Shell’s Perdido Development, in the Gulf of Mexico, was the second. Electric pumps of 1,500 horsepower drive the oil up nearly 1,800 metres (6,000 feet) to the surface for processing on the Espirito Santo, a floating, production, storage, and offloading (FPSO) vessel. The FPSO has a daily processing capacity of about 100,000 barrels of oil and 50 million cubic feet of natural gas.

• Downstream news:

- Shell announced that it has blended a second advanced biofuel into fuel supplied to Scuderia Ferrari for the last three races of the 2010 Formula One championship. Scuderia Ferrari will use a fuel containing ‘‘biogasoline’’, a biofuel converted directly from plant sugars. The ‘‘biogasoline’’ has been produced by Shell’s technology partner Virent at its facility in Madison Wisconsin, USA.

- Shell announced that it has agreed to sell the majority(*1) of its refining and marketing businesses in Finland and Sweden to Keele Oy. Keele Oy is the major shareholder of St1 Holding Oy, whose businesses include fuel retail networks in Finland, Sweden, Norway and Poland. The terms of the transaction, which are subject to regulatory approvals, include Shell’s retail business, including some 340 service station in Sweden and some 225 in Finland as well as its commercial road transport (CRT) in both markets. All service stations together with the CRT business will remain Shell-branded in both markets under a licensing agreement(*2). Also included is Shell’s 87,000-barrels-per-day Gothenburg Refinery, Shell’s bulk fuels business in both markets and the Shell marine business in Sweden. The businesses will be sold as going concerns and Shell will receive a total cash payment of $640 million.

• Business/Finance news:

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 28 October, 2010 Royal Dutch Shell plc will release its third quarter results and third quarter interim dividend announcement for 2010. Register now for the webcasts. These announcements will be available on http://www.shell.com/investor.

- The Board of Royal Dutch Shell plc announced the appointment of Mr Gerard Kleisterlee, currently the President and Chief Executive Officer of Koninklijke Philips Electronics NV, as non- executive director and member of the Audit Committee of the Board with effect from 1st November 2010.

- As the United States lifted its moratorium on deepwater oil drilling, the European Commission was on the verge of proposing a curb on drilling in extreme conditions until an inquiry into the causes of the fatal explosion at a BP rig in the Gulf of Mexico was completed. President Barack Obama imposed the moratorium after the blowout of a BP well on April 20 led to the largest offshore oil spill in American history. He lifted the ban after imposing new rules intended to prevent another such disaster. Günther Oettinger, the European Union energy commissioner, was expected to say on Wednesday that rules on oil and gas exploration in the union were too fragmented at a time when companies are going into deeper and rougher waters to seek new sources of fossil fuels. In an appearance in London, the chief executive of Royal Dutch Shell, Peter Voser, strongly defended deepwater oil and gas drilling even as he acknowledged that the industry had failed to prepare adequately for the accident in the Gulf of Mexico and its aftermath. Speaking at Oil and Money, a conference convened by The International Herald Tribune, Mr. Voser suggested that the explosion in the Gulf of Mexico had been, at least in part, a result of shortcomings by BP and the other companies involved. Shell “clearly would have drilled this well in a different way and would have had more options” to prevent the accident and limit its impact. Even so, Mr. Voser said the oil and gas industry “learns, and learns fast,” when it comes to developing safer designs for wells and better ways of counteracting and containing spills. The industry was making every effort to ensure that “all the learning is taken into account and deepwater drilling can continue,” Mr. Voser said. In Brussels, the European Commission was expected to propose that countries in the European Union adopt a voluntary moratorium on drilling in very deep waters, and in environmentally sensitive areas like the Arctic, until the results of a United States government inquiry into the causes of the Deepwater Horizon accident is completed. The results of that inquiry are expected in January. Mr. Oettinger’s proposal would be voluntary for governments but would seek to give them the means, under E.U. law, to impose a ban if they choose. Mr. Oettinger also was expected to propose that the E.U. agree on new laws that would require governments that license offshore drilling sites to check whether companies had the ability to pay to clean up a spill and to repair any damage to the natural environment. A formal proposal for legislation on liability could follow early next year. Nobuo Tanaka, the head of the International Energy Agency, was among other senior figures at the Oil & Money conference who underlined the importance of pushing forward with deepwater drilling. Mr. Tanaka added that about one-third of oil production globally comes from offshore projects. He said the level was expected to rise to about one-half by 2015. Ivan Sandrea, a vice president at Statoil, a Norwegian oil company, said deepwater wells had accounted for 40 percent to 60 percent of new oil discoveries in recent decades. Deepwater sources were “a big thing for all of us,” he said. The accident in the Gulf of Mexico meant there would be a “higher cost environment” in the future because of new regulations, inspections and other factors, he said. There also would be a “reduced interest for the most environmentally sensitive areas,” he added. The American moratorium had idled 33 deepwater rigs in the Gulf of Mexico, affecting many jobs and triggering anger in the region. Though it was lifted, officials have said that it could be weeks or even months before drilling operations can resume because new permits must now be granted. Drilling also has been a sensitive matter for European governments, which want to be seen to be defending the environment against damage from the fossil fuel industry but are reluctant to cede sovereignty on matters concerning their energy sector. Britain was particularly wary of mandatory E.U. intervention on the grounds that it already has a robust safety regime in place. British officials also contend that natural gas, which is responsible for less environmental damage than alternatives like coal, is critical to its transition to a low-carbon economy. Even if E.U. member governments choose to act, there is a limited amount they can do to stop some of the most potentially sensitive projects. One of the most important deepwater projects in the region is in waters outside European jurisdiction. By the end of the year, BP plans to begin drilling below the Mediterranean Sea off the coast of Libya a few hundred kilometers from E.U. member states like Malta, Italy and Greece.

- The Board of Royal Dutch Shell plc announced the intended timetable for the 2011 quarterly interim dividends.

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 28 October, 2010 Royal Dutch Shell plc released its third quarter results and third quarter interim dividend announcement for 2010. Royal Dutch Shell Chief Executive Officer Peter Voser commented: “Our results have rebounded substantially from year-ago levels, driven by some improvement in industry conditions, and Shell’s strategy. We are seeing new growth, with improved earnings and cash flow, underpinned by a 5% increase in oil and gas production, a 22% increase in LNG sales and increased downstream volumes. This is a better performance from Shell, achieved despite continued difficult industry conditions in refining and natural gas markets. We are making good progress on implementing our strategy, with a focus on performance improvement, delivering a new wave of growth, and maturing the next generation of growth options for shareholders, with achievements in all of these themes during the quarter.

November

• Upstream news:

- Shell announced that it has agreed to sell its interest in six Gulf of Mexico oil and gas fields to W & T Energy VI, LLC, a wholly owned subsidiary of W&T Offshore Inc., for $450 million, with an effective date of September 1, 2010, as part of an ongoing portfolio restructuring and focus on capital efficiency. The divested fields are Tahoe, Southeast Tahoe, Droshky, Marlin and Dorado, and a Gulf of Mexico producing shelf property, and are predominately mature gas fields. These fields produce some 18,000 barrels of oil equivalent per day (boe/d) and have proved reserves of some 27 million barrels of oil equivalent (net to Shell’s interest). A definitive agreement has been signed for all fields except for one of the fields, a Gulf of Mexico producing shelf property and associated assets, which is the subject of a Letter of Intent and is currently anticipated to close before year-end. Shell continues to make significant investments in the deep water Gulf of Mexico, where the company currently produces some 230,000 barrels of oil equivalent per day. Perdido, the most recent addition to the Shell Deep Water portfolio, began production earlier this year. Shell recently took the final investment decision on the 100,000 boe/d Mars B deepwater development (Shell 71.5%). Shell has also recently announced the potential for two new 100,000 boe/d deep water production hubs at the Appomattox (Shell 80%) and Vito fields (Shell 55%); following successful exploration and appraisal work on those prospects.

- Royal Dutch Shell plc (“Shell”) announces an agreement to sell part of its stake in Woodside Petroleum Limited (“Woodside”) to equity investors. Shell’s subsidiary, Shell Energy Holdings Australia Limited (“SEHAL”), has entered into an underwriting agreement with UBS AG, for the sale of 78.34 million shares in Woodside, representing 29.18% of its interest in Woodside and 10.0% of the issued capital in Woodside at a price of A$42.23 per share. Upon completion of the sale, SEHAL will continue to own a 24.27% interest in Woodside. As part of this transaction, SEHAL has committed to retain its remaining shares in Woodside for a minimum of one year, with limited exceptions, including a sale to a strategic third party of an interest greater than 3% in Woodside provided the purchaser agrees to be bound by the same escrow restrictions to which SEHAL is subject or in pursuit of an acceptance to a bona fide takeover offer for Woodside.

- Royal Dutch Shell said that it would sell almost a third of its interest in Woodside Petroleum for about $3.3 billion, nine years after it failed to take over the company. Shell, an British-Dutch company based in The Hague, said UBS had agreed to underwrite the sale of 29 percent of its stake in Woodside, selling more than 78 million shares at 42.23 Australian dollars ($42.64) a piece. After the sale, Shell will own nearly a quarter of Woodside, shares that it has agreed to keep in lock-up for at least a year. Woodside shares rose 11 Australian cents, or 0.24 percent, to close at 45.86 dollars in Sydney, giving the Shell offer a discount of almost 9 percent. In a another move to invest more directly, Shell and PetroChina together bought Arrow Energy’s Australian assets in March for 3.5 billion dollars. Shell hinted that another deal for Woodside might be in the works, saying that the lock-up would not apply under certain conditions to “a strategic third party” interested in a more than a 3 percent stake. Woodside, based in Perth, is the largest independent energy company in Australia. In September, The Australian business daily reported that Shell and BHP Billiton were in discussions last year for a takeover of Woodside, but an offer never materialized, and Shell later denied any plans for a takeover. Now that the Potash Corporation deal is on the rocks, BHP may try its luck closer to home. Shell Australia’s chairwoman, Ann Pickard, said that in liquified natural gas, the company had a capacity of 2.7 million tons a year, and that output would more than double in the next fives years. Shell owns a 25 percent stake in Australia’s Gorgon project.

- Now that the moratorium on deep-sea oil and gas drilling has been lifted by the Obama administration, the battle for the Arctic is heating up again. The suspension of deep-sea drilling was of course a reaction to the disastrous blowout in the Gulf of Mexico that gushed from April to July, producing the biggest offshore oil spill in the nation’s history. The moratorium was lifted last month, about six weeks before a Nov. 30 expiration date. As soon as it was lifted, Cliff Krauss reported last week, Royal Dutch Shell began lobbying eagerly to get final approval for its long-delayed plans for exploratory drilling in Alaska’s Beaufort Sea. The petro-giant is paying for national advertising as part of a campaign to convince the public and the government that it is taking safety precautions that would prevent the kind of catastrophe that unfolded in the gulf from happening in the Arctic. Yet the Arctic is well known to be more fragile ecologically than the gulf. And on Thursday, the Pew Environment Group released a detailed report brimming with charts and maps that explores the question of how well the government and industry would be equipped to deal with a blowout and spill there. The report concludes, not so well. So the researchers concluded that far more study is needed of the Arctic marine ecosystem. Modeling should be devised to project the trajectory of oil flow in sea ice conditions should a spill occur, they added. And deployment exercises should be conducted to determine how effective a spill response would be in such a remote, sparsely populated region “before introduction of new offshore oil spill risks,” the report said. (The study includes a detailed critique of Shell’s planning scenarios in the Chukchi and Beaufort Seas.) In other words, the study’s message is that the Arctic is not ready for such deep-sea drilling operations. Asked about the Pew report’s conclusions, a Shell spokeswoman, Kelly op de Weegh, said in an e-mail that the company had “taken extraordinary steps to compensate for the harsh conditions we expect to encounter in the Arctic, and that is evident in all aspects of our program, including ice management, a commitment to oil spill response and new baseline science.” “Our Arctic exploration plan has been scrutinized by regulators, stakeholders and the courts, and we look forward to demonstrating once again that we can operate safely and responsibly in the Arctic,” she added. The study’s conclusion was also disputed by lawmakers who support the drilling. “I disagree with Pew’s insistence on an unspecified moratorium on Arctic development, because the perfect set of conditions simply never occurs,” Senator Mark Begich, Democrat of Alaska, said in a statement. “I’ll continue to push the Obama administration for responsible Arctic development now to help meet America’s energy, national and economic security.”

- Alexey Miller, Chairman of the Gazprom Management Committee, and Peter Voser, Chief Executive Officer of Royal Dutch Shell plc, signed a protocol on strategic global cooperation. This agreement establishes basic guidelines for the companies’ broader collaboration. Amongst the opportunities the companies will consider are: Further development of bilateral cooperation in exploration and production of hydrocarbons in western Siberia and the far east of Russia, Cooperation in the downstream oil products business in Russia and Europe, as well as Gazprom participation in Shell upstream projects outside of Russia.

• Downstream news:

• Business/Finance news:

- Shell confirms that its subsidiary, Shell Energy Holdings Australia Limited (SEHAL), has sold 78.34 million Woodside shares representing 10.0% of the total issued shares in Woodside. SEHAL now holds 190,119,364 shares representing 24.27% of the issued share capital of Woodside.

- Six oil and gas service companies and a prominent freight-forwarding company agreed to pay about $236 million in criminal and civil penalties in one of the largest corporate bribery cases ever to focus on a single industry, federal authorities said. Most of the bribes were paid to circumvent local rules and regulations, allowing the oil service companies to import equipment and vessels into foreign countries, which included Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan. The settlements were announced by the Justice Department and the Securities and Exchange Commission. The freight-forwarding and logistics company, Panalpina, which is based in Basel, Switzerland, admitted that it paid thousands of bribes totaling at least $27 million to foreign officials in seven countries on behalf of many of its oil and gas industry customers, the federal authorities said. The oil and gas companies, which agreed to plead guilty to violations of the Foreign Corrupt Practices Act or to pay settlements under deferred prosecution agreements, are Transocean Inc. and Tidewater Marine International Inc., both of which are based in the Cayman Islands; Pride International Inc. of Houston; the Noble Corporation of Switzerland; and Shell Nigeria Exploration and Production, part of Royal Dutch Shell. A sixth company, the Global Santa Fe Corporation, will pay a civil settlement only. “The Department of Justice’s commitment to rooting out foreign bribery is unwavering,” Lanny A. Breuer, an assistant attorney general in the criminal division, said in a statement. “Wherever possible, the department seeks to find and hold accountable all the players in corrupt deals — from customers who know that bribes are being paid on their behalf to those actually making the payments.” Robert Khuzami, the director of enforcement for the S.E.C., said the companies found themselves in the cross hairs of federal officials because they “resorted to lucrative arrangements behind the scenes to obtain phony paperwork and special favors.” This settlement brings to more than $1 billion the amount of criminal penalties that the Justice Department has assessed this year in cases related to the Foreign Corrupt Practices Act. Of the $236 million in penalties in the latest settlement, $156 million will be assessed for criminal penalties and about $80 million will be for civil disgorgement of profits, interest and penalties. All of the agreements are subject to court approval. The charges were filed in United States District Court for the Southern District of Texas. The largest penalty, $70.56 million in criminal fines and $11.3 million in civil disgorgement, will be paid by Panalpina, which made bribery payments on behalf of customers. The Justice Department agreed to defer prosecution and eventually drop conspiracy charges against the parent company, Panalpina World Transport, if it complies with antibribery statutes in the future. The company’s United States subsidiary pleaded guilty to violating the books and records provisions of the antibribery act and to aiding and abetting its customers in doing so. Monika Ribar, Panalpina’s chief executive, said the settlements “mark the end of an extremely burdensome chapter in Panalpina’s history and the end of a very demanding three-year effort to address and eliminate serious concerns” about the conduct. She added, “Based on our new leadership and significant enhancements of our compliance systems, we are much stronger today. Pride International will pay a $32.6 million criminal penalty and a $23.5 million civil settlement on charges that it paid $800,000 in bribes to government officials in Venezuela, India and Mexico. The bribes went to extend drilling contracts for offshore rigs in Venezuela, to settle a customs dispute in India and to avoid duties on drilling equipment in Mexico. During the investigation, Pride provided information and “substantially assisted in the investigation” of Panalpina, the Justice Department said. Both Panalpina and Pride, as well as Shell, Transocean and Tidewater, agreed to cooperate with American and foreign authorities in any continuing investigations of corrupt payments and to carry out enhanced compliance and reporting. Royal Dutch Shell will pay a total of $48 million in penalties — $30 million in the criminal case and $18 million in civil disgorgement. Shell’s Nigerian subsidiary paid $2 million to subcontractors with the knowledge that some or all of the money would be used for bribes to Nigerian customs officials, the Justice Department said. Shell officials could not be reached for comment. Transocean will pay $20.64 million — $13.44 million in criminal penalties and $7.2 million in disgorgement, penalties and interest. Tidewater will pay $15.65 million, or $7.35 million in criminal penalties and $8.3 million in the civil case. Transocean was charged with designating bribes for Nigerian customs officials to import its deepwater oil rigs into Nigerian waters. Tidewater was involved in the payment of bribes to tax inspectors in Azerbaijan and to Nigerian officials to allow the importation of vessels. Spokesmen for both companies said they were moving forward with enhanced compliance programs. Noble will pay $8 million in total penalties for bribery activity in Nigeria, while Global Santa Fe will pay $5.8 million in civil settlements for payments to Nigerian customs officials.

- The Board of Royal Dutch Shell plc (“RDS”) announced the Reference Share Price in respect of the third quarter interim dividend of 2010, which was announced on October 28, 2010 at $0.42 per A ordinary share (“A Share”) and B ordinary share (“B Share”) and $0.84 per American Depository Share (“ADS”).

- THREE summers ago, the world’s supertankers were racing across the oceans as fast as they could to deliver oil to markets growing increasingly thirsty for energy. Americans were grumbling about paying as much as $4 a gallon for gasoline, as the price of crude oil leapt to $147 a barrel. Natural gas prices were vaulting too, sending home electricity bills soaring. A book making the rounds at the time, “Twilight in the Desert,” by Matthew R. Simmons, seemed to sum up the conventional wisdom: the age of cheap, plentiful oil and gas was over. “Sooner or later, the worldwide use of oil must peak,” the book concluded, “because oil, like the other two fossil fuels, coal and natural gas, is nonrenewable.” But no sooner did the demand-and-supply equation shift out of kilter than it swung back into something more palatable and familiar. Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation. Meanwhile, another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia. Add to that an increase in liquefied natural gas export terminals around the world that connected gas, which once had to be flared off, to the world market, and gas prices have plummeted. Energy experts now predict decades of residential and commercial power at reasonable prices. Simply put, the world of energy has once again been turned upside down. “Oil and gas will continue to be pillars for global energy supply for decades to come,” said James Burkhard, a managing director of IHS CERA, an energy consulting firm. “The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years.” Some unpleasant though predictable consequences are likely, of course, as the disaster in the Gulf of Mexico this spring demonstrated. Some environmentalists say that gas from shale depends on drilling techniques and chemicals that may jeopardize groundwater supplies, and that a growing dependence on Canadian oil sands is more dangerous for the climate than most conventional oils because mining and processing of the sands require so much energy and a loss of forests. And while moderately priced oil and gas bring economic relief, they also make renewable sources of energy like wind and solar relatively expensive and less attractive to investors unless governments impose a price on carbon emissions. “When wind guys talk to each other,” said Michael Skelly, president of Clean Line Energy Partners, a developer of transmission lines for renewable energy, “they say, ‘Damn, what are we going to do about the price of natural gas?’ ” Oil and gas executives say they provide a necessary energy bridge; that because both oil and gas have a fraction of the carbon-burning intensity of coal, it makes sense to use them until wind, solar, geothermal and the rest become commercially viable. “We should celebrate the fact that we have enough oil and gas to carry us forward until a new energy technology can take their place,” said Robert N. Ryan Jr., Chevron’s vice president for global exploration. Mr. Skelly and other renewable energy entrepreneurs counter that without a government policy fixing a price on carbon emissions through a tax or cap and trade, the hydrocarbon bridge could go on and on without end. So what happened to shift the energy world so drastically the last few years? Is the shift reversible once the economy picks up? The recession throttled the world’s demand for energy, particularly in the United States and Europe, but that tells only part of the story. Periodic jolts, like the Arab oil embargoes in the 1960s and 1970s, are likely to recur in a world with unpredictable actors like Iran. Access to oil and gas may always be limited by geopolitics, especially in places like the Middle East. Just in the last few days, the decline in the dollar spurred a new spike in oil prices, along with those of other commodities. Yet, the outlook, based on long-term trends barely visible five years ago, now appears to promise large supplies of oil and gas from multiple new sources for decades into the future. The same high prices that inspired dire fear in the first place helped to resolve them. High oil and gas prices produced a wave of investment and drilling, and technological innovation has unlocked oceans of new resources. Oil and gas from ocean bottoms, the Arctic and shale rock fields are quickly replacing tired fields in places like Mexico, Alaska and the North Sea. Much depends, of course, on government policies in the coming decades. The International Energy Agency, the Paris-based organization that advises industrialized countries, projected this month that global energy demand would increase by an astounding 36 percent between 2008 and 2035, assuming the broad policy commitments already announced by governments were exercised. Oil demand is projected to grow to 99 million barrels a day in 2035, from 84 million barrels a day in 2009.

December

• Upstream news:

- Shell announced an agreement to sell a group of gas fields in South Texas to OXY USA, Inc., a subsidiary of Occidental Petroleum Corp., for approximately $1.8 billion, effective January 1, 2011. The sale is a further step in Shell’s ongoing portfolio restructuring and focus on capital efficiency. The fields include all Shell’s gas-producing properties and related assets in South Texas, where Shell first drilled wells in 1953. They are predominately mature tight gas fields which currently produce some 200 million cubic feet of gas equivalent per day. Shell and OXY USA have signed a definitive sales agreement and the transaction is expected to close in early 2011, subject to regulatory approvals. Acreage recently acquired in the Eagle Ford shale in Texas is not part of the transaction.

- Shell announced the appointment of three chief scientists to cover the critical industry disciplines of exploration, unconventional oil, and in-well technology. This further strengthens Shell’s existing group of six top scientific experts. Expanding its group of chief scientists underscores the importance Shell places on delivering targeted responses to the challenges of a rapidly changing energy landscape, including demand of business customers.

- Shell and Schlumberger announced a multiyear research technology cooperation agreement focusing on improving the recovery factor of oil and gas reservoirs and extending the life of existing oil and natural gas fields.

• Downstream news:

- Qatar Petroleum and Shell have signed a Memorandum of Understanding to jointly study the development of a major petrochemicals complex in Ras Laffan Industrial City, Qatar. The agreement was signed in Doha by His Excellency Abdulla bin Hamad Al-Attiyah, Deputy Prime Minister and Minister of Energy and Industry of the State of Qatar, and Peter Voser, Chief Executive Officer of Shell. The scope under consideration would include a mono-ethylene glycol plant of up to 1.5 million tonnes per annum using Shell’s proprietary OMEGA (Only MEG Advantaged) technology and other olefin derivatives to yield over 2 million tonnes of finished products.

• Business/Finance news:

- The Board of Royal Dutch Shell plc (“RDS”) announced the pounds sterling and euro equivalent dividend payments in respect of the third quarter interim dividend of 2010, which was announced on October 28, 2010 at $0.42 per A ordinary share (“A Share”) and B ordinary share (“B Share”). Dividends on A Shares will be paid, by default, in euro at the rate of €0.3138 per A Share. Holders of A Shares who have validly submitted pounds sterling currency elections by November 26, 2010 will be entitled to a dividend of 26.72p per A Share. Dividends on B Shares will be paid, by default, in pounds sterling at the rate of 26.72p per B Share. Holders of B Shares who have validly submitted euro currency elections by November 26, 2010 will be entitled to a dividend of €0.3138 per B Share. This dividend will be payable on December 17, 2010 to those members whose names were on the Register of Members on November 5, 2010.

- At 07.00 GMT (08.00 CET and 02.00 EST) on Thursday 3 February, 2011 Royal Dutch Shell plc will release its fourth quarter results and fourth quarter interim dividend announcement for 2010.

- Royal Dutch Shell plc announces that it has issued 18,288,566 A Ordinary shares in relation to the scrip dividend program for the third quarter 2010 interim dividend. Following the issue, the total number of A shares in issuance is 3,563,952,539 and the total number of B shares is unchanged at 2,695,808,103. Royal Dutch Shell plc holds no ordinary shares in Treasury.