Shell plc (LON:SHEL)

Status Update

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May 25, 2021

Ladies and gentlemen, good morning and good afternoon to you all. I'm Wael Sawan, the Upstream Director at Shell and I really appreciate you making the time to join us for this session for our upstream strategy. For those of you who don't know me, I joined Shell some 24 years ago as a project engineer and I've had the opportunity since then to work in our upstream, downstream and our integrated gas businesses. Before taking on my current role in 2019, I led the deepwater business for 4 years and before that I had the opportunity to lead our businesses in Puffer. Today I'm joined by various members of the upstream leadership team. Firstly, Sinead, the CFO of our upstream business will join me to discuss in more detail some of our broader upstream strategic elements that we introduced at our recent Strategy Day. We will also be joined by Paul, Gretchen and Zoe who lead our deepwater, shales and conventional oil and gas business respectively and who will update you on some of the exciting opportunities across our portfolio. We plan to first run through around 45 minutes of plenary presentation and leave plenty of time thereafter for your questions. To ask a question, you will need to be dialed in via the phone line found in your invite materials. Now before we dive in, let me first show our cautionary note that we always share relating to any forward looking statements. Let me begin with our investment case. We believe Shell has an important role to play in the energy transition And our strategy then introduced you to Powering Progress, our strategy to accelerate the transition of Shell into a provider of net 0 emissions energy products and services and our upstream business is going to be a crucial part of this strategy. Powering Progress is set around 4 main goals with the intent to deliver value for our shareholders, for our customers and for society as a whole. Generating value for our shareholders means delivering strong returns by taking a dynamic approach to managing our portfolio, continuing with our financial discipline and ensuring we are ready to realize future opportunities in the energy transition. Powering progress also means powering lives from supplying affordable and reliable energy that is crucial to the global economy today to the work that we are doing to become one of the most diverse and inclusive organizations in the world. It's also about achieving net 0 emissions by partnering with customers, with businesses and society as a whole to address the problem of greenhouse gas emissions in the atmosphere. Shell's target is to be a net 0 emissions energy by 2,050 or sooner in step with society. This means net 0 emissions from our operations, our Scope 1 and 2 emissions and also net 0 from the end use of all the energy products we sell, our Scope 3 emissions. Finally, powering progress also means respecting nature by stepping up our environmental ambitions to protect and to enhance biodiversity. Shell has 3 integrated business steps and each has a critical role to play in delivering our strategy to ensure that we have a strong, profitable and resilient company now and well into the future. Our upstream business which we will focus more on today aims to responsibly manage our advantaged oil and gas resources. This upstream business has a clear purpose, to build on the legacy we have of delivering reliable and affordable energy that are essential for modern life, while at the same time generating material cash flow that underpins shareholder distributions and funds our growth pillar through the energy transition. And this transition is already happening of course. Around 70% of the world's global CO2 emissions is covered by net zero commitments that have either been adopted or are in the process of being adopted by national governments across the world. And at the same time, our customers are increasingly demanding lower carbon energy products. The pace of this change will vary depending on the customer and the region and Shell is playing an important and a leading role in that transition. But even the most ambitious scenarios tell us that as the world transitions it will continue to need oil and gas for many decades to come. You will know that have seen analysis of the IEA's net 0 by 2,050 scenario that was published just last week, including its assertion that in that scenario there will be no further need for new oil and gas supply projects. While it sets out an alternative pathway to our own Sky 1.5 degrees C scenario both underscore the urgency and the importance of ambitious policy, unprecedented collaboration and dramatic changes in the way the world consumes and produces energy. For us, this all means that we must have the highest quality upstream business possible, An upstream business that is focused and leverages our core strengths. An upstream business that is resilient to oil and gas prices as well as to carbon and an upstream business that is highly competitive. This has been and will continue to be our focus going forward. Now as we look to the future of Upstream, we do so from a starting position of strength with a business that over the last 5 years has been focused on value over volume. Our upstream business has generated more than $75,000,000,000 in CFFO excluding working capital over the last 5 years at an average oil price of $55 a barrel and over that same period has generated around $25,000,000,000 in organic free cash flow to Shell. While of course we are proud of this performance, make no mistake, this does not mean business as usual for us in upstream. Powering progress will radically transform Shell over the next 30 years and will require our upstream business to step up even further if we are to achieve Shell's ambitions of the energy transition. This will be reflected by the portfolio choices we make as we high grade and strengthen our upstream portfolio. It will be reflected in our investment choices as we focus our CapEx program on our differentiated core positions to sustain material cash generation. And it will be reflected in the way we do work every single day, aiming to safely grow our margins by leveraging the strength of our integrated capabilities as an enterprise and digitally enabling our people. And I firmly believe that digitalization will be a key enabler to help us get to our full potential as a business. It's fundamentally changing the way we work, helping enhance our recovery from reservoirs, reducing development time and costs, as well as improving performance, reliability and safety along the way. Let me give you just a couple of examples. We are using advanced data analytics on our critical equipment such as our valves to prevent incidents and avoid unplanned interruptions. We have also applied analytics in our subsurface where if you take an example of the Gulf of Mexico, we have taken some 3,300 troubled events over 25 years of world history, integrated them into a user friendly tool and complemented them with 6 AI models, allowing us to streamline the process of identifying subsurface hazards and optimizing well plans to avoid or mitigate risks. This saves 1,000,000 in costs. It saves on emissions due to less non productive time and of course it improves safety of our operations and that's just scratching the surface of the full value potential that I think we can unleash from digital. Now our ambitions all begin with being the most responsible operator possible. This starts with safety. In 2018 we rolled out our process safety fundamentals which was not about new requirements but a renewed focus on the rigor that we had to have in following our existing operating practices. Over the past 5 years we have achieved an almost 50% reduction in the higher risk process safety incidents. Operating responsibly is also about protecting the environment by delivering on our climate targets. Today our upstream business has made good progress. We have reduced the total scope 1 and 2 emissions of our portfolio by more than 25% since 2016 and we have cut our routine flaring in our operated assets by more than 65% in that same time period. We are on track to fully eliminate routine flaring by 2,030. Our upstream activities are also essential for the economic development of the countries in which we operate from providing vital energy for homes, businesses and transport to supporting economic growth and And it's this talent base that we have across upstream that will deliver our ambitions. As we reorient our company towards the energy of the future, our people will continue to proudly deliver the oil and gas that the world needs today, while supporting the Schall Group in areas of adjacencies such as developing offshore wind farms, materially growing our CCS business and leveraging our current positions to support our host governments on their own transition journeys. We have outstanding people that are committed to playing their part in support of Shell's transformation by ensuring that Upstream delivers to its full potential. And it's the same group of people that have already delivered significant improvements over the past 5 years. We've reduced our unit development costs by around 50% since 2015 and reduced our unit operating costs by more than 25% over the same period. Our controllable availability has also significantly improved reaching around 90% last year. This means more uptime for our assets and more cash generation even in a world like what we saw in 2020 where our people were also managing through the pandemic. All of these improvements have led to an almost 70% increase in our upstream unit cash flow from operations versus where we were in 2015, recognizing as well that in 2015 oil prices were higher than what we saw in 2020. Our focus over the last few years around resiliency, operational excellence, reducing costs and high grading our portfolio are what puts us in a position of strength. When we look at our combined upstream and integrated gas business to be able to compare with our peers, not only are we by far generating the highest cash flows compared to our peers, they are also the highest quality cash flows as you can see when you look at the CFFO per barrel metric. We also have the most diversified portfolio, diversity that provides us optionality. We have long plateau advantage positions in our conventional oil and gas business, short cycle opportunities in our shales business and world leading high margin deepwater and integrated gas businesses. And on our carbon metrics, which are an important part of our investment decision making process, we also are well ahead of other operators when it comes to carbon intensity on a Scope 1 and Scope 2 basis. But as I said earlier, we are not satisfied with the status quo. It is this track record of improvements, this position of strength and this organization and its capability that gives me great confidence in being able to achieve much more. So what do I mean by more? For Shell Upstream, this means structurally reducing risks while delivering material cash flows and improving returns. We will do this by becoming more focused, more resilient and even more competitive. We will focus our portfolio on our 9 core positions that generate around 80% of our CFFO. This is a unique and diversified portfolio with access to significant price upside where we have deep expertise and where we have leadership positions with decades of history. As we high grade our portfolio, we will use both an economic and a carbon lens in our decision making. Our positions outside of our core ventures will be operated under a lean venture model, which Zoe will talk about in just a moment. There are also parts of our core positions where we are reviewing portfolio options. At strategy day we talked about our onshore oil portfolio in Nigeria where we have faced a consistent environmental challenge, mainly because of leaks caused by sabotage and theft in areas where security is a serious problem. The balance of risk and reward associated with our onshore oil portfolio in Nigeria is simply no longer compatible with our strategic ambitions. Because of this we have started discussions with the Nigerian government to align on a way to move forward. From an investment perspective we will be disciplined in our deployment of capital and we'll look to make replicable project investments with low breakeven prices and faster payback times. And we will continue to look to reduce our cost structure further with an aspiration to reduce costs by an additional 20% to 30% by 2025 compared with our 2019 cost base. This focus, discipline and continued drive for improvements in our underlying performance will enable us to provide the energy that the world needs and at the same time to provide the best returns for our shareholders. Now with that, let me hand over to Chenay to talk through our funnel of opportunities that will drive our cash flow generation. Thank you, Wael, and hello to everyone on the call. My name is Sinead Gorman. I'm the Executive Vice President for upstream Finance. Since I joined Shell in 1999, I've held a variety of positions in different parts of Shell, including trading, mergers and acquisitions, shales and EVP Finance for Integrated Gas and New Energies. I've been EVP Finance for Upstream since late 2019. So in order for us to provide the energy that the world needs today, we must ensure we have a strong project funnel and resilient future development opportunities. Our current funnel of projects is robust with more than 400 KBOE a day of new projects under construction and a multiple of that which are pre FID. The projects listed here are only a subset of our portfolio, representing around 50% of volumes including shares. And if I look at our broader 2P and commercial 2C resource base, we have over 20 years of production in our funnel. Our upstream business will attract around 30% to 40% of Shell's total CapEx between now and 2025. With this $7,000,000,000 to $9,000,000,000 per annum of CapEx, we will be selective in the projects we pursue. They will be projects where we have clear competitive advantages, subsurface expertise, strong integration value and can offer the highest returns. We currently have an attractive portfolio for projects with an average forward looking breakeven price of around $30 per barrel and an average portfolio IRR between 20% to 25%. Going forward, approximately 80% of our investments will be into our core positions and the majority will be in our deepwater business. We've been focused on value deploying for many years now and this has been key to driving our increase in unit cash flows. The future projects we choose to bring to a final investment decision will also have the same focus. Replenishing our portfolio to sustain material cash flows into the 2030s will also require some continued exploration with a focus on differentiated opportunities. Our exploration team has made a significant discovery in the Gulf of Mexico with our leopard discovery that we announced earlier this month, extending our track record in the deepwater Gulf of Mexico after the black tip discovery in 2019. We have also seen continued near field exploration successes over the last few years with multiple wells in PDL Oman, Malaysia and in BSP, Brunei. And we have added exciting new exploration acreage to our portfolio of the Kosmos deal last year, for example. So going forward, we will spend around $1,500,000,000 per annum on upstream exploration and we'll develop projects that meet our expectations of PayBank by 2,035. Our exploration strategy, like our development strategy, will be focused on value delivery, not volume. The majority of our exploration spend will also be focused on our core positions, ensuring that we continue to keep our hubs full and leverage off our quality positions and deep expertise. There will be some frontier and emerging exploration we will pursue and this will be focused in basis where we believe we have differentiated subsurface understanding. An area of focus for us will be pursuing opportunities around the Atlantic Margin basins as you can see here. We have an exciting exploration drilling campaign in the next few years, mostly in deepwater, for example, in Gulf of Mexico, both on the U. S. And Mexico sides, Sao Tome, Suriname and Namibia to name a few. And after 2025, we will not pursue any new entries into frontier positions. I believe that our top quartile drilling performance and our focus on basins where we have deep subsurface knowledge gives us a real competitive advantage. Paul will go into this a little bit more in a minute. Before we move to hear from the various business leaders, let me spend one more minute on cash As Wael mentioned earlier, with our combined upstream and IG businesses delivering higher total and unit CFFO than our peers, we have demonstrated not only how we can maximize value from our assets, but also how we can generate differentiated value from integration. With the changes we're now making in our strategy, we expect to continue strong performance across a range of commodity prices. If I just take 2020 as an example, our core assets delivered $5 per BOE higher unit CFFO compared to the rest of the portfolio. And as we talked about at Strategy Day, our total oil production is expected to peak in 2019 and we expect our oil production to gradually decline by 1% to 2% a year, including divestments until 2,030. We also expect the percentage of total Shell gas production in our portfolio to gradually rise to around 55%. Our upstream business is free cash flow positive at $40 a barrel and our positions have significant access to price upside. For every $10 increase in Brent, we expect our upstream business to be able to generate an additional $4,000,000,000 in cash flow per year. This underpins the material and resilient cash generation we expect from our upstream business into the 2030s. Now with that, let me hand over to Paul. Thank you, Sinead. Hello, I'm Paul Woodford, Executive Vice President for our Global Deepwater Business. I've been with Shell for 30 years where I've worked in operational and leadership roles in wells, deepwater, Onshore, Offshore and Shales. For 2 years, I served as the VP for the U. K. And Ireland before being appointed as the EVP of Wells in 2017. And I took over as EVP of Deepwater in 2019. As Wael mentioned, delivering our strategy requires the best possible upstream and that will mean unlocking greater value from deepwater. Our 4 decade history is filled with great successes, notable challenges and a resilient spirit. And today, with 2 prolific basins, an exciting exploration portfolio and a track record of strong operational performance, we have a significant competitive advantage in Deepwater. Over the last few years, we've also proven we're capable of further improvement. And we have many examples that bring this to life, but a few that stand out. In 2018, our availability across deepwater was 85% and in 2020, we reached 90%. This advance resulted from improving our asset management systems, allowing us to identify and mitigate risks to our production. We've reduced our unit development costs by around 50% and our unit's operating costs by 40% since 2015. Last year, we drilled our lowest cost, most efficient deepwater wells ever in Brazil. At a cost of $34,000,000 our Saturno well went from spud to total depth in 20.6 days, a best in class result and 25 percent of 35% below the median time and cost performance across the industry and Brazil Presort wells. In totality, these examples and many more like it, meaning that in a $60 a barrel oil price environment, we're able to realize CFFO is greater than $30 a barrel. As others have mentioned, Shell's strategy includes increasing investments in lower carbon energy solutions, while continuing to pursue the highest returns and most energy efficient upstream investments. The Gulf of Mexico isn't just about cash generation. Our U. S. Gulf of Mexico production is amongst the lowest greenhouse gas intensity in the world for producing oil. Even with these improvements and advantages, we know that there's more to do. Let's take a look at how we'll generate even greater value from our assets. We aren't focused on doing deepwater everywhere. We're focused on delivering greater value from our advantaged positions. For example, as part of the Perdido Phase 2 topside turnaround, we increased capacity by 30,000 barrels per day. And through data science and analytics, Pinedo originally designed for 82% availability is currently operating at 93%. We look at our portfolio as a collection of urban communities or corridors that can learn from each other and work together to drive better outcomes on a larger scale. Corridors give us the options and alternatives that you just don't have if you're a single block operator. As Sinead mentioned earlier, we'll focus our exploration spend and invest over 70% of that in deepwater. So let me give you a sense of what that looks like. In the Perito corridor, we've been able to explore for bigger opportunities like we've done with Whale, Blacktip and Leopard. With this focus, we can optimize our infrastructure, including pipeline to shore to unlock the full value potential of our discoveries. But this urban planning isn't unique to Benito. It's at the heart of value creation in deepwater and speaks to the value that these strategic corridors represent. Here's a very simple example that highlights the benefits of this coordination. In 2015, we have more than 60 supply vessels And in Brazil, by taking a similar approach, we've realized a 25% cost reduction for supply vessels over the last 2 years. Now let's look at how replication is making a difference. Prior to our VITO final investment decision, we recognized an opportunity to reproduce the host for Whale, which is up for final investment decision later this year. By leveraging the construction and supply chain of Vito, Whale will go from discovery to 1st oil in approximately 7.5 years and feature top quartile subsea facilities. And this cycle time includes the impact from COVID cash preservation efforts that delayed the project FID by approximately a year. With a 99% replicated hull and 80% replicated topside, the benefits go beyond reducing cycle time. We've realized months of reduced engineering time resulting in significant savings in engineering costs on both the hull and topsides as well as greatly improved manufacturing outcomes for the replicated topsides equipment. While I trust the power of our corridors is clear, it's actually our unique capabilities and advantaged positions that show actual upside. We'll build on our strengths to drive better business outcomes, not just at an asset level, but across deepwater. We've proven that we're best in class at well delivery, but we know there's an opportunity to take even more cost out. We've adjusted to a franchise model where we've gone to a limited number of standardized well types that cover our global deepwater portfolio. We've gone from 18 well archetypes to 3 and from 14 completion archetypes to 4. This method is similar to the franchise models of fast food restaurants around the world brings together the right materials, services, people and procedures to reliably deliver world class business outcomes regardless of location. And this launch is a domino effect of efficiencies internally and in the supply chain. From a supply chain perspective, we're partnering with key suppliers to develop standard work packages based on a set of well archetypes that we deployed globally. This simplified and standardized approach has delivered an additional 20% cost reduction in the last 2 years in the Gulf of Mexico where we've been developing it. But we know our more recent successes aren't enough. With our advanced these assets, we are capable of more. We'll build on our strengths and learn from all of our challenges so that we can deliver even greater value for this business. And with that, let me hand over to Gretchen. Thanks, Paul. It's a pleasure to be here today. For those of you who don't know me, I'm Gretchen Watkins, Executive Vice President of our Shales business and President of Shell in the United States. I took up those roles when I joined Shell in 2018. And before that, I was the CEO of Maersk Oil based in Copenhagen and previously worked for Marathon Oil and BP. Shale has been on a significant improvement journey over the last couple of years, a journey that's transformed our business by focusing on a high graded portfolio, improved capital efficiency, strong operational performance and a simplified operating model that has significantly reduced costs, all of which underpins strong cash flow generation. To achieve a high graded portfolio, we've divested from non strategic assets for strong valuations, allowing capital to be focused in our preferred basins. We divested our dry gas positions in the Haynesville and Appalachia and the United States. In Canada, we exited our Foothills sour gas business. And in April of this year, we completed the divestment of our Fox Creek and Rocky Mountain House assets. In fact, our current portfolio has generated more CFFO in 2020 versus 2017, despite a smaller asset footprint, the impact from COVID-nineteen and prices that were 23% lower. This cash generation is a testament to the progress that we've made on our competitiveness journey. In 2020, we also transformed our operating model, resulting in more disciplined execution and 40% fewer handoffs. Our operating model puts us on track to see a further 30% reduction in costs by the end of this year. And more importantly, we are a smaller and more nimble organization. We have clearer accountabilities, simplified processes, which enable our teams to boldly take the business forward. Now let me highlight a couple of our assets. In Canada, our Ground Birch Montney natural gas asset continues to show additional potential for resource maturation and excellent well performance. The Ground Birch asset is uniquely positioned at the inlet of the Coastal GasLink pipeline. By sharpening the focus execution and cost reductions in the shales portfolio, Gratunberg has reached its breakeven price by reduced its breakeven price by some 20% since 2018, and it will offer a lower cost of supply than the local AECO market. As a result, we can confirm today that Groundbridge will provide the majority of the feedstock for LNG Canada Trains 12. Our Argentina asset sits in the Vaca Muerta where reservoir quality matches the Permian. We have a large position in the best part of the basin and we are ramping up oil production while continuing to appraise and unlock development potential. Wells that we have already drilled in the Black Oil window have exceeded our expectations. And now to the Permian, which delivers the majority of our high margin volumes and free cash flow for our shales business. Permian is an upstream core asset and it will attract the majority of the capital within our shales portfolio. We have a very attractive Permian position with more than 500,000 acres in the Delaware Basin in areas with the thickest formations. We have some of the highest oil yields in the basin and have derisked 8 plus years of Tier 1 inventory. We've seen a nearly 60% reduction in drilling and completion costs and a 50%, 30% reduction in unit operating costs since 2015. Here, technology is an enabler to the significant reduction in well costs. We use remote real time monitoring and automation in our drilling activities. This capability allows us to deploy Shell proprietary AI techniques to optimize and continually refine our drilling parameters, leading to more capital efficient wells. We are looking for cost saving opportunities everywhere. For example, we've reduced our flowback costs through automation and simpler designs. This also improves our cycle time and increases early production by almost 20%. Additionally, we've started using our own sand traps and tanks, eliminating more expensive rental equipment. We continue to progress development while looking for opportunities to consolidate and enhance our footprint. We're focused on strong operational performance and competitive cost structure. With prior infrastructure investments, we are now in our drill to fill stage here. We have forward looking IRRs greater than 50%, breakevens of about $30 a barrel and paybacks within 2 to 3 years. We also capture additional commercial value through our trading and supply business. This integration enables Shell to reach the highest value markets and manage price exposures to increase the resilience of our investments. And as communicated in our Q1 results, the Permian has delivered 3 consecutive quarters of positive free cash flow. So now I want to talk about our efforts in the Permian to reduce flaring and emissions. Shell places a high priority on reducing methane emissions and we support the direct regulation of methane. We have actively worked to significantly reduce our emissions and as a company have announced a target to maintain methane intensity below 0.2% by 2025 for operated oil and gas assets. This is an area that I personally am very passionate about. Today in the Permian, we have top quartile performance emissions, and we are already below our 0.2 percent methane intensity target. Since 2017, we have reduced our greenhouse gas and methane shell operated assets by nearly 120%. We've implemented infrared cameras along with drone technology as a means to improve methane emission leak detection and improve the speed of repair times. For example, drone mounted detection cameras feed information to an artificial intelligence based analytical platform, which is able to detect and analyze methane leaks from images collected by this camera. This produces a simple data analytics set and within 24 hours of a drone survey, we have all the information that we need to identify a potential leak, dispatch a maintenance crew and remediate that leak. We've also stopped all routine flaring in the Permian Basin since 2018, and we applaud others who are moving in that direction now. With that, let me hand over to Zoe to talk about our conventional oil and gas business. Thank you, Gretchen. It's great to be with you all today. I'm Zoe Janovich, the Executive Vice President of Conventional Oil and Gas. Let me also briefly introduce myself. Prior to my current role, which I took on in January of 2020, I was the Executive Vice President and Country Chair for Shell in Australia, where I was responsible for our integrated gas assets. Before that, I was in Canada, leaving our heavy oil business, including both oil sands and unconventionals. This is where I joined Shell in 2014. Before then, I worked with Rio Tinto as the CEO of our Iron Ore Company of Canada and prior to that with the company President for Brazil. Conventional oil and gas is the heart of our upstream business as it spans our legacy positions, which we've developed and operated over decades. Over the years, this portfolio has proven to be a material cash engine. The diversity of the portfolio also provides price resilience given the mix of production sharing contracts and tax royalty agreements. This was evident in 2020 when our conventional business delivered around 60% of the $4,000,000,000 organic free cash flow for Upstream. We're also well positioned to take advantage of price recovery and upside as we demonstrated in our recent Upstream quarter 1 results. To sustain this cash generation capacity into the future, we are focusing the majority of our capital and resources on 6 core positions: 3 key operated countries in the U. K, Nigeria and Malaysia and 3 non operated positions in Oman, Kazakhstan and Brunei. We have unique leadership positions and competitive advantages in these countries based on our subsurface knowledge, integrated value chains, decades of production experience, deep relationships with customers sorry, governments and partners and very talented local staff. These 6 core positions provide longevity through production optimization, new project developments and also have near field exploration running room, which will allow us to sustain cash delivery well into the 2030s. As we focus on our core positions, we are significantly reshaping the portfolio. We've made good progress with the divestments of non core assets, as you can see on the map. Earlier this year, we announced the divestments of our onshore Egypt assets. And last week, we signed a deal to sell our interest in Malampaya in the Philippines. The divestment of our ventures in the Baram Delta in Malaysia is in progress, and we're also intending to hand back our Upstream licenses into this year to the government in 2022 when the Misko license expires. In Nigeria, we divested OML 17 earlier this year. And as Wael mentioned earlier, we're also discussing portfolio options for our remaining onshore oil positions in Nigeria with the Nigerian government. Looking forward, we will concentrate our efforts on our deepwater and gas value chains in country. Focusing our portfolio will also allow us to further drive our operational performance and project delivery. Already, our capital efficiency has improved by around 45% over the last 5 years, and we've reduced our unit operating costs by around 10%, while keeping our controllable availability close to 90%. But there's more improvement potential as we leverage our extensive subsurface and operational data through advanced data analytics and digital technologies. In PDO, for example, the team implemented a new digital web based system called Takamal, the Arab word for collaboration. This In 2020, almost 2,000,000 barrels were accelerated, generating an incremental cash flow of more than 200,000,000 dollars The other unique feature of our core positions is that these upstream assets are part of an integrated value chain with integrated gas, trading and downstream. This allows us to maximize the value of our molecules and positions us strongly for the development of new value chains as we move towards net emissions or net zero emissions. Let me turn to the U. K. As a great example of what we're doing in this space. The U. K. Is a core part of our portfolio. We operate around 10% of the total U. K. Oil and gas production. Our cash flow from operation unit margins in the UK are very attractive and resilient and among the best in our upstream portfolio. Our UK team increased production by more than 50% since 2015 after divestments. And the 7 major project FIDs we took in the last few years and with several upcoming will result in further growth in the years to come. Our U. K. Portfolio can essentially be segmented into 2 parts. The first is the high margin oil FPSOs, where we'll focus on project replication, standardization and selective growth. And the second is in natural gas, where we expanded our unique integrated value chain from wet gas to chemicals. We realize that the external context is changing at pace in the U. K. And the U. K. Government is a front runner in developing policy and legislation to achieve net zero emissions. We are also committed to achieving net zero emissions in the U. K. And have made good progress to reduce our upstream emissions over the last 5 years. But as the landscape changes and shifts quickly, so are we, and we need to do much more. As we continue to develop our U. K. Portfolio, we're actively pursuing a funnel of projects to further reduce our direct emissions through brownfield abatements, offshore electrification and selective portfolio high grading. We're also well placed to develop new value chains for blue hydrogen in combination with carbon capture and storage, addressing both Scope 1 and Scope 3 emissions by leveraging our gas assets and strategic infrastructure positions. For example, we're participating in the Acorn project, one of the largest and most mature carbon capture and storage and hydrogen projects in the U. K, which is centered around our St. Fergus gas plant. St. Fergus receives large volumes of natural gas from U. K. Offshore production and Norwegian imports and plays a critical part in supplying the U. K. Energy needs. By reforming the gas into blue hydrogen and storing the carbon dioxide into nearby depleted fields through currently shallow and and operated infrastructure, the Acorn project has the potential to decarbonize industry and homes across Scotland and the UK and the ability to store over 5,000,000 tons per annum of CO2. To enable these types of developments, the upstream industry and the UK government have recently entered into the North Sea transition deal in which Shell is a partner. This deal brings together a package of commitments and measures that will facilitate supply decarbonization while building policy frameworks, capability, supply chains and investments in clean technologies, all while supporting jobs. It's a powerful example of what can be achieved when government and our industry work together towards a common goal and can serve as a blueprint for other markets. Finally, let me also spend a few words on what we're doing in our lean portfolio. Last year, we identified 11 lean positions in our conventional portfolio, including countries such as Italy, Norway, Netherlands and Iraq. Since then, we've taken this number down to 8 with the portfolio decisions I mentioned earlier, showing evidence of our early action despite the challenges of 2020. My ambition for the lean portfolio is twofold. Firstly, to drive high performance in the assets, evidenced by reducing OpEx by more than 40% in the next 3 years, increasing free cash flow by more than 30% compared to a 2019 baseline and turning them into agile organizations demonstrating our ability to drive a fit for purpose control framework in Shell. And secondly, to assess if these ventures have the potential to become core by unlocking significant materiality, and if not, to divest for value over time. Critically, the value in segmenting our conventional portfolio is not only in the focus that this brings to our lean assets, but the clarity of purpose for the Shell Group on our core asset positions as well. We will manage our lean assets with a new operating model based on 6 key principles: more frontline autonomy and decision authority within the ventures, a small supervisory team with lower central overheads and more stringent investment hurdles for projects and exploration steering towards faster paybacks. The differentiated operating model means that in general, the lean ventures will function with more autonomy, be liberated from the complexity so that they can focus on cash generation. Learnings will be taken from Lean and implemented broadly across our upstream organization at every relevant opportunity. We've already taken the first steps to implement this model and I'm confident we can achieve these objectives within the next few years. Now, let me hand back to Wael. Thank you for that Zoe. Let me now wrap up before we open up for questions. At our Strategy Day in February, we introduced you to powering progress, our strategy to transform Shell and today we built on that hopefully helping to explain how this translates to the upstream business. In short, we believe our upstream business has a critical role to play in responsibly providing energy that the world needs today and providing the financial strength to transform our company and to fund our shareholder returns. In recent years, our three lines of business have made good progress, building a compelling investment case through their competitive portfolios, attractive growth options and differentiated operating models. To support Shell's ambitious transformation upstream needs to continue to push for more. We need to become more focused, more resilient and even more competitive and our upstream business is well positioned to deliver that. With that, time to go to our questions. And Ali, if I can ask you to invite the first question. Thank And we'll go ahead and take our first question from Oswald Clint from Bernstein. Please go ahead. Good afternoon, everyone. Thank you very much for your time. Two questions. First one, I mean, really around exploration first, please and really derisking these frontier exploration plays and enabling for you to feed your hubs going forward. Just one example here, I'm just thinking about risks. The Northlet play was a good shelf success story. But then you've I think you've ended up taking a bit of an impairment on Appomattox. So it's really a question around subsurface risks as you try and derisk the exploration plays. And I mean anything going on there with seismic imaging that could really help unlock a bit more resource? Some of your peers talk about this in recent years. And then secondly, question on production. Obviously, it feels a lot easier to manage to 1% to 2% decline in oil than trying to grow 1% to 2%. But you're very offshore exposed. And of course, decline rates here are obviously an order of magnitude higher than 1% to 2%. So just getting a sense of your confidence around managing to this number. Should we expect it maybe to be a bit more lumpy some years and some years higher, some years lower? Or is this really down to Paul here and his wealth team to just enable you to do the 1% to 2%? Thank you. Oswald, good afternoon to you. Thank you for the questions. Let me start with the production one and then dovetail into exploration and hand over to you Paul maybe to talk a bit about Appomattox specifically the Northland and subsurface risks in general. Also for the production declines, I think it's important to contextualize that the 1% to 2% that we talk about is on the overall portfolio and that's going to be driven majority of it is going to be driven through some of the divestment activities that we expect to see going forward. The majority of our 9 core positions will we will look to keep flat or to slightly grow and that's where we are focusing the majority of our capital. With 80% of that capital going into those core positions, we have high confidence that we are able to continue to drive that sustainability in those positions. I think to your point around the nature of offshore positions and the higher decline rates. What I would say is we do have a very diversified portfolio. If you look at our Oman position, if you look at our Nigeria position, if you look at our Brunei Malaysia position and others, those tend to be lower decline rates and therefore easier to manage at that rate. From an offshore perspective, the majority of our exploration spend around 70% plus goes into the quarter to be able to sustain some of the levels that we talked about. And that's how we come up with a $7,000,000,000 to $9,000,000,000 of CapEx that we feel is important to be able to sustain the cash flow generation from this business well into the next decade. Just on the exploration piece, what I would say is indeed we are more geared towards deepwater exploration. We have had many, many successes in this space. I think in particular as we I'll hand over to Paul on NAPO that is an area where it's important to look at the entire urban corridor that Paul was referring to and maybe give him an opportunity to reflect on both the subsurface, but also some of the plays that surround. Paul? Thank you, Wael. And Oswald, thank you for the question. Specifically on Appomattox, if I take a step back then Appomattox was the play opening development of the Northlet play. But clearly, it's not the only opportunity that we have within the Northlet. It came on stream ahead of schedule and ahead of budget. And availability has been very, very good since we started that asset up. Clearly, yes, we've seen more complexity from a subsurface perspective that we have, now that we've got a year or so's production behind us have been able to really sort of integrate that into our overall thinking of what that means going forward of how we position future infill wells, but also how we think about the satellites that we already have from a discovery point of view, so Dover, Rydberg and Fort Sumter, as well as with the other exploration opportunities that we have within that urban theater in totality. So whilst yes, we have clearly learned from the subsurface and that often happens with play opening developments such as Appomattox and the Northlands. It's clear that the technology, some of the examples that we spoke about in terms of how we integrate that insight to further then reflect that in upcoming opportunities that we have will be absolutely clear. And Seismic that you mentioned is just one of those technologies that we are using heavily. Yes, I will say that whilst the subsurface is more complex at Appomattox, we do see pressure connectivity there. We did start our first water injection well at the end of 2020, and that is progressing well. With that, Wael, let me hand back to yourself. Appreciate that. Paul, thank you. Ali, if we can ask for the second question and most of all, thank you for that first question. And we'll go ahead and take our next question from Martin Ratz from Morgan Stanley. Please go ahead. Hey, hi. It's Martin. Thanks for this presentation. Very useful. I've got 2 questions, if I may. While in your introductory remarks, you mentioned a little bit about the IEA report from last week, but it's come as such a sort of marked sort of set of conclusions, so to say, that I did want to ask you to elaborate a little bit about it. So reading the report myself, there seems to be quite a wide gap between sort of the detail in the report and some of the media reporting. But the perceptions of it are not necessarily insignificant. And I was wondering if you have a view on how this might still, despite all the plans that you have, impact your ability to move forward with major FIDs and things like that. So that's one thing. And the second thing I wanted to ask relates to the Permian. You speak very positively about the Permian. But I was wondering you're talking about breakevens that are $30 a barrel. So that's a rather wide gap of $30 And yet, we're not seeing super major oil companies like Shell adding any rigs. We see privately owned companies adding all the rigs, but the supermajors including Shell are not really adding all the rigs. So now I can sort of understand a bit perhaps capital discipline sort of constrained framework sort of why that might be the case. But I was wondering if you could say a few more words about how you're thinking about allocating capital to shale. Are you in effect saying, look, we want to do these short cycle projects perhaps later in the decade when really we can only do short cycle projects. So we don't want to do them now, we want to do them in the future. Is there sort of thinking behind it like that? Martin, thank you for those two questions. I'm going to kick off with the first one and invite Gretchen to talk to the second one including how we think about the capital allocation from an upstream perspective. I think maybe let me start with the IEA report which of course like you I had the opportunity to review. I think firstly to say we as a company of course welcome that IEA report and one can dispute of course the plausibility of some of the assumptions that underpin that scenario. We do find quite a lot of common ground with it and maybe just to be a bit more specific, if the world is to achieve the net zero emissions by 2,050 the report rightly points out as we have been trying to point out for a long, long time now, it will take unprecedented levels of collaboration across all the countries with real policies and regulations that need to be implemented immediately. It also refers to that those policies, but also customer behaviors needing to change very quickly to be able to fundamentally impact the demand side of the formula. It talks about the uptake of electric vehicles, the installation of heat pumps, solar panels in the houses, refers to, for example, business travel being constrained to what we experienced in 2020, which at least from my perspective was minimal. And so you put all that context, what it tells you is that you do need policies and regulations and you do need significant demand shift if we are to achieve the ambitions that are set by the report. If I then take it one step further, the report rightly points to a significant amount of capital being required to achieve that. It talks about $5,000,000,000,000 per annum, which is a significant step up from the roughly $2,000,000,000,000 or so that we spend at the moment, which is absolutely right, but also plays to our conviction and the underpinning of the Power in Progress strategy that we introduced in February, which is that if we are to truly move towards the ambitions of Paris, if the world is to collectively move there, it will require the right incentives to be able to create a pool for that $5,000,000,000,000 per annum of capital to come through. And therein will light a number of opportunities for companies like ours who have the customer connect to our retail sites and B2B businesses, but also companies like ours that are able to integrate across the entire energy value chain. And that is very much the underpinning of why we talk about one thing to move with the transition, one thing to start to redirect capital towards our growth pillar and one thing to at least look to pivot, prove, see that we can create value and then pivot even further. If I then step back for a moment and say that's how our strategy drives it, what does it mean for the upstream business, I think it's very consistent with where we have been going, albeit it looks at a different timeframe and it is a scenario after all. I can give you 100 different scenarios. But what we have done is already guided towards that 1% to 2% oil production decline with a peak in 2019. And what we have done is we have also talked about no longer going for frontier exploration post 2025. So we are already in a mindset that plays into the scenario. And then the question is simply going to be, is the pace going to materialize or is it going to be slower? I hope for the best, but we need to be able to be wary and be ready to go in step with society rather than go too far ahead of it. Let me maybe pause on that question and then hand over to you Gretchen to talk a bit about the Permian. Thanks, Wael. And thanks, Martin, for the question. Yes, so from a capital allocation perspective, we actually feel really good with where we are right now in terms of allocating capital to the Permian. We're running 3 rigs that are operated by Shell. There's 3 to 4 rigs operated by our non operated partners. But we're in a free cash flow positive position right now, which is right where we want to be. We've been there for the last three quarters. We plan to stay there. As you say, the price environment is looking positive. So we have the ability to ramp up if and when we would like to do that. But right now, we're enjoying the free cash flow that's coming in from that. I mean, attribute that really to the fact that we've reduced our D and C our drilling and completion costs by almost 60% over the last 5 years. We've reduced our unit operating costs by 53% over the last 5 years. So we've taken a lot of efforts to simplify our operating model, reduce our costs, really get clear on accountabilities. And we feel like that free cash flow that's coming in right now is exactly where we want to be. So we do have an opportunity to increase our capital when we want to. We've got 8 plus years of Tier 1 inventory derisked at this point with an opportunity to derisk more over time. And we feel like that flexibility of inventory and capital when we want to use it is available for us. Thank you for that Gretchen. Martin, thank you for that question. Thanks. Ali, if we can go to the next question please. And we'll take our next question from Prashanth Malik from JPMorgan. Please go ahead. Hey, good afternoon. Well, thank you for that presentation and some really excellent insights from the team. Appreciate it. Two questions from me. First of all, just going back to the Slide 12, where you share your planning assumptions of the medium term for oil price and in the context of that and what can be some of the variables you've talked about in terms of decline rates of $7,000,000,000 to $9,000,000,000 The first question is around that, which is, well, say we are in a sustained higher oil price, dollars 60, dollars 70, whatever, does that dollar amount change? And would you then solve for potentially moving the needle towards no decline per annum? So I just want to understand the reaction function of oil price, the strip to your CapEx assumption in the context of that because it strikes me as slightly odd that if all is at $70 you'll still be sticking at the low end of your or whatever $79,000,000,000 of upstream investment when it would be more tempting to spend and generate more cash flow, particularly some of the inventory that you have in the deepwater? The second question I have is regarding just this argument around a sustained period of other investment and just how the NOCs that you're interacting with are responding to your selected from the selection process around where you invest? In other words, how are the NOCs without wanting to sort of single out 1, responding to yourself and other majors, CapEx discipline and sort of in some cases under investment versus previous years? How are they able to then sustain their own production levels without that funding that you've long put in there in the past? Thank you. Christine, good afternoon to you and thank you for both those questions. I'm going to start with the second one, in particular the context of the national oil companies. And then Sinead, I'll come back to you to maybe reflect a bit on how we're thinking about capital going forward. Christian, I think it's fair to say that there's a very different dynamic that we have seen over the past, I'd say, 5 years, but that has accentuated in the last couple of years. I think the discussion around energy transition, the discussion around stranded assets has changed the dynamic and in particular as we have all as a sector I think held back on capital and we've talked about it from a value over volume perspective at Shell. I think it's changing the narrative and the interactions with many of our counterparts. Not that there is anything that we're doing to hold back, it's much more to be able to try to get across in our discussions that we do need sanctity of contract. We do need the stability of investment climate. We do need the right support and the right fiscal incentives to be able to do that. And that I have to say has landed a lot better in the last couple of years than I have seen in the last 2 decades, I would suspect in our sector. And you will see multiple examples of that around the patch. I mean just earlier today a deal that we have been working on for a few years to try to close with our counterparts in Nigeria the extension of the OML 118 porta block was finalized. That's taken us a long time, but it gives us now a deal that is commercially attractive and one that allows us to be able to continue to look at further opportunities there. Many of these things I think we find ourselves at a point in time where there's a lot more sensitivity in the discussion and that there is a recognition that capital will simply leave the country if it is not given the right level of protection and the right incentive. And we're trying to be as open and clear with our counterparts that we need to be able to have that environment if we are to continue to invest. Let me hand over to you, Sinead, maybe at this point to get your perspectives. Thank you, Al. And thank you, Christian. Indeed, so it's interesting to watch the oil price vary, as you say, at the moment. Dollars 7,000,000,000 to $9,000,000,000 of CapEx is a significant amount without a doubt. And that range gives us flexibility as we discussed earlier. You will see variability depending on which year it is. In some years, you'll see us at the lower and some years, you'll see us towards the higher. And we will flex that according to both the readiness of our opportunities and, of course, what's happening in the macro situation as well. So we have flexibility, which is definitely there. Beyond that, as I discussed, we have a significant portfolio or funnel of options coming towards us. We're not short of opportunities without a doubt and we talked about 400 kilobytes a day of things in pre FID coming towards us at the moment. So we will use those as they become ready to begin to ramp up further as comes through. But we've also talked about the options that we have in shales. So we have that ability to swing between the different elements. Going back to that, I would say the cash flow that comes from this portfolio, as you rightly point out, with price going up is significant. That $4,000,000,000 per annum of extra CFFO for every $10 is just very significant and why is that a group point of view and ability to consider what we do with that when we transition and how we return money to shareholders as we discussed before. Thank you for that, Sinead. And operator, before I go to you, Priscilla, again, thank you for that question. And maybe the only thing to leave with you is, we don't plan to jump outside of that $7,000,000,000 to $9,000,000,000 range. We would like to very much be able to ride the various cycles within that space and it still gives us $2,000,000,000 of flex. And so what we don't want to do is the sins of the past where we get excited by a short term oil price reality and by the time a project comes in, the oil price has gone through the cycle. And so expect to see us really disciplined in staying within that space. Thank you, Christian. And operator, Ally, if I can go to you for the next question. And we'll take our next question from John Rigby from UBS. Please go ahead. Hi, good afternoon. Thank you for taking my question. Four questions actually. So a couple and then just one clarification. So can you talk a little about how the way you run the business has changed since you moved to a value over volume strategy? How have costs, activities and behavior changed? Because I think one of the sort of conundrums that we have had externally in looking at oil companies and their financial performance is that they advertise extraordinarily good IRRs very often on a project basis and deliver extremely poor return on capital employed. And so there's always been a sort of gap between projects and corporate. And I just wondered whether as you sort of change all strategic behavior, whether there are things that drop out either just absolute costs or risk or whatever. I was wondering whether you could just talk about that and maybe talk about how we can reconcile better between those two numbers. The second question is, is there a risk as you pursue a strategy about value over volume? I assume that you will be more selective about the projects that you go ahead with. The way that you will shape them will be focused on an IRR and a short payback. And yet governments and resource holders may well be focused on something else like a maximization of the resources on the ground, etcetera. And then you may have issues in, I guess, like Nigeria where you were to exit bits of your portfolio, but still pursue other bits. So I just wondered whether there were any sort of issues of obstacles or sort of grit in the way of pursuing this strategy that arise because you're not aligned with stakeholders in the way you might have been before? And then just one point of clarification. You just sort of laid out the FIDs, but Groundworks isn't on it. What's the how does that fit into your plans? Thanks. John, thank you for those questions. I'm going to give Gretchen the opportunity in a moment to later clarify the Gramercy ones. I'll take the first one. And maybe I'll come to you Paul given the amount of capital we're spending in the deepwater space. I think worthwhile to sort of reflect on this move from pure NPV maximization to one that tries to nuance NPV and IRR and the like maybe in the context of V2 1, V2 2 wave etcetera. And I'll try to address your first question there, John. I think it's a great question and it's one where I have to say we've evolved over the past 5 years. So it's not been a it's value over volume. Therefore, you can see a change overnight. It has progressed. Before I get into that, maybe let me firstly acknowledge your point around the return on average capital employed. And there's nothing more painful nor more transparent than the reality that the sins of the past continue to weigh us down. We still have in our Riwache a significant number of projects where our breakeven prices were closer to $70 $75 in the heyday of the early 2010s that it's going to take us until the early part of this to be able to really get past them and to get the ROACE impact of the projects where we have been investing in the last 4, 5 years in a much more value over volume mindset. So what does it mean though value over volume in the way we work? I think it starts with the fundamental assumptions around oil price when you look at projects into the future. In the past, it would be one where you believe that ore prices are in perpetual inflationary mode. We don't look at that in the same way anymore. We look at, 1, the resilience as determined by the breakeven price. Then we look at the resilience against a set of different oil prices, including the high that we would get in a high oil price. And so that mental model of what we are measuring for when we invest in the project has fundamentally changed from where it was. I'd say another element of value over volume that you also see at the moment is our appetite to be able to really go after the tail of our portfolio. When we were much more focused on volume, and I mean by that both production and reserves bookings, it made us not want to move on some of these opportunities. When we have liberated the organization to say where do we truly get value out of this out of our time and out of our capital. It's allowed us to really be a lot more scrutinizing of the portfolio and to focus on the key areas that make a big difference. And maybe the 3rd and the last one I'll mention in terms of practical ways of where value over volume has changed the way we think about things is in the exploration space where, again, a volume over value mindset or at least a volume centric mindset was one where you are perpetually looking to put your exploration dollars into the highest potential contingent resource opportunities. The value of course typically sits in your near field exploration opportunities. Even if you only get 30, 40,000,000 barrels, it can be much more valuable than a 200,000,000 barrel discovery in a totally new environment because you can tie it back very quickly, you can leverage existing infrastructure, you can leverage existing organizational structures. And so you see us shifting 80% of our capital towards those core countries where we are truly focused on the value creation. John, I hope that just gives you a flavor of some of the things and I have a long list I can describe to you of what we're doing, but it is this evolving change in the way we think and measure and screen how we do work that I think is an important element of this strategy. Let me now maybe go to you Paul to talk about the implications of that for some of the projects. Thank you, Wael, and thank you, John, for the question. Maybe if I pick up where you left off, Wael. So clearly, it's a shift from NPV maximization to a suite of metrics that help us think about the business where IRR is a key one, but also cash breakeven, what our payback time is. And clearly, that results in us thinking about a number of pathways that we have in a business such as deepwater, where we have 2 tremendous basins and a very exciting frontier portfolio. Near Field Exploration is one of those and the ability to quickly tie on stream for a couple of years. It's also as we think about those frontier exploration plays, how do we minimize cycle time and actually start off with a view of what will it take to derisk and polarize. And I think you've seen that in our entry into Mexico where we went from lease siding to spudding the first well within 2 years. And then once we sort of think about development, it's really about how do we think about developing the core and building options above that. You see that on VITO, where we took FID on sort of VITO as a core project, but now have options to think about waterflood as an add on on top of that. I think in a maximized NPV world from 5, 10 years ago, we would have looked at the totality of that in 1, which adds complexity, cost, scope, scale and size, not necessarily for the betterment of sort of the value piece overall. I think you'll see similar type of thinking as we bring Wael towards FID, as we think about other pre FID options such as Gato D'Amato in Brazil. So really it's about thinking about the holistic whole, how do we sort of lock in the core and then how do we give ourselves options to build on top of that to further enhance value through the capabilities that we have? Thanks for the question, John. And Wael, let me hand back to you. Yes. Thanks, Paul. And indeed, to John's point there, I think we will continue to have to work with our partners, with our governments to go in this direction because that's the only basis under which we're going to be investing capital as per our strategy. Otherwise, I think we go back to where we were. And maybe Gretchen, just to close it off on the clarification around Ground Birch. Yes. Thanks, John. Ground Birch is a great asset. It's got we have enough resource there to be matured through the whole 40 year window of LNG Canada operating window. And since we FID'd LNG Canada, we've actually increased the our volumes there through some commercial deals that we've worked and we've reduced our costs significantly. So our cost to supply LNG Canada is down 20% since FID. And as I said in my talk earlier, we're now able to supply LNG Canada Trains 1 and 2 below the AECO market. So we're really pleased with where we are there. We are planning to start ramping up drilling again in anticipation of LNG Canada probably late this year, early next year. And the reason you don't see it as an FID is we just don't FID shales projects in the same way we do major projects. So you saw that on the slide, I think, that Sinead showed at the very bottom where we have a constant capital allocation that's ongoing into our shales businesses, but we just look at it differently in terms of batches and how we performance manage on a more of a short interval basis than we do on our big major projects. Thanks Gretchen. And John, thank you for those questions. Ali, can we go to the next question please? And we'll take our next question from Michel Della Vigna from Goldman Sachs. Please go ahead. Thank you, Wael. It's Michele here from Goldman. I wanted to ask you about your ambition to reduce OpEx by 40% over the next 3 years. It's clearly very important for the returns in the business. It's very ambitious. I was wondering if you could unpick some of the moving parts there. How much is cash versus non cash? How much it comes from portfolio change? Because when I look back since 2015, you reduced your unit OpEx by 26% and that was a period of major improvement in availability of broader cost deflation in the industry. So 40% over the next 3 years certainly looks quite ambitious. Thank you. Michele, thank you for that question. And what I'm going to do is to split this one between Sinead and Zoe. And the reason I do that is just to clarify, we will be looking for roughly a 20% to 30% improvement or reduction in our cost structures between 2019 and say 2025. The 40% is very much what we're looking for the lean ventures portfolio which we believe we have disproportionately more that we can take out of it. So maybe I want to invite you, Sinead, just to talk about what we're doing across upstream to Nikkadis point around cost, what's cash, what's not and then give you the opportunities that we do to further a bit what specifically we think we can do in the lean portfolio. Sinead? Thanks. And thanks, Mikhail. And you're right, you've seen that we've reduced our unit operating costs by more than 25% since 2015. And at the same time, actually, just as we what we talk about impact to cash, our unit development cost has come down by around 50% as well during that time. So we'll continue to look to reduce that further and we're looking to reduce costs by an additional 20% to 30% by 2025 compared with our 2019 cost base. And per your point, how are we doing now? Part of it is by building a simpler portfolio that will be powered by a leaner organization. And I'll stay away from lean specifically and let Zoe talk about that. But we are focusing and making sure we're more agile and increasing project standardization and replication. And that flows through, of course, not only in capital, but it also flows through in terms of what you see in OpEx as well. And you see it in terms of just having platform designs and operating platforms run-in similar ways. And certainly on the design base, which I realize impacts caps more, but you've seen it in the Gulf of Mexico and Paul talked about it a little bit, but also where we're seeing nearly 80% of the VITO design replicating into our whale development. So that's showing through in terms of just reductions cost specifically, but more specifically on OpEx. We're being very, very focused on where we use our own expertise and where we turn to the external markets. So recognizing where we truly differentiate and how it drives the most value from our differentiators and not reinvent. So we will go externally when somebody else is more cost effective to do something. Well, I also spoke, of course, about the digital technologies that are flowing through at the heart of our transformation. I think you made it very clear about the absolute potential to drive cost down through those as well, both in terms of cost but also improving performance line as well, which helps on the UOC element. And if I take a step back and say, well, where's my confidence level? Certainly, in our business plan, we have line of sight to 20% OpEx reductions over the next years. That includes efficiency improvements in the assets. It also includes the reduced staffing levels that we're seeing as a result of the recent reshape restructuring that we've talked about and also of course selective divestments in there. But also beyond that, we're continuing to challenge each of the assets to close their full gap to potential and try and find further yield to bring that 20% up to the 30%, which is where we want to be. But Zoe, I think you can build on that in terms of the specifics around the lean portfolio. Yes. Thanks, Sinead. I won't repeat some of the areas you've already explored around fundamentally how we want to go after the value stack that really will help us to drive the broader efficiencies in our underlying OpEx. I think worthwhile probably stepping back on our lean ventures and sort of remind ourselves that the broader synergies come really in 2 parts. It comes in our lean portfolio and our drive for additional efficiencies, and I'll come to that in a moment, but also in ensuring that the broader Shell organization, all of our functional expertise, our drive for project replication and standardization is duly focused on the core of our upstream business. And so what we intend to achieve is a significant momentum and pace of delivery in our core business, which of course is what will sustain our cash flows into the forward decade and indeed be the most significant part of where we attract our capital investment. For the lean ventures, indeed our focus is really on 3 key things. I mean, the lean assets are broadly categorized into 3 areas, what we call developing assets, mature assets and those that we're divesting. The developing assets are those that we're still maturing, but we believe could have the potential for significant materiality or longevity. The mature assets are those that we're looking to maximize cash generation. And then, of course, those that we are divesting are those where we're driving the safe performance to maximize short term value optimization. And these are largely around those things that we have recognized are unlikely to make a significant material shift to our business over time. So the shorter term focus on the lean businesses is really around our governance and making sure that we can really go after our above asset costs, making sure that we have significant leaner and simpler businesses. It also includes the way we organize it organize our operating model. And I think in addition, as I mentioned in the earlier part of our speech, making sure that we're really focused on those payback periods and those shorter term hurdle rates to maximize our benefits. So hopefully that gives you a bit of a flavor at least for the NIM, how we are really focusing on driving the efficiencies. Thank you for that, Zoe. Thank you. Thank you for the questions. And I think as both Sinead and Zoe said lots more to do. Since 2019, if you compare it to Q1 results, we are 12% down in terms of costs and therefore we're making good momentum. But we still also have of course potentially headwinds coming our way around inflationary pressures. So the real focus right now is to go even faster than that and make sure we can get closer to that 30%. Thank you for the questions. And Ali, if I can go to the next question, please. We will take our next question from Irene Himona from Societe Generale. Please go ahead. Thank you very much. Good afternoon. I had two questions. So firstly, Whale, leaving aside things you don't control, like oil and gas prices, what to you is the key risk to Shell's upstream business as you look ahead to the next 4 to 5 years? And my second question, thank you for your presentation. And clearly, you presented today a strong progress made over the last 5 years in terms of your key metrics and further targeted improvements. In 2016, when you acquired BG Group, you presented that deal as an opportunity to reset the Shell portfolio. So looking today, on the one hand, at the progress made since 2016 and on the other, on your projected further quite material improvements to these key metrics, would you say that, that post BG portfolio reset in the Upstream has worked well? Or is it something that is still, let's say unfolding and in progress? Thank you. Irina, thank you for both questions. Let me address them both. Maybe starting with the second one. I have to say incredibly proud of what the organization has done since that BG acquisition. Indeed, we have set our stall there. And I think by and large everything we said we would do, we have done. On the upstream side, we have driven the rigor, we have driven the portfolio rationalization. We have done the improvements that we talked about. But I think it's fair to say that this leadership team is not happy with doing better. We really want to achieve the full potential of this business. And in all honesty, I don't think we're there. I think there's a lot more to do. I think we've we have moved a long way forward. We have through our reorganization, our corporate wide reorganization called ReShape, we have reduced the number of staff and so you're looking at a significantly smaller group in upstream as well. And we do believe that we're going to be able to fundamentally liberate that staff base that we will have left to be able to go after even more opportunities as we drive accountability deeper into the organization, as we look to leverage the capability of the organization we have. And so I'm in no way satisfied with where we are. But I also realize that there is massive urgency in us getting there both from us to being able to really continue to support RDS on its journey, but also to be able to I think demonstrate that we can continue to generate significant value for the Group and for our shareholders. I think that plays into the first question you asked and I can come at this in multiple ways. I mean fiscal concerns as in particular a number of governments put a significant amount of their capital in support of a post COVID recovery? Will there be fiscal threats to our business? I think all those are going to be important and clearly are risks on our horizon. But the singular one that if you were to say the one that trumps all in my mind would be losing the passion, the energy and the spring in the step of our upstream organization as the outside world sometimes tries to delegitimize an oil and gas business that for decades has been an incredible force for good for society, which is maybe why behind me here you see this pride in upstream. To me that is going to be the key issue, retaining that passion in our staff irrespective of where they sit in the world, letting them recognize that not only do we have a responsibility to continue to provide reliable and affordable energy, Not only do we have a responsibility to support Shell in funding itself through the energy transition, but we also have capabilities that Shell absolutely needs as we go through the transition. I touched on things like CCS, I touched on offshore wind, but also we have some incredibly strong legacy positions where our relationships making sure that as an enterprise we continue to grow our business and we continue to grow our business and we continue to grow our business. So making sure that as an enterprise we continue to support that is going to be a top of mind for me and my leadership team. Irene, I hope that addresses the question. Thank you very much. Thank you. Thank you. We'll take our next question from Biraj Borais Arya from RBC. Please go ahead. Hi, thanks for taking my questions. I have a couple, please. On the ground merch, birch, this question might be for Martin, but I guess it's a kind of joint upstream and ID development. But how are you thinking about the timing of Trains 34? Because I suppose you'll be ramping up the upstream spend alongside that and there's probably some economies of scale there terms of timing. And then secondly, at the upstream division level, you put out the targets in terms of unit development costs and things like that. But can you talk about return on capital and how you expect that to evolve under your price scenarios once you hit those targets? Thank you. Biraj, thank you for those two questions. I'm going to invite Gretchen to talk about Groundworks ramp up with the caveat maybe before I hand over to Gretchen to say no decision has been taken on Trains 34 at all at the stage garage. The focus very much is on landing or starting up trains 12 as and when we can. So nothing more on that space, but maybe just how we are thinking about the symbiotic relationship between Granberg and LNG Canada trains 1 and 2. In the first instance, I'll have Gretchen speak to it. And then maybe invite you, Sinead, to reflect on where we are from a return on capital employed. Gretchen? Yes. Thanks, Wael, and thanks Biraj for the question. Our Ground Birch asset is one that hasn't been we haven't been drilling there for the last couple of years in anticipation of ramping up when LNG Canada trains 12 are close to coming on stream. And as I said earlier, we anticipate that that's going to be somewhere around the end of this year, early next year. We've spent a lot of time though, while we haven't been drilling, doing great work in that business. And from a commercial perspective, the NPV of that business has gotten better. We've actually added resources around the edges of that. Our reliability is up above 97% right now. And so we have a very well operated, safe and highly valuable asset there that is poised and ready to be the primary feedstock for LNG Canada, Trains 12. As we look towards Trains 34, we'll be evaluating certainly Groundbridge has 40 plus years of resource available to it. And so it will be there and the team is there sort of ready and waiting to be part of that. I think the other thing I would add is that, we look at this very much as an integrated business. And so, while the Groundbridge team sits in my shales team, they're very much part of an integrated value chain business of LNG Canada. And so there really are no organizational boundaries that inhibit that. And as we get closer to being operational with LNG Canada, that will get more and more tight in terms of that integrated business and that integrated value chain. Gretchen. Janine? Indeed. Thank you. So if I take a step back again and think about sort of our return on capital employed, it is true and I think well raised is that we have a significant balance sheet. We have several projects on our books that are clearly were done at different times and really have breakevens with much larger prices than we would look to today. What that drives, of course, is what we see is a significant depreciation flowing through for the upstream business at the moment. And remember, you see over $3,000,000,000 per quarter coming through for us. And that weighs heavily on the returns that you've seen coming through. But of course, what we're now trying to do is to make sure that we turn away from that and we learn from the different experiences that we've had. And we've laid that out very, very clearly in terms of the discipline that we will have around our capital. And you can see that the new projects are very much focused on value. And to do so, we're using that suite of products that we've discussed. Whether that is IRR, whether that's NPV, whether it's payback periods, breakeven prices, etcetera. But that allows us to look at the full risk spectrum that we have and make sure that we're increasing those margins as they come through. This is all about driving discipline, of course, and making sure that at the end of the day, we're improving those returns. And you'll start to see that flowing through with all of these metrics in place and that continued discipline. Alongside that, of course, as we've discussed, our returns will be helped by the fact that we're driving that cost structure down further with the aspiration to further reduce costs by 20% to 30% that we've talked about by 2025 as well. And that should start to show a significant impact on our return on capital. Wow. Thank you, Sinead and indeed, Biraj. I think that is also largely why we have been very clear around the 18% internal hurdles on up stream, 20% to 25% average of our portfolio. And undoubtedly, as Shanae says, with time, you're going to see that start to filter through into our watch. Thank you for the question. And Ali, if I could invite the next question please. And we'll take our next question from Lucas Herman from Exane. Please go ahead. Thanks and thanks very much for the opportunity. A couple if I might. Nigeria onshore, can you give any indication of where you'd like to end up as regards Nigeria's onshore and how far in that direction your discussions with government might propel you? And while Argentina, it's non core, but you talk about it as though it's a core asset. What's the disconnect? What am I missing that explains why it's sitting in a particular bucket, but as yet you seem less than convinced that it will stay? Those are the 2. Thank you. Thank you very much for both questions, Lucas. Let me invite Zoe to speak to the first one and then invite you, Gretchen, to speak to the second one. Yes. Thanks, Weil. Thanks, Lucas, for the question. I think perhaps firstly, of course, we've said a number of times now in various forums that the onshore oil operations in Nigeria, which are continuously exposed to some of the 3rd party interference and illegal activities and sabotage and theft and so forth has put those assets outside our risk appetite. I think you talked about what does end point success look like and I probably touched on a couple of principles that are guiding the discussions that we're having at the moment. I mean the first, I think it's really important that we continue to work with our host governments on the way in which we want to look to exit some of our onshore oil assets. And so the engagement that we're having in the collaborative discussions with the Federal Government of Nigeria are core to that. The second thing I would say is that we, of course, always seek to ensure that in any exit that we have that we do so in a responsible manner that includes what that looks like in terms of our historical footprint in country claims, liabilities and so forth. And that we have a mechanism through which that we can continue to focus on the way in which those historical issues are resolved. And then finally, but importantly, I think that any of our exits in onshore oil, we find it important to see that SBDC as a joint venture and the way that that exit is conducted ensures that we have a sustainable business that is indeed remaining in the country. Of course, in that regard, we can say that the work that we have done as the operator of SBDC has seen some significant improvements in the SBDC world class performance. And so the capability that resides within SBDC is of course world class, including some of the operational improvements that we have seen around their spill response and their ongoing improvement to the business underlying competitive business performance. So I think the best thing I can say at this stage, I think Lucas in response to your question is that we're very clear about the principles that we are seeking to engage as an endpoint. We are working closely with the various stakeholders and venture partners in the pursuit of our ambitions there and that we need to continue to keep those live in discussions. It does, and of course, I think Wael mentioned it before about OMO 118. We do continue to see bigger opportunities, I should say, in Nigeria holistically. And so we do continue to hope to be able to unlock the value that we see in our deepwater and our integrated gas value chains. Perhaps I'll leave it there, Lucas. Over to you, I think. Can I ask any idea on time lines? I think probably, Lucas, let me say that like with any kind of ongoing commercial discussions, best that we don't talk time lines at this stage. But it's important to say that this is something that certainly has our attention and is an active discussion with our key partners and stakeholders. Thank you for that. Zoe and Gretchen on Argentina? Yes. So thanks, Lucas, for asking about Argentina. It is a great asset and it sits in the category that Zoe spoke about just a few minutes ago called lean, assets. And so inside lean, as she discussed, there are 3 different buckets. This very much sits in the developing bucket. And so it is an asset that we are investing in right now. We are primarily investing in the black oil window. We're highly optimistic with the well results we've seen so far have been above our expectations. But it comes with a different set of non technical or above ground risks. And so, of course, we proceed cautiously there. We've got good relationships with our partners. We operate most of what we own there. We do collaborate, of course, with YPF, the national company there. They operate a bit of what we have as well. And so far, all of that's going well. But again, we keep our options very well open there and make sure that we have the ability to sort of ramp up and ramp down as those risks become or shift over time. The other thing I would just say about Argentina and frankly the whole shales portfolio, a number of you have asked about cost reductions and we have aspirations and frankly plans in place to reduce our costs over the next few years. But inside the shales portfolio, we've actually gone through a big change already and we've brought our cost down just over the last 18 months by about 30%. That came with a lot of effort. We completely re baselined our operating model. We exited about 45% of our people. And as a result, our operating model is very, very simplified. We have very few handoffs now. And so that also is something that gives us confidence when we look at our operations in Canada and the U. S, but also, of course, Argentina. Thanks, Chris. Just a sort of interest on Argentina. Has it been easy for you to repatriate funds historically? Maybe invite Sinead, if you want to say a word on that? Sure. At the cycle that we're in at the moment, of course, we're actually investing at the moment. It's a developing asset, as Gretchen rightfully put. So it's not something that we've had too much of an issue with in recent years. Of course, you rightly point out the risk of Argentina and we stay very close to it. But we do have a breadth of businesses there, as you know. I'm not going to step too far outside of upstream at the moment, but as you're aware, we've got some downstream businesses as well, which gives us a bit of diversity and a bit of an implicit hedge as well there. Thank you for that, Sinead. Lucas, thank you for those questions. Just to take stock of where we are, we plan to run to the top of the hour. So suggest another 20 minutes or so and Ali maybe would invite the next question. We will take our next question from Roger Read from Wells Fargo. Please go ahead. Hey, thank you and good afternoon. Two questions for you, one a little more involved, second one is pretty straightforward. The first one is we're looking at the transition out to 2,030. You're going to go to 55% gas. Breakevens today, dollars 30 If you're going to add more gas, expect your breakevens actually should go lower. But I'm wondering, as we look at all the cost reductions that you're looking at and guiding to in the near term, how does that maintain pace with what is likely to be a lower overall capture at the revenue line? So the breakeven stay 30%, do they also go down, given that we would expect you to be getting something less than a pure oil price for the majority of your production as we go through the decade? So that's question 1. The second one, as we look at Perdido, the commentary about it going from the low 80s to the low 90s on utilization, Curious how that compares to expectations across the rest of your portfolio. In other words, was that a significant improvement? Or is that relatively normal for what you see across your overall portfolio, deepwater or otherwise? Thanks. Roger, good day to you and thank you very much for that. I'm going to invite Paul to talk about Perdido and I'll maybe touch on the first one. If I just step back for a moment, when we think about this transition to 2,030, just to remind everyone, so in the upstream business we have a portion of the gas production and of course our integrated gas business also has some significant gas production that is tied into the full integrated value chain that typically is LNG, but of course also includes GTL in the case of Qatar and Malaysia. Today, we are roughly 2 thirds up to 70% liquids production in upstream. And indeed as we've guided that will sort of decline at 1% to 2%. Once again I'll just sort of stress that's more through portfolio moves more so than the underlying decline in our core assets that today generate the majority of our cash flow, which is why we continue to have high confidence in our ability to generate that consistent and steady cash flow well into the next decade. I think what you see us doing here is firstly setting some clear boundaries around our returns expectations of any project we invest in. Whether that's oil or gas doesn't matter. We are looking at 18 plus percent IRRs when we invest in these opportunities. And so we're hoping through a very, very clear hurdle rate to be able to maintain the sorts of margins irrespective of what commodity we're investing in. When I look at the broader portfolio, when we do invest in a full LNG value chain, then indeed you will see that we can make quite a bit of the incremental money not just from the upstream, but of course from the trading optionality that it gives us to bring gas into the portfolio and that can be significant as you've seen in many parts of or in many quarters of late with the delivery of our integrated gas business. I think the last thing I would say is our challenge to reduce costs is not driven by a 2,030 outcome. It's a fundamental view that as we have really looked at our portfolio and challenged ourselves asset by asset by asset, What is the full potential? Who are the best in operating an asset like this? What's the sort of availability they can achieve? What's the sort of cost level they're running it at? Irrespective of whether it's a major, a minor, an independent, who are the best of the best and we are pursuing for every single asset the bridging of that value gap that we see. And that's why we believe that we have another 20% to 30% to go and are not satisfied with where we are today. You put all that together, I think the total picture is one that with lower production you're still going to see the same level of cash flow through this decade at least. And maybe as to segue then to you Paul in that context for Perdida? Thanks, Lyle and thanks, Roger, for the question. Maybe a couple of points that I'll make. The first one is you can invest in a capital sense for reliability and availability by having sparing philosophies redundancy etcetera. Or you can also think about in terms of how do you operate efficiently from a maintenance perspective, from a turnaround perspective in terms of the rigor with which you drive continuous improvement and the standardization of the underlying core processes. I think on Panudo, that's what you've seen. And so at the time of the capital build of that project, the choice was that from a capital structure and capital cost point of view, we're designed for an 83% availability. What we've actually done through thinking about where the weaknesses are, where the potential of that asset is by driving rigor, minimizing turnaround time, maximizing the maintenance that we do in a predictive sense versus a reactive sense, we're able to drive that above 90% as I mentioned. That's the view that we take across the totality of the portfolio. And so the Deepwater portfolio, as I mentioned, delivered 90% availability last year. We see that journey continuing. We're very much driven by the benchmarks that are out there, really what is best in class, making sure that we understand what the gap is between our own performance and that best in class. And how do we do that, not at any cost, but whilst also driving down our unit operating costs. And I think you saw that on the slide as well that as we have driven up availability, we've also driven down our units operating costs. And so it's about good investment that actually gives us greater yield. And That's not just specific and unique to deepwater. That's something that we're driving across the totality of the upstream portfolio. Wael, back to yourself. Thank you for that, Paul, and thank you for the questions, Roger. Ali, if we can go to the next question, please. And we'll take our next question from Peter Low from Redburn. Please go ahead. Hi. Thanks for taking my question. The project list on Slide 27 doesn't have any future developments in 3 of the 9 core regions, Oman, Brunei and Kazakhstan. Can you perhaps give some color on how you plan to maintain production in these countries? Is it just that there are a number of smaller brownfield type projects which don't feature in the list? Or is it down to lower decline rates in those regions? Any color would be great. Thanks. Peter, thank you for that. Zoe, we'll be back and invite you to respond given the majority sit in your portfolio. Yes. Peter, thanks for the question. And I'm pleased that you asked because indeed, we maybe don't miss them in the slide, but there is a significant opportunity funnel in all of the 3 countries that you talked about. I think both in Oman, in Brunei, but also in Kazakhstan, we have some very active and quite competitive projects on the horizon that we continue to invest in. I'm not sure how much time I have to go through all the specifics, but I can say that all three countries do continue to be core countries because we do see that longevity and competitiveness in the backfill. I think we've got a number of projects that we are pursuing in combination with our partners in Kashagan related to the Phase development, Phase 2b in particular. But we've got a number of debottlenecking projects, which are also on the horizon, some of which have taken to FID, some of which were in commissioning, some of which were in the development funnel, similarly for Karushaganak as well in Kazakhstan. In Brunei, we also have a significant portfolio and similarly for Oman. So I might keep it at the high level, but indeed happy to follow-up offline with some specifics for each of those countries in the broader project funnel that we have. Thanks, Zoe. And Peter, I think you asked it and answered it well as well. Indeed, there is the plan rate question, which is lower than deepwater and there is indeed a lot of brownfield. So we thank you for that. Ali, if we can go to the next question please. We will take our next question from Lydia Rainforth from Barclays. Please go ahead. Thanks and good afternoon everyone. I have 2 quick questions if I could. The first one, can we get back to the digital side of things and the idea as to how much of the cost reduction is actually coming from the digital side versus Project ReShape? And how far along that journey are you? Because I think in the past, if you first say, is there a lot of work that goes in to get the infrastructure right in the digital side before you see almost a hockey stick effect? And then just in terms of the idea of developing pathways to net zero emissions for the upstream operations, Can I ask why not have a more specific plan at this stage in terms of it seems like we're developing pathways as to what at what point do they actually become developed pathways? Thanks. Lydia, my apologies. That second question, I'm not sure I fully got. Can you just repeat it one more time for me? Yes. Thanks. I'll say it's just in one of the slides, it does refer to a basis idea of getting to net 0 from emissions for upstream operations and developing pathways to get there. And from what I understand, you're putting CCS into all of the projects already or they're all kind of carbon ready. So I'm just wondering what we're not a more specific plan as to when you want to get to net 0 emissions from those upstream operations. Can I say something from that? Thank you for that clarification. Let me quickly touch on those 2. I think on the digital one, I recall you and I had a discussion and at the time I said to you we are literally 20%, 30%. We've moved from that, but we haven't moved a huge amount. I think we continue to make good progress along a number of different areas. But I still think the potential is significantly beyond where we are today. And let me maybe just say a few words on that. As an enterprise, as Shao, we have sort of quantified around $1,000,000,000 to $2,000,000,000 per annum of incremental value that digital has been contributing. I think at one point Harry had spoken I think a couple of years ago about the $1,000,000,000 per annum. We see that closer to the $2,000,000,000 per annum. Important to recognize that's not just driven by cost, it's driven by improved availability, it's driven by improved margin our customer facing businesses and so on and so forth. What I would say right now is digital was an add on to the way we were doing work. So we were doing work in an analog context and then we tried to supplement with digital. Through reshape we are fundamentally remapping all of our workflows. So the way we do exploration, the way we do development, the way we do production, we're remapping it with a digital lens and integrated value lens and we're looking to digitally enable those workflows. And so it is going to be much more fundamental to the way we do business. What will it achieve? It will allow us to really derive insights a lot quicker where we need to get them. It will force a different level of integration than we have ever seen in the past. And I think it will unleash the excitement and the energy of our people as they work on it. I won't venture to put a number as to how much we can unlock from it, but suffice it to say that everywhere we've looked we found value. And I think to your second question around the net zero emission pathways, we are in the midst of developing those pathways. As you rightly say, we're looking at it from a project perspective, but there's several elements we're looking at. Firstly, how to make our existing assets the ones that are producing as low carbon emission as possible. And I think Gretchen spoke very eloquently around what's happened in the Permian as a great example. But if I then look at pool shop and where we're investing in new projects as you rightly said we're looking there at certain project specifications around carbon that are a lot tighter than we would have done just a couple of years ago. And then if you look at Zoe's example around what's happening with Acorn in the UK and how we're trying to leverage CCS opportunities to be able to create sinks not just for our own CO2, but to fundamentally leverage those sinks to also create a customer sink as we bring our carbon facing businesses to make sure that they support our customers in decarbonizing their own value chain. You put all that together and when we talk about these pathways, they are evolving at a certain pace driven by local legislation, driven by carbon pricing, driven by technology advances and we expect them to continue to move. And I suspect reality in 5 years' time will be very different than what we see it today simply because we have a lot more levers to able to pull than what we have had in the past. Lydia, I hope that addresses what you had and maybe invite Thank you. Thank you. Yeah. Invite Ali to ask the next question please. We'll go ahead and take our next question from Paul Cheng from Scotiabank. Please go ahead. Thank you. Good afternoon. Two questions, please. If I look at Page 7 of your presentation, it looks like the unit cost is flat from 2019 to 2020, given the supply cost has come down quite a lot last year and your controllable availability have gone up. So I imagine that the reason why it's flat is because of the negative impact from the OPEC plus government mandate production cut. So can you tell us that what is that impact? In other words, in a more normal world without that kind of production cut, what's the unit cost look like in 20 20? And that probably is a better baseline we can use to project forward. The second question is go back to Permian. It's still unclear to me what is the game plan for Permian on the longer term, not so much about this year or maybe even next year, but if I look out 5 years, is Shell's expectation to grow the Permian production and increase the activity level or that the expectation is you're going to one year as a cash cow and maintain the current production and current activity level. And if you do increase the activity level and CapEx, given your overall upstream CapEx is RMB 7,000,000,000 to RMB 9,000,000,000 relatively fixed, So where that you're going to get the money? Which area you're going to reduce? And also, can you tell us what's permanent production currently is? Thank you. Paul, thank you for those. I'm going to come to you Sinead in a moment to ask a quick response to the unit cost 2019 to 2020. Gretchen, if you're okay, I'll quickly maybe address portfolio question given I suspect it's on a few minds. I think Paul what I would say there is we have not shied away in the past from saying we don't think we have the scale that we typically need. We have a subscale permanent position. But we've also been very clear that it does not take away from the need for us to do all the things that Gretchen has talked about to really create an exciting very, very competitive position. So we're investing our time and effort over the past we've been investing our time and effort over the past year and continue to do so to get to this the best business we can get to. We want to retain options as to what we want to do with the portfolio, whether to grow it or any other billion to SEK 9 billion. If we do choose to put more capital into the Permian, the $7,000,000,000 to $9,000,000,000 as you rightly say is across upstream, but you also know how lumpy our capital spend is. And so once we've invested in a few of the ongoing projects in deepwater we will create a bit more capacity unless our exploration team discovers some more resources. And so we will optimize and constantly high grade to make sure that capital is going to the right places including the Permian when the right opportunities come through. Did you want to quickly maybe Sinead address the first question? Sure. In the interest of time, it will be quick. So my apologies. It's a great question, Paul. 2019 is 2020 is a difficult one. You rightly point out the fact that and of course the impact from OPEC hit us, but it was much more than that as well. Of course, with COVID, we made some strong choices. Some of that was cash preservation, which meant of course we pulled back And particularly, Gretchen's area of shales is a key one there. We dropped rigs, but we also shut in wells in many places. And in other places, we also had the situation where we simply couldn't get people out to platforms. So in some cases, we took the opportunity to either incur maintenance or to literally shut in. That means, of course, that what you're seeing is unit costs coming down to flat across those 2 years. But what you do see as you move into Q1 of this year is a continued focus on costs coming through and you'll see that continue to flow out. So you'll get those proof points as we go through this year as it becomes a little bit more normal. And we see the OPEC impact, which is still there, but very small at the moment, continuing to roll through and as we catch up on some of the maintenance. I apologize. I realize that's very quick while, but I recognize you need to close off. So I will hand back to you. Thank you for that, Sinead. And Paul just to close out your last question roughly 160,000 to 170,000 barrels per day production in the Permian. And I'm looking to Gretchen in case I've gotten that wrong. Okay good. Thanks Gretchen. Paul thank you for those questions. Let me maybe now move to close out. And firstly to apologize that we haven't been able to cover all the questions and thank you for the interest. Our commitment is through our IR team. We will make sure we come back to you to be able to address any lingering questions that you might have or potentially to draw on some of us which the IR team can do if needed. Just to close off and say a huge thank you on behalf of the entire upstream leadership team, but more broadly on behalf of everyone in Shell, thank you for the interest to join this call and for your active participation as well. I have to say I'm incredibly excited about our upstream business and fundamentally believe we have a critical role to play in the Shell strategy going forward. I and this leadership team look forward to continuing this conversation with you over the coming days months and look forward to hopefully meeting you in person when the opportunity allows itself. Thank you everyone and have a good rest of the day. And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.

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