Shell plc (LON:SHEL)

Management Day 2019

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Jun 3, 2019

Okay. Ladies and gentlemen, thank you very much for joining us today and turning out in such great numbers. That's really very encouraging. And also, of course, very warm welcome for those of you on the phone and on the Internet. So today, I'm really looking forward to talking to you about the progress in our delivery of our 2020 outlook, but also the plans that we have for positioning Shell for the future of energy well into the 2020s and even beyond. But before we start, let's first of all take a close look at the disclaimer statement, which I'm sure you are getting very familiar by now. So Jessica and I are going to start update you on your company in a bit more detail. Jessica will join me first in presenting to you the strategic and the financial framework outlook for Shell up to 2025. Then we will have some presentations by the business directors who are all here. We will then do a short high level Q and A, which will be quite challenging with a room this full, but we will keep it quite short because after that, we will have first of all lunch break and then we will have breakout panels and there will be plenty of opportunity to ask questions and have in-depth discussions with not only other Executive Committee members, but also quite a few Executive Vice Presidents you will see around. Now first of all, you will undoubtedly be glad to hear that we have made significant progress with our strategy. And the progress that we have made means that we are now competitively positioned for the future. And this is a future where we expect the net carbon footprint of the energy products to be lower. We will continue our focus on fully sustaining our upstream business well into the coming decades because for as long as there is sustained demand for oil and gas, there will be sustained commitments from Shell and that means also sustained investments. And alongside a strong upstream that future for Shell also includes growth in our businesses that have a strong market facing aspect. So businesses like integrated gas, oil products, chemicals, but also emerging opportunities like power. And being very well positioned for the future allows me to be confident of our potential growth in shareholder distributions supported by continued capital discipline, growing returns and a balance sheet that is resilient through the cycle. And all of this is leading to an increased organic free cash flow outlook for 2025. And it's a strong delivery today that allows us to have such confidence in the future. You will agree that we already have taken action that we will expect will pay back over many years to come, action to safeguard and to build trust, but also action to pursue a relentless drive for safety in our operations, action to ensure that ethical standards are being maintained and our people always do the right thing and actually to ensure that Shell can thrive through the transition of the global energy system. This is action that will keep Shell aligned with our customers. And all this adds up to a forward looking company that is well placed to thrive through the energy transition in the coming decades. Let me start first with the financial and operational delivery and outlook, which I strongly believe are the key elements of our world class investment case. So over the past few years, many of you have told us you have come to appreciate our clarity of purpose. And we are proud of that because clearly our strategy is clearly working. In recent years, we have transformed the financial metrics of our business. We have substantially de risked the delivery of our 2020 commitments. That has meant for a start more cash. So we are on track to deliver a revised $28,000,000,000 to $33,000,000,000 of organic free cash flow by 2020. And this strong cash flow generation has allowed us to progress well with our $25,000,000,000 share buyback program. But the success of our strategy has also meant higher returns with ROACE on track to now be around 10% by the end of 2020. Implementing that strategy has also brought down debt, meaning that gearing is well within reach of 25% by the end of 2020. And finally, you may remember that we introduced the metric of cash CapEx earlier in the year. So we believe cash CapEx is a better metric, a cash based metric to evaluate our capital spend and prevents the distortions that may come from accounting impact. So until 2020, we expect to stay within a cash CapEx range of $24,000,000,000 to $29,000,000,000 per annum with a hard ceiling of $29,000,000 So that is the previous $30,000,000 There is no change to our commitment to stay within that hard ceiling, dollars 29,000,000,000 cash CapEx. Now let me then give you some insight on what we expect our strategy to deliver as we look forward to 2025. First of we plan to be generating some $35,000,000,000 of organic free cash flow by 2025. And this strong cash outlook will create the potential to distribute to our shareholders a cumulative cash amount of $125,000,000,000 or more over the 5 year period 2021 to 2025. And distributions are expected to come from a combination of dividends and share buybacks. 2nd, we expect that our continued capital efficiency programs and discipline around investments also to yield results. So we expect a return on average capital employed of more than 12% by 2025. And third, very important, we continue to maintain a strong balance sheet and expect our gearing to be deliver these results. So we expect cash CapEx to deliver these results. So we expect cash CapEx to average around $30,000,000,000 per annum over the 2021 to 2025 period. And while the average cash CapEx spend over that period is expected to be €30,000,000,000 of course, we will allow for some variation in the annual spend. But even with the flexibility, we are setting an annual ceiling of €32,000,000,000 for each year over that period. Now of that €30,000,000,000 and this is very important, some €20,000,000,000 per annum would be required the outlook is mostly based on organic growth. The $30,000,000,000 average cash CapEx only includes a modest inorganic spend of around $1,000,000,000 a year. Now to ensure continuity and to make it easier for you to compare, the 2025 outlook is also based on an oil price of $60 per barrel 2016 real terms. So that's the same premise that we used in Management Day for 2017 or 2016 for that matter. So I have outlined now how our strategic direction has translated into financial results and how we expect that progress to continue. But let's now highlight the effect of this performance on our competitive position. So for us to be a world class investment case requires industry leading outcomes. And we have been delivering industry leading cash flows over the last 11 quarters. And we have also improved our return on capital employed over the last few years and we are now on par with our peers. I hope you will recognize that our brand is second to none in our industry and we are building on the strength of that brand and the trust in our product to further grow our customer facing businesses. Much of what I talked about so far, of course, concerns shall progress towards being a world class investment case, but let's now spend some time on some other strategic ambitions. To sustain a societal license to operate, for instance, because without a strong societal license to operate, without trust, we cannot and also we will not be a world class investment case, nor will we be able to thrive through the energy transition. So securing a strong societal license to operate requires us to do 3 things. The first one is to cause no harm, no harm to people, no harm to the environment. These are actually the basics of being in business. It requires a very strong operational HSSC performance, but it also requires ethical and respectful behaviors by all of our staff and all of our contractors. The second requirement for a strong societal license to operate is to make and sell good products, good products that our customers actually want and need. Customers, of course, want products that have the lowest possible environmental impact and we intend to sell such products that are also, of course, at the same time commercially viable. And the 3rd element of a strong societal license to operate is to contribute to society. It is by contributing that we can be valued and trusted as part of that society. And at its most basic level, this means for us providing energy, of course, providing employment, bringing local investment, prosperity with the projects that we do, collecting substantial contribution to improving people's life as well by providing access to energy to those who do not have a reliable and safe connection today. To secure that strong societal license to operate, we must ensure the right performance and the right behaviors. Now all of this, I think is the right thing to do. And I expect you to expect nothing less from Shell. Our strategy today is set against a number of global trends. We believe that a growing population, rising living standards are likely to continue to significantly increase energy demand for many years to come. And while the world needs to find a way to meet this growing demand, of course, CO2 emissions need to fall to counter climate change. So last year, we released our sky scenario, which is a technically possible, but a challenging pathway for society to achieve the goals of the Paris Agreement. And this scenario outlines how electricity is expected to become a much bigger part of the primary energy mix because of changes in consumer energy demand. And these trends that we can see help us to shape our portfolio to be fit for the future. And while liquid and gaseous fuels including biofuels of course will continue to be an important element of the energy mix, over time electricity will need to play a much bigger part if the world is to meet Paris ambitions. Organizing our business in 7 strategic themes has served us well. It has focused our investment priorities. It has helped us to execute our strategy of driving delivery. But in recent years, of course, we had a grouping in cash engines, growth priorities and emerging opportunities, but these businesses have evolved over time. And of course, so has the external environment. And we believe that now these groupings have become somewhat obsolete. So we are refreshing the way we group our strategic themes to better communicate the portfolio strategy that we have in Shell. We now group the themes into core upstream. These are themes that need to generate strong cash flow, leading transition themes which will be critical for us to capitalize on the energy transition to a lower carbon future and an emerging power theme which will capture value from the growth electricity consumption that I just referenced. The corruption themes comprise deepwater, shales and conventional oil and gas, the 3 themes that we had before. And as the label implies, these themes are core to Shell. We will sustain their strong gas generation through the coming decades. At a market facing integrated gas, chemicals and oil products businesses are where we already have a leading position in the industry. And we intend to extend that leadership as we see these businesses as the cornerstone for Shell as we thrive through the energy transition. And the power theme will focus on creating business models to support evolving customer demands for more electricity as the energy transition unfolds. And as I said, this is an emerging theme for Shell, so we will have to plan our steps carefully, but also with conviction as we prove the investment case before we scale up this business with more investment. So the refreshed grouping continues to provide clarity about our strategy, I believe, and expectations in relation to the returns as well as the risks and the opportunities in there. Let me give you a little bit more flavor on the specific themes. Starting with deepwater. We have a very strong position in deepwater where we generate high margins through very focused cost management. We are a top quartile shales with very strong basin positions and we aspire to be cash positive in this business in 2019. We were already cash positive in the Permian last year, but we will make this entire theme free cash flow positive. We have a deep funnel of projects in our conventional oil and gas business. Our integrated gas business, I hope you will agree is a market leader. It generates very competitive returns and more resilient cash flows compared with our peers through the deep optimization capabilities that we have in the company. Our gas business is expected to play a critical role in meeting our net carbon footprint ambition by enabling natural gas to displace higher carbon fuels like coal for instance. Petrochemical demand is expected to grow above GDP rates. And chemical products are expected to play a role in lower the carbon intensity of the global economy as well. They are less resource intensive compared to the alternatives and they are lighter for instance, which enables energy efficiencies. The integrated nature of our and our trading optimization capabilities really make this particular business very resilient to market downturns. It is strongly positioned to offer new customers choices in response to energy system changes, thereby also playing a very important in meeting the challenges of the energy transition. And John will provide more details in a session on the downstream themes. And our power theme in turn is well positioned to respond to evolving customer preferences, identifying sources of value in an increasingly dynamic sector. And as I said before, we must absolutely ensure we get our approach right for this team and we will not get ahead of ourselves. But our conviction to find value in this theme will therefore be backed up by a clear track record and proof points. And Martin will discuss both the integrated guest team and the power theme in more detail in the presentations to follow. Now to demonstrate the robustness of the project funnel, I would like to highlight some high level expected business milestones in the period from 2019 to the end of 2025. So we expect to take more than 40 final investment decisions on major projects across all our businesses and we plan to start up more than 35 major projects. And for a more detailed list, I refer you to the backup slides that you will have in your handouts. But I also would like to reiterate the outlook provided at our downstream open house last year. When we expressed our intent to open up more than 10,000 new retail sites and add more than 10,000,000 new daily customers in the period to the end of 2025. Now let's break down the figures for the outlook for 2025 a little bit further. So as I mentioned, we need to spend around $20,000,000,000 each year of cash CapEx to just sustain operating cash flow at the 2020 level. And remember, the focus here is on delivery of cash and not remaining production levels. We have also detailed the total cash ranges on the slide, so including the growth CapEx for each of the things. So all of this adds up to an average of around $30,000,000,000 per annum during the 2021 to 2025 period. And as I said, we had a ceiling in any one given year of €32,000,000,000 So this investment in growth is expected to deliver an organic free cash flow of around $35,000,000,000 by 2025. And as you will notice, most of the upstream strategic themes CapEx is spent on sustaining cash flow, but a modest amount of growth in there. The main investment in growth is expected to gravitate towards the market facing transition themes and eventually also to power. Some of these themes options are expected, of course, to then start delivering cash beyond 2025. Delivering high value projects is expected to raise our return on average capital employed to more than 12% by the end of 2025. And we demonstrate here an attractive evolution of our shareholder distribution story. So in the period 2011 to 2015, we paid out more than $51,000,000,000 cash to shareholders in dividends and share buybacks. Was at $97 Brent. In the period 2016 to end 2020, so where we are in at the moment, we expect to distribute more than $90,000,000,000 and that includes a $25,000,000,000 share buyback that is currently underway. It's at $60 Brent. But if you look at the 2021 to end 2025 period, we expect to have a cash potential of 125,000,000,000 or more to be available to distribute to shareholders over that period. That's half the market cap of Shell. Now we are fully committed to our current dividend per share. We expect any dividend growth to be resilient, of course. And we plan to increase our dividend cover and any dividend per share growth by complementing it by further share buybacks to reduce the share count. We expect to grow the dividend per share, but we have a clear line of sight to completing the ongoing $25,000,000,000 share buyback program. Now the founding assumptions behind this chart is a gearing level of around 20%. So that's in the middle of the 15% to 25% range that I mentioned earlier. The cash potential is based on organic growth assumptions. And if you identify any opportunities to add substantial value through major inorganic moves, then these would require decisions to be made on a case by case basis. It's hard to predict exactly what that would be at this stage. Now finally, let me share with you some of the levers that we will pull to deliver that 2025 outlook. Delivering an increase in cash flow from operations versus actuals in 2018 is of course one of them. Delivering growth through major project investment decisions is another one. Competitive operating cost and capital efficiency are also very important levers for us to create value with. We plan to drive unit operating cost per barrel down to less than $9 per barrel of oil equivalent in our upstream businesses. For our global commercial and retail businesses, the focus is on driving up the marketing OpEx yield to above 65% by the end of 2025. And capital efficiency leads to increases in organic free cash flow, while of course driving up at the same time the returns in our business. It's a very important lever. We intend to achieve average forward looking breakeven prices of around $30 per barrel in our upstream businesses, while driving down the average unit technical cost of integrated gas projects to around $5 per 1,000,000 BTU. Delivering the cash in a resilient manner requires ensuring that our businesses models are future proof. So this means making progress towards achieving our net carbon footprint ambition and the short term targets that we have set for the net carbon footprint. So in summary, So in summary, we continue to implement the strategy that has served Shell and Shell's shareholders well over the recent years. Successful implementation of that strategy allows us to be confident in the delivery of our 2020 outlook. And our faith in that strategy also allows us to set out what I think is an ambitious, but also very achievable 2025 outlook. Now with that, let me first of all hand you over to Jessica. Good morning, ladies and gentlemen, and thank you for joining us this morning. It's great to see you all here. Today, I'm looking forward to sharing with you how our strong financial delivery is set to continue beyond 2020. I would first like to start by reflecting on what we've achieved since 2016 and the BG acquisition. When we announced the BG acquisition, we made a number of promises and we've been delivering on each of them. And equally important, we created momentum that we've used to transform Shell. In 3 years, we've integrated BG, a $65,000,000,000 company and divested $30,000,000,000 in assets. We started up new projects that generated additional cash of $10,000,000,000 We restructured our organization and ways of working, which has led to cost reductions of some $10,000,000,000 And at the same time, we also transformed our approach to the financial framework, bringing greater clarity and discipline to drive robust and sustainable program and launched the share buyback program. So we've kept our promises and have transformed Shell. And I'm confident that we can continue delivering on our promises for 2020 beyond. By 2020, we seek to sustainably achieve gearing of 25% on a post IFRS 16 basis, which is our proxy for a strong AA credit rating. We remain disciplined with our capital decisions and plan to spend between $24,000,000,000 $29,000,000,000 on cash CapEx per year for 2019 2020 also on a post IFRS 16 basis. This outlook is equivalent to our previous capital investment range. And we're on track to complete our share buyback program and deliver organic free cash flow of $28,000,000,000 to $33,000,000,000 by 2020, which is equivalent to our previous target on an IAS 17 basis. But as I said at the beginning, we've been delivering more than promises. We've reshaped Shell through big and small steps. With company wide programs such as upgrading the portfolio, as well as with asset level programs such as increasing availability, we have shifted the culture of our company as seen in our approach to cost management, and we have refreshed our people strategy to sustainably deliver industry leading performance. Starting with reshaping the portfolio. In the past 3 years, we have simplified our portfolio tremendously, allowing us to focus on where we have a competitive advantage. We've exited oil sands in Canada, downstream in Argentina and Japan, upstream in Ireland and Gabon, and integrated gas in Thailand and New Zealand. And we simplified our operations in many other countries. Our reshaped and improved asset base generates more cash than before. We've invested in high margin projects and divested low in mature markets in the Middle East, Europe and North Africa and have invested in high margin barrels in Brazil and the Gulf of Mexico. And we can see the results of these portfolio decisions in our numbers. Our unit cash flow for upstream and integrated gas has increased significantly in 3 years. We now outperform most of our peers by some distance. And besides the higher value we get from our barrels, we've achieved more balance with our portfolio. If you look at the cash generation from our business, you can see how our cash flow from operations has become more diversified. This makes us more resilient and competitive through the commodity cycle. And as we've improved our portfolio with our divestment decisions, we've also applied the same focus and discipline to our investment decisions. Investors often ask me, how do we ensure robust capital stewardship in Shell? This is an area where we adopted best practices from BG. To improve capital allocation, we have taken several steps to increase the quality of our decision making. In our Capital Investment Committee, we consider all organic and inorganic opportunities above the threshold. I'm a member of this committee together with Ben, the business directors and subject matter experts. This committee is supported by an independent team of experts who provide unbiased assurance. We bring diverse expertise to the table to provide robust review and challenge to each opportunity. Opportunities are assessed against a breadth of strategic, financial and non financial criteria, which drives consistency and discipline in our capital allocation. This has proved to be an excellent investment of our time and has raised the bar for capital investment proposals. The shift in Shell is also reflected in our people strategy. In the last 3 years, as we sought to reduce our cost base and achieve the PG synergies, we also sought to reduce internal complexity. This has had a number of effects. We reduced the number of people required to do the same work, and we gave people larger roles and greater accountability. At the same time, we built more capability with our business operation centers in Manila, Kuala Lumpur, Chennai, Bangalore and our employment costs by some 22% since 2015. But costs and processes alone are not the only changes in our people strategy. We now have a more diverse organization in gender, nationality, as well as thought and experience, which we believe will be will support our success into the future. Further, we saw improvements in our scores on staff engagement levels and staff support for the direction of our company during the same period. So with all the changes in the last 3 years, we have a more engaged organization, which is essential for our long term success. As we transform Shell, we transformed our approach to cost management. We've rolled out a number of global programs to simplify, standardize, risks are managed with cost as a resource to be deployed. With these initiatives, we've significantly reduced costs across Shell. Combined our support functions such as HR, IT and Finance together with our projects and technology organization lowered their costs by almost $5,500,000,000 in 3 years. Harry will talk further about how we've transformed projects in technology the projects in technology organization, and we have the ambition to do more. With this transformation in our culture and portfolio, we've created a strong foundation to deliver a world class investment case to our shareholders well into the next decade and beyond. In fact, our priorities remain the same. We will keep our focus on growing free cash flow and returns and maintaining a robust balance sheet to be resilient through the commodity cycle. So we can generate the cash capacity to increase distributions to our shareholders. In order to sustain and grow value, we will continue rebalancing our portfolio into the next decade. In 2025, our core upstream themes should continue generating substantial cash flow, with increased contributions from shales providing a more balanced upstream portfolio. At the same time, we see around half of our capital going to the leading transition themes, mostly to an integrated gas, which is expected to increase cash flow beyond 2025. Gradually, we are reshaping the portfolio to ensure we are competitive for the energy transition. While on the portfolio side, we need to continually rebalance and high grade, there are other areas that remain unchanged. This is the case with our commitment to capital discipline and our focus on free cash flow and returns. For 2025, we are upgrading our outlook to deliver some $35,000,000,000 of organic free cash flow. There are also no major changes to how we look at our priorities for cash post 2020. We will continue to reduce net debt, pay dividends, invest in the business to sustain cash flow and keep our gearing between 15% percent, while any cash surplus will be invested to grow our business and or further distribute to shareholders. Inorganic opportunities, acquisitions and divestments will be evaluated separately when they arise. In our sector, it is essential to have a resilient balance sheet to manage volatility. We target a range of 15% to 25% gearing through the cycle, which means that when industry conditions are favorable, we plan to reduce gearing to build resilience. So we can use this flexibility during the trough of the business cycle to retain a resilient balance sheet or make countercyclical investments if the right opportunities arise. This way we remain competitive through the cycle and ensure strong sustainable shareholder distributions. A resilient balance sheet combined with the strategy, portfolio and operational capability we have established will enable significant levels of cash generation through the next decade. This translates into the potential for more than 125 $1,000,000,000 of cumulative shareholder distributions from 2021 until the end of 2025, which are expected to come in the form of further share buybacks as well as growth in dividend per share. Our progressive dividend policy is very important to us, as is our disciplined financial framework. This means that we must ensure any growth in dividend per share is resilient through the business cycle. So we expect to increase dividends per share once the completion of the current $25,000,000,000 share buyback program is in sight. Dividend per share growth will be complemented with share buybacks to reduce the share count and over time the amount of the total dividends are expected to reduce. So let me recap before I give the floor to Harry. Our ReShape portfolio can generate more value than before. This solid base gives us confidence in delivering on our promises for 2020, which are now substantially derisked. And we see an even more promising outlook for 2025, with substantial potential to grow shareholder distributions into the next decade. This is how we're delivering a world class investment case today and in the future. With that, let me hand over to Harry. Thank you, Jessica, and good morning, ladies and gentlemen. Today, I'd like to talk to you about 2 things. First detail around the exceptional progress that we've been making in projects and technology. And let me start by recognizing that climate change is a challenge that involves each and every one of us. From consumers to communities, from industries to governments, you would have heard too about the significant steps that Shell is taking. In December 2017, we announced an ambition to reduce the net carbon footprint of the energy products we sell by about half by 2,050 and by about 20% by 2,035. In practice, our net carbon footprint ambition starts with ensuring that our own operations use energy as efficiently as possible of course. But as the previous slide showed, most of the emissions associated with our energy products come from our customers' use of these products. So achieving our net carbon footprint ambition means that we have to change the makeup of our product portfolio. On this chart, you see the tools we have to achieve our ambition. We're already using all of these. The first bar represents our 2016 baseline, the last full year before we announced our ambition. To the right of it, we see several opportunities to shape our energy mix. Some are likely to make larger contributions than others, of course. Probably the greatest contribution Shell can make right now is to continue to increase the role of natural gas to fuel transport, to heat and light homes and to power industries, because natural gas, as we know, is less carbon intensive than coal and oil. We are also investing in low carbon businesses and technologies. These include biofuels, hydrogen, wind and solar carbon capture and storage technology and nature based solutions such as reforestation. These investments will mean we can offer new solutions to our customers. For example, our nature based solutions program in the Netherlands offers Shell customers nature based carbon credits to compensate for carbon associated with the use of the fuels they purchase from us. This is done at no extra cost for consumers who choose Shell V Power, while those who fill up with regular fuels can participate for an additional $0.01 per liter of fuel. We plan to make similar opportunities available to customers in other countries, starting with the U. K. Later this year. But we can only change the mix of our energy products in line with the willingness of our customers to buy them. We think we can meet our net carbon footprint ambition for 2,050, but we all have a part to play, because Shell can only get there if society as a whole gets there. Let me now move on to Shell's project and technology organization and how it sets our business apart from the competition and helping Shell to achieve its strategic priorities. Our P and T organization partners with all businesses to deliver our major capital projects, to provide asset support, to manage our supply chains and to develop and deploy technologies. We're responsible for the safe and efficient delivery of nearly 2 thirds of Shell's total capital hand in hand with our business partners. This is a key factor that sets us apart from other companies. It ensures we deliver consistent competitive results through our capital efficiency improvement program across the upstream, the downstream and integrated gas. As a proof point, we have successfully reduced the unit development costs for all major upstream and integrated gas projects by more than 50% since the end of 2014. And although this is a great achievement, we can and we will do more on costs. We'll do so by systematically applying our capital efficiency improvement program. And by doing so, we have ensured that over 3 quarters of our major projects that were sanctioned in 2018 were either best in class or top quartile. Such savings means Shell is even more resilient to oil price. Our average forward looking breakeven price at final investment decision has gone from around $40 a barrel in 2014 to around $30 per barrel in 2018. And we're not done yet, as will be reflected by Andy, Barwell, Martin and John as they discuss their various businesses. Now let's look at the other key strengths that P and T will bring. Let me start by Shell Supply Chains. Our supply chain sets us apart. Again, it is organized and governed globally, but it is delivered locally. So we can reach deals of a scale that are very competitive to us, but also commercially sustainable for our suppliers. Over the past few years, we have accelerated our journey through greater digitalization and high graded workforce. This has resulted in an even more competitive supply chain. In 2018, 50% of our spend was benchmarked as most competitive. However, we still see significant upside and we aim therefore to have 80% as most competitive by the end of 2020. Digital technology and better and simpler processes and improved contract management are all helping. For example, we integrated 14 contracts and procurement systems into 1 end to end purchasing tool. The tool went live in late 2017 and we now have a standardized contract system driving deeper discipline and enabling more focus on strategy and on value added activities. There's still a lot more to do in our supply chain chain to do even more, but significantly less. Now let me move to innovation and digitalization in Shell. We have a proud history of commercializing technology to create value for Shell. For example, by innovating in both catalyst and process technology over the last several decades, Shell has established a 50% global market share in ethylene oxide with which we make derivatives that are used for the manufacturing of many materials including plastics. The catalyst business makes products both for our own use in our assets, but also for third parties where it represents a $1,000,000,000 revenue business for Shell. One of the ways we create value is by having Shell's world class scientists collaborate with academic partners to make the most of the latest technology. In 2018, our collaborative efforts meant that we embarked on some 2 60 research and development projects worldwide. I'd like give you an example of successful partnering. We are working with a company called Exelos. It's a company that performs highly complex engineering calculations almost in real time. Last year, Shell and Axcelos invested in a project to deploy their predictive digital twin technology for Shell's upstream asset integrity management systems. Today, this technology is used on several of our fixed and offshore assets. It provides information that allows us to optimize our assets, for example, by performing real time structural integrity checks. Also P and T's unique abilities produce unique solutions that enable us to create value. For example, we've developed an artificial intelligence drilling system called Shell Geodesic, which determines the best well and allows us to drill more precisely, more efficiently and more quickly. This means in turn that we have higher production at lower costs. And you'll see many more of these examples in our shales business, which Wael will speak to later. This sort of innovation could also mean further improvement where we are already best in class. We will look to extend our lead over the competition. For deeper insight into our business, I'm happy to invite you to our P and T open house, which is planned for the 26th November this year and where we will have the opportunity to go in-depth Shell to deliver Shell to deliver better products and better assets. Thank you very much. And with that, I'd like to hand you over to Maarten who will take you through Thank you, Harry, and good morning, ladies and gentlemen. Good to see you all here. Talk about Integrated Gas. Indeed Shell is a worldwide leader in LNG and Gas to Liquids. And our Integrated Gas business provides material and resilient free cash flows to Shell. Today, I will outline our strategy to expand and diversify the strong position in the market that we expect to grow well into the 2030s and probably beyond. For Shell, gas is not only a few for today, it is also a few for the future. We intend to grow this business and deliver substantial cash and returns, with natural gas helping Shell thrive through the energy transition on its way to a cleaner energy system. Now to make sure this business achieves its full potential, our strategy for integrated gas rests on 3 pillars. First of all, we are a market leader in LNG. We are building here on the position of strength, which is based on an unmatched LNG supply portfolio, a top notch trading, marketing and optimization organization and a 22% share in the worldwide LNG sales. And since we expect that LNG market to grow by 4% a year, we plan to grow along with it keeping that leading position. We plan to lead in creating new pockets of demand by accessing currently unserved geographies, creating new global markets such as fueling ships and trucks and by mining the adjacencies to our growing power business. The second pillar of our strategy is to run the engine that put us in the lead in the 1st place even better and deliver superior cash flows enabled by operational excellence. We have been on a good improvement path already and are determined to increase our LNG liquefaction capacity utilization further to above 90% as well as reach top quartile unit costs in our operations. Now sustaining that high level of cash flow that we have today requires us to invest about $4,000,000,000 to $5,000,000,000 per year in our existing assets and to build new assets to displace declining assets. This includes the capital that we spend on backfill opportunities that keep our plants full and tend to offer attractive marginal economics. And finally, we will grow this engine. Until 2025 from 2021, we will invest an additional $2,000,000,000 to 3,000,000,000 dollars per year to create more free cash flow growth from advantaged positions that will come on stream in the second half of the next decade. You can expect us to pursue the most competitive projects emerging from our healthy funnel of LNG projects and we plan to complement these with inorganic opportunities and options to grow our gas to liquids footprint. This strategy allows us to target organic free cash flow of $9,000,000,000 to $10,000,000,000 and our watch around 11% by 2025 with further free cash flow growth coming in the second half of the decade. Now with that, let me take a step back and put our strategy for integrated gas in a larger context. The energy transition and Shell's net carbon footprint ambition call for a greater role of gas. When used instead of coal, it helps to meet increasing energy demand, while lowering greenhouse gas emissions and air pollution. To give you an example, coal to gas switching has led to a 78% improvement in Beijing's winter air quality over the past 5 years. To increase our resilience, we also need to improve the carbon footprint of our own operations further. Our LNG Canada project, which we sanctioned last year, is designed to achieve the lowest carbon intensity of any LNG project currently in operation around the world. And finally, for our own operated ventures, we have set a target to maintain methane emissions below 0.2% by 2025. We are proud to lead a global industry coalition focused on continually reducing emissions of methane throughout the gas supply chain from well to customer. Now as the world transitions to a more sustainable energy system, the gas market and particularly the energy market will continue to grow. Our projections to 2,035 estimate that more than 70% of the energy demand growth will be met by gas and renewables combined with gas supplying some 40% of that additional energy demand growth. China, India and other major energy importers are putting policies in place that drive a preference for gas over coal. And LNG therefore remains the fastest growing source of natural gas supply. And it's worth noting that a large share of the growth of gas demand is coming from the non power sectors such as industry and industrial heating and residential heating where demand is sticky. But natural gas of course also supports the integration of variable renewable electricity generation as it can quickly compensate for dips in solar or wind generation and rapidly respond to sudden increases in demand. Now in the short term, the increase in demand for LNG is expected to be well met by some 35,000,000 tonnes of additional liquefaction capacity coming on stream this year, but we still expect a supply shortage to develop in the early to mid-twenty 20s as demand continues to grow. Now let me illustrate how we are developing that new demand for LNG. Customer centricity is fundamental to our business and the LNG customer landscape is growing and diversifying. The number of LNG importing countries has grown to 42 and we currently supply 76 customers in 27 of these countries. We are actively developing new markets and penetrating deeper in gas value chains. Taking full on ownership of the Hazira LNG import terminal India is a good example. At Hazira, we supply the LNG for India from our global portfolio. We perform the regasification, but then we also sell the gas to local customers behind the terminal through our Shell Energy India marketing and trading business opening up new markets for LNG. We also increasingly see opportunities to leverage the adjacencies to our power business where the customer base and the product offerings are starting to overlap. One example is provided by the Bahamas where we are the project developer for a 200 megawatt to 2 50 megawatt integrated LNG to power project that also offers upside through LNG to marine facilities. The 3rd way we are helping to develop a growing market for LNG is as a fuel for transport. In Europe, for example, the number of LNG fuel trucks is expected to grow from currently around 5,500 to about 280 1,000 by 2,030, the same number that's on the road in China today. In the same timeframe, we anticipate the global demand for LNG and marine to increase to almost 20,000,000 tonnes per year. And we are well positioned to supply this demand, especially with our fitting stations along European and Chinese roads and with our worldwide LNG bunkering network for ships. Let's now look how our diverse customer base and our diverse supply base are matched and how we generate value from optimizing the match between the two. I think the best way to illustrate this value is by showing you the routes that our LNG cargoes traveled in 2018 and that's what you see now on the screens behind me. In 2018, we sold some 71,000,000 tonnes of LNG from a supply portfolio that is diverse like no other. This makes us a worldwide leader in LNG and we are ahead of other IOCs by a large margin. The diversity of our supply portfolio is unmatched. We sourced 58,000,000 tonnes of term volumes from more than 20 sources with the single biggest source accounting for only 8% of the total volume sold. In addition, we sourced and delivered some 13,000,000 tons of spot volumes equivalent to 200 cargoes. And apart from this mixed supply portfolio, our sales portfolio is equally diverse with varying contract duration, flexibility indexation. And all this diversity on both sides of the equation means that we have many, many options to match supply and demand. And with options come the opportunity to create additional value. Our experience in trading and the commercial control that we have over a fleet of more than 60 LNG carriers on any given day allows us to generate value from that optionality and our earnings and cash flow last year and in the Q1 this year demonstrate that value. And we are seeking to grow that value in the future by looking for more competitive source of supply and by growing our own production and the volume we buy from others. Now let me talk about our assets and the improvements that we have made in our Operational performance and cost control are key value levers in our business and we have stepped up our game. In 2018, we achieved an LNG liquefaction capacity utilization of 87%, up from 81% in the year before. Our relentless focus on operational excellence is paying off and we are convinced that we can improve further. With continued attention to the reliability of our assets and by realizing major backfill opportunities, we are confident that we can increase the utilization to around 90% or more. In operating cost, we see a similar picture. Our drive for competitiveness is paying off and we see average unit operating costs of our integrated and our midstream assets in or close to the top quartile benchmark in the industry. Digitalizing our assets and our operations is a major enabler for our ambitions. For example, our shipping arm uses advantaged algorithms to analyze ships' operational profiles and instructs the captain on the optimum draft, trim and speed to use given the circumstances. This reduces the ship's resistance requiring less main engine power and saves 3% to 8% of the fuel compared to before. We introduced this method. Not only is it good for the environment, it is also good for business since few usage accounts for a large share of the operational cost of a trading outfit. And as you can see, we are increasingly achieving the benefits of digitalization from other examples of this slide and are now aiming for fast replication of those examples at the global scale of our portfolio. Now with that, I will now set out how a leading position in a growing LNG market translates into competitive financial performance. Over the past 3 years, we have consistently been growing both our LNG liquefaction volumes and our sales volumes. This speaks to our ability to secure long term offtake agreements from third parties and to improve the utilization of our own plants. As a result and further supported by an average Brent price of $71 last year, we have delivered a very significant earnings improvement and organic free cash flow of $10,800,000,000 in 2018 and a ROACE of almost 11%. And with Prelude now producing LNG for more than a week and the first shipment from Prelude being imminent, we are further derisking the delivery of our $8,000,000,000 to $10,000,000,000 organic free cash flow target in 2020. Looking further ahead, we see continued growth in our cash flow from operation towards 2025. Post 2020, we will also step up our cash capital expenditure to $6,000,000,000 to $7,000,000,000 a year to ensure that we can benefit from the opportunities the growing gas and LNG markets offer to us. And against that $2,000,000,000 CapEx increase, we still expect to generate $9,000,000,000 to $10,000,000,000 of organic free cash flow by 2025 and to increase that free cash flow further in the second half of the decade as we bring those new projects on stream. So how will we grow our business and create these new advantage positions? I explained before that we look for the most competitive source of supply. This can mean buying LNG from third parties, but it can also mean expanding our own asset base. As you have observed last year, when we announced our final investment decision on LNG Canada, we take investment decisions based on the cost competitiveness and the resilience our projects. One way to measure this is the cost it takes to produce and deliver 1 MMBtu of LNG to the customers that we have in Asia. And as you can see on this slide, our LNG project furlough compares well with the rest of the industry. All of our potential projects have a delivered unit cost to Asia below $8 per MMBtu and many as you can see below $7 and they beat the typical cost of U. S. Gulf Coast projects that are being developed at the moment. In addition to these new greenfield and brownfield projects, we have lined up attractive backfill opportunities to keep our existing assets full. And across those backfill projects in development, we average a unit technical cost of below $5 per MMBtu. And indeed, we see a lot of opportunity in LNG. But when it comes to growing our business, gas to liquids or GTL also has an important role to play. Let me explain why I am so excited about this technology. We have 45 years of experience with GTL and own more than 3,000 patents on the technology. In Malaysia, we operate the first ever GTL plant and with Pro GTL in Qatar, we operate the largest GTL plant in the world. We produce high value differentiated premium such as GTL gas oil, kerosene, normal paraffin and base oils. Shell Helix Ultra with PurePlus Technology is the 1st synthetic motor oil designed from natural gas. Through strong integration with our downstream marketing and trading business, we are able to develop new markets and successfully sell these products for new and unique applications. We have a clear competitive advantage and see significant free cash flow generation from our gas to liquids assets. A key value lever is the proportion of specialty projects with higher margins that we are able to produce and place in that market. We've been increasing the share steadily reaching 16% of our production in 2018 allowing us to capture an average premium over brand of $14 per barrel. Our team in Qatar continues to optimize the product slate and we have an ambition to get the average premium over brand to $21 Now as we look ahead in the market, we see a significant increase in global demand for GTL based oils that is not matched by our current supply capacities. This creates an exciting opportunity for us and we are looking at ways to increase our GTL footprint. I hope you can see why I'm excited about the opportunities that we have in GTL and LNG and I'm very confident that we can extend the leading position that we have today. With that, let me hand over to Andy to talk about Upstream. Thank you, Martin, and good Thank you, Martin, and good morning, ladies and gentlemen. It's a real pleasure to be here today and this will be the last time that I'll be speaking to you as the Upstream Director in this forum. As you probably know, I'll be handing over to Wael Suwan on the 1st July. I've worked with Wael for over 20 years. And under his leadership we've seen the transformation of our deepwater business and I look forward to watching him lead upstream in the coming years. So let me start by touching on how we've improved upstream over the last few years and ask Wael to share what more you can expect from this business in the future. Our upstream business consists of 3 strategic themes and we've made them stronger, more competitive and more resilient. We have a leading global deepwater business, where we've transformed the capital efficiency of our projects, have grown production from existing hubs, brought new hubs online and have an exciting funnel of competitive high margin projects still to develop. In Shales, we've improved our competitiveness and focused our portfolio and now have a very high quality asset base such as in the sweet spot in the Permian Delaware. And in conventional oil and gas, we've high graded our portfolio, improved our operational performance and reduced our development costs, unlocking further attractive opportunities to develop this deep resource base. You can see the results of our transformation in our financials. When we spoke in 2016, upstream was cash flow negative. Today, we're generating some $1,000,000,000 of organic free cash flow every single month. Only a third of that improvement is a result of the high oil price. We've worked hard to improve the performance of our assets. For example, since 2015, we've reduced unit operating costs by more than 20% and aim to reach below $9 a barrel UOC by 2025. And with that performance, we're well within reach of our 2020 target of delivering $12,000,000,000 to $15,000,000,000 of organic free cash flow annually. The strength of our development funnel and asset performance shows that despite significant divestments, our upstream business is delivering strong cash flows and that delivery will continue. Today, we're updating our outlook for our organic free cash flow delivery to the range of $14,000,000,000 to $17,000,000,000 by 2025 at a $60 Brent real terms twenty 16 price. And we expect strong double digit returns in the range of 12% to 14% from upstream. We have visibility of how we will maintain momentum from our upstream business well into the next decades. When looking upstream and integrated gas, we have a commercial resource base with significant developed options at a resource life exceeding 20 years. And when you compare this to peers, we're well in range and benefit from having the largest share of high margin liquefied natural gas and deepwater resources. And high margin barrels is what we're focusing on, value over volume. The strength of these high margin barrels is clearly seen with Shell delivering industry leading cash flow from operations per barrel. We've shown yearly unit development cost improvements which allows for more of our resource base to be developed at less capital spend giving us confidence in the long term strength of our business with the capital allocated. Most of the cost reduction is structural with only 20% of the improvement by supply chain unit costs. And we have an ambition to further reduce unit development costs by some 20% to 30%. With an intense operational focus on well reservoir facility management, infill drilling, LNG backfill and production availability, we see a decline rate of just some 3% across our portfolio. This means we only need around 100,000 barrels a day of production from new fields annually to sustain the business. Our development opportunities easily covers this and more helping us grow cash flow through the next decades. So with our discovered resources, we can sustain production through most of the next decades. In addition, we have a very exciting exploration portfolio that will supplement this. We have been investing some $2,000,000,000 per year recently. But we have a value focused exploration strategy where we've been successful in discovering high value near field and heartland discoveries. We track our value creation as a multiple of our exploration spend. We just need to look at the U. S. Gulf of Mexico, where we have a string of discoveries like Appomattox, Vito, Kykias, which we're bringing online. And we have more discoveries in the funnel to develop in the coming years. But beyond this, in the last years, we've seen a substantial build of our prolific acreage in Brazil, Mexico, U. S. Gulf of Mexico, Mauritania. And in our conventional portfolio in places like Malaysia, Egypt, Brunei and Oman, we replenish our heartlands year on year. And also in emerging basins like onshore Albania, we've seen some exciting recent world results in an asset with a really large resource base. Overall, we expect to see reduced unit finding costs down to $2 to $3 per barrel without compromising the value per barrel of discoveries we make. So whilst maintaining our investment levels, we're seeing the yield on that spend improve and have ambition to add over 750,000,000 barrels of resources each year. Now let me hand over to Wal, who will take you through the outlook for upstream in more detail. Thank you. Thank you, Andy. Good morning, everyone. It's a real pleasure to be here today. Let me start by saying, I really feel fortunate that Andy has built such a strong foundation for me to step into. He's shown a relentless commitment to safety, a sharp focus on portfolio optimization and capital efficiency and a dedication to operational excellence. And I plan to build on that success during the years to come. Let me start the presentation talking about Deepwater. We are the leading IOC in each of the major Deepwater theatres which we operate. The U. S. Gulf of Mexico, Brazil, Nigeria, Malaysia and most recently, Mexico. This gives us a strong position to drive growth by leveraging existing infrastructure, our locally established capabilities and our relationships in these countries. And I'm especially pleased with what we have done in the past few years to improve the performance of this business. You can see the large swing in organic free cash flow from 2016 to 2018, we expect to keep moving further in this direction, reaching some $7,000,000,000 to $8,000,000,000 in organic free cash flow by 2025, almost entirely on the back of our already discovered resource base. We expect to invest some $4,000,000,000 to $5,000,000,000 in cash CapEx each year, which will sustain production of at least 900,000 barrels of oil equivalent per day. And we will continue to push this business as we are not yet at the end of our improvement journey. By fully leveraging our leading global projects and our wells delivery, replicating our growing digital capabilities across our assets and continuing to deepen our partnership with our core supply chain, I am absolutely convinced that we can deliver differentiated performance and the next exciting tranche of growth. Our transformation began with our people and our focus. We moved from making the technically impossible possible to now making the possible profitable. We are using our deep technical capabilities to drive capital efficiency with a strong focus on value and delivery. We have challenged the organization to deliver industry leading unit replication, we are driving towards top quartile development costs and cycle times. We're targeting less than 6 years from discovery to first oil with plans to replicate nearly 80% of the Vito host design. By changing the way we work internally externally with the supply chain to drive capital efficiency and value, we have reduced the breakeven prices by almost 50% since 2014. And on average, our projects breakeven around $30 a barrel or less on a forward looking basis. Our operating costs have also been decreasing. For example, we made structural changes to our headcount and the logistics fleet and have an ambition to achieve unit operating costs of $5 to $6 per barrel over the coming years. It's worth us looking at 2 of our major deepwater locations, starting with the U. S. Gulf of Mexico. Our strategy is to fill our hubs by focusing on operational excellence and investing in waterflood and tiebacks around our hubs and that is working today. For example, we've seen nearly an 80% increase in production from the Mars corridor. These are highly attractive investment options that mitigate declines and importantly and critically deliver profitable barrels. And our development funnel is strong. 2 weeks ago, Appomattox started production. It was delivered some 40% under budget and will ramp up to 175,000 barrels a day. And with discoveries at Dover, Fort Sumter and Riddberg, we believe we can keep Appomattox full for some time to come. Last year, we sanctioned Vito and our 2nd phase of development at Perdido. Both are progressing as planned and we are also maturing PowerNap, a tieback to Olympus. And we continue to expand this Heartland through exploration. In April, we announced Blacktip, an exciting discovery in Perdido corridor and today we announced exploration success at King and Baymont, a near field success near Mars. Lastly, we participate in bidrands where we add new licenses. With the licenses from the last bidrand, we will have nearly 300 licenses and will be the largest leaseholder in the Gulf of Mexico. Let me shift now to Brazil. Brazil has become an exciting heartland for in Shell with production approaching 400,000 barrels of oil equivalent a day. We have 15 floating production storage and off loading vessels online. The 16th, known as P-sixty 8 is coming online later this year. Well performance from the presold is exceeding expectations and we are seeing lower declines than expected. And beyond these, we have a conveyor belt of FPSOs that will come on stream, including our Mero development program. In total, we are progressing a further 7 FPSOs in which we have interest. In addition, appraisal activity is underway at Gato D'Amato and we are planning exploration wells at Alto Cabo Frio West and Saturno. These are exciting blocks that can really help extend our funnel further. Let's now move to shales. We've been on a significant performance journey optimizing our portfolio and directing our capital to developing high margin assets. We now have a proven track record of And by 2020, we expect over half of our production to come from liquid rich assets in the Permian, Fox Creek and Argentina. Within these areas, we have some of the best positions in the core of these basins. As a result, our shales business is on track to become organic free cash flow positive this year already. And we are positioned to deliver strong returns and long term cash flow. We expect to reach production of 600,000 barrels of oil equivalent a day and to generate $2,000,000,000 to $3,000,000,000 of organic free cash flow per year by 2025. Our business is supported by a competitive cost structure, resilient breakevens in every basin and strong operational performance across all of our positions. Our strong Permian performance underpins the delivery of our strategic intent for shales. We are a leading operator in the basin and in the second half of last year became organic free cash flow positive. We've achieved top quartile drilling performance in the Delaware Basin and have reduced total well costs by some 40% since 2015. In the same time, through completion optimization, we've increased our ore recovery by more than 60%. We see technology, particularly our ice shell program, as an integral part of our business that drives delivery today and into the future. A quick example, which Harry had introduced earlier, is Shell Geodesic. By the end of 2019, nearly all the wells and shales will be geosteered using this AI technology, allowing us to stay in zone nearly 100% at the time, which of course allows for greater overall recovery, adding some 5% per well to our EURs. Further, late last year, we became the 1st and only company to receive approval from the U. S. Federal Aviation Administration to fly drones beyond the visual line of sight, allowing us to reduce costs and enable safer production. Our improvement in drilling costs, use of modular replicated facilities designs, optimized EURs and deployment of technology means shorter paybacks, better financial returns and margins per barrel of production. With our high graded portfolio, we have the running room and the capabilities to deliver our aspirations. We will continue to deliver organic growth and potentially as well through inorganic options. We are not in a rush to grow through acquisition given the quality and the depth of the portfolio. If we choose to grow inorganically, we will be selective and would only consider value accretive opportunities that fit within our financial framework. Let's now take a closer look at conventional oil and gas. We have more than 100 years of experience in this business. This deep familiarity with our Heartlands comes with unique assets, insightful data, established capabilities and deep relationships, all of which are key differentiators for us. Since 2015, we have been high grading and simplifying this portfolio through a series of divestments, really focusing efforts on key assets with Running Room. As a result, we now have a simple, more resilient portfolio on track to deliver between 12% 15% ROACE by 2020 5. And while we will continue to divest non core positions to further improve our portfolio and returns, we are very confident about the longevity and the growth opportunities of this business. In recent years, we have secured agreements with governments to unlock more value from existing discovered positions, for example, in Brunei, Malaysia, Nigeria and Egypt. These agreements have been key to the turnaround of this theme and allow us to grow in the majority of the conventional oil and gas countries. By 2025, growth countries will represent more than 80% of the cash flow from operations. We have a deep resource base of around 11,000,000,000 barrels of oil equivalent of commercial resources, providing attractive infill drilling and debottlenecking opportunities. And with a sharp focus, we can unlock more production from existing wells, allowing us to limit decline to around 4% per year. With a strong pipeline of competitive new developments, we expect to sustain production at around 1,500,000 barrels per day, with cash CapEx of $4,000,000,000 to $5,000,000,000 a year, delivering organic free cash flow of $5,000,000,000 to $6,000,000,000 by 2025. Now maybe let me explain some of the underlying improvements and why I am excited about the future of this business. A sharp focus on competitive scoping and efficient execution has halved our average unit development cost from $14 per barrel oil equivalent in 2015 to $7 in 2018. And we will aim to further decrease this to $5 to $6 a barrel. Our planned new developments are very competitive with an average forward looking breakeven price of under $30 a barrel. This is complemented by a rich portfolio of infill drilling and debottlenecking opportunities with very attractive economics and average IRRs above 50%. In summary, this Heartland portfolio offers strong cash flow generation and resilient returns for years to come. Let me end now by sharing my reflections and priorities as I get ready to take responsibility for Upstream. 1st, let there be no doubt, we will continue the journey that Upstream has been on to safely deliver top quartile performance. 2nd, I see an enviable development funnel that we are maturing with key projects ramping up on stream soon or under construction, adding over 650,000 barrels of oil equivalent a day at peak production levels. With key projects coming in feed and pre feed that will add another 750,000 barrels a day. And further delivery of smaller projects that can add an additional 400,000 barrels a day. My objective will be to ensure we apply a ruthless focus on value and returns for our project portfolio and to develop this funnel in a safe and competitive manner. 3rd, on exploration. We will continue high grading our funnel of options and in parallel drilling some of the most exciting exploration wells in the industry. In Brazil, we have some critical wells that we are preparing to drill over the next 2 years. In the U. S. Gulf of Mexico, we have both opportunities near infrastructure and corridors and hub scale opportunities. And in Mexico, where our acreage is nearly 4 times the size of our entire U. S. Gulf of Mexico position, We are moving quickly from license award to drilling our first well later this year, have identified prospects that could support 1 to 2 drilling rigs for an extended period of time. To conclude, I'm excited to inherit this business from Andy and would like to really thank him for his leadership and his vision over the past years. I strongly believe we have right skills and the capabilities to unlock the full potential of this upstream business. And I'm very confident about the longevity and sustainability of strong cash and returns that we can extract from this portfolio for decades to come. Now let me hand over to John. Thank you, Wael, and good morning to everyone. As I look around the room this Downstream Open House event last year where I shared a handful of important points. Firstly, that Downstream plays a key role in Shell's progress towards a world class investment case. Secondly, it is integral to help Shell transition to a low carbon future. And finally, as the world changes, so the Downstream must change as well. Today, I want to reinforce these messages, give you further details and further insights. So how are we going to adapt our Oil Products business and deliver growth? In short, we plan to continue expanding the marketing business to further increase its predictable and high returns. This is expected to involve expanding in the key growth markets of China, India, Indonesia, Mexico and Russia. It will mean a more balanced geographical spread. And with this growth, we aim to increase our marketing earnings by £2,500,000,000 per year by the end of 2025, and that's relative to 2017. And I'll talk more about this later on. But first, I want to sketch out for you how Downstream plans to adapt our products and our services to respond to the changes that are taking place in society today. And as we highlighted previously, with a growing population with rising living standards, we will as a society consume more energy. And at the same time, the world must find ways to reduce greenhouse gas emissions and improve air quality as well. And as the energy system changes in response to these fundamental challenges, advances in technology and mobility will give customers far more choice. For example, in transport and convenience retail, we are working on many different solutions because we believe the customers will not only need these, but also demand them. This is demonstrated by our offerings of fast charging for electric vehicles, liquefied natural gas, LNG, for shipping and heavy freight, and of course, hydrogen as fuel for vehicles as well, but also by leveraging mobility to increase our non fuels retailing offerings. And as we bring more solutions to our customers, we are also using the opportunity that comes with the rise of digital innovation to change the way the customers interact with us. This is a great opportunity not only for Downstream, but for the whole of Shell. So we are planning to offer multiple solutions and maximize the opportunity of digitalization. So you may say, well, others will do the same as well. But Shell's Downstream has three strengths that set us apart that will ensure that we win. The first is our brand. This has a higher value than our competitors' brands, as you can see. The second strength is our scale. Our retail business is the largest of its kind in the world with more than 44,000 retail sites in close to 80 countries. And our global commercial business includes the lubricants, which has been recognized as the global market leader for 12 consecutive years. And finally, lubricants to our trading and supply business, we aim to ensure the best value for Shell. And as the world changes and the needs of our customers change, so will our retail and lubricants businesses. We will shape the future of both businesses to meet the needs of our customers. Indeed, the importance of this focus on the customer is clear to see with more than half of the margin coming from Shell's distinct products and services, for example, Shell V Power. It is through our customer focus that we aim to achieve our growth ambition. In 2025, we aim to serve more than 40,000,000 customers every single day. And as we offer yet more premium services and products, we expect them to contribute significantly to our margin. And as you will see, these changes are already well underway. Last year, we made a commitment to achieve more than 20% return on average capital employed by the end of 2025 across our marketing businesses. I can tell you that this still stands. And whilst our current business has competitive returns compared with retailers even like Sainsbury's or Walmart, we plan to become even more competitive in 2025 as a result of our focus on customer and our strong returns. And as you can see, we're making clear progress. There are many examples on this chart, but let me just draw a few to your attention. For example, since 2017, we have already added more than 4 50 new retail sites across the key growth markets that I mentioned earlier. And we've increased our lubricants volumes by more than 8% also in those growth markets. It is in this way that we are building the foundations of our future growth strategy. And we're using our significant customer insight and our versatility to make sure that we offer customers not just what they want, but also what they need. To put it simply, we are moving with the customer. And we will continue to seize opportunities as they arise, like the digitalization of our loyalty schemes or rapid rollout of electric vehicle charges across 23 markets. And as you can see, we're providing multiple solutions to create the best possible products for all of our valued customers. Now earlier on, I talked about Shell Downstream's brand, scale and capabilities, the factors setting Shell apart from its competitors. And it is these three elements that truly come together in trading and supply. We believe making Shell's downstream business the most highly integrated in the world. Trading and supply integrates and optimizes everything that Shell does. This is the key to making Downstream an efficient and profitable business. It sources the crude, oil products, biofuels, gas, LNG, electricity and carbon credits that the businesses need and matches them against customer demand. And those customers could be car owners in Chennai, an airline in Bangkok, the builders of a bridge in China or even a Shell Energy customer here in London. We expect to see further value opportunity as we implement the new marine fuel specification changes as well, which are aligned with the IMO 2020 targets. Optimizing what we do, whether it's through trading or across our portfolio, means that we stay competitive. And our focus on high grading our portfolio has improved our competitiveness further, but there is still more for us to do. And indeed, as this slide shows, we plan to continue to reshape our refining portfolio over the next decade with both divestments and investments. First, we intend to ensure our global presence matches that of our customers, our trading operations and chemical plants. So we ensure that we use our commercial advantage at every stage of the downstream business. Secondly, we intend to ensure the remaining refining portfolio delivers resilient returns through the energy transition. And as you can see here, when benchmarked, our refining portfolio was in the Q3 for its non energy cash costs. This is not good enough to generate the returns we aspire to and so we have worked to identify material and significant savings via our cost improvement program that will put us on a strong path to that 2nd quartile. The 2nd quartile, we feel, offers the most efficient and sustainable running of our operations whilst also creating significant integrated value. So let me show you what this means in financial terms for oil products. The competitive strengths I've highlighted earlier are allowing our oil products business to deliver on the commitments I outlined at last year's Downstream Open House event, which many of you will recall. Oil Products has delivered sustainable and resilient cash flow from operations excluding working capital movements over the last 3 years, representing a return on capital employed at the end of 2018 of 11%. With our competitive returns contributing to our world class investment case. Now our current growth in marketing is on track to deliver our aims in 2025, which actually shifts our capital employed more towards this part of the business. And together with our integrated trading and refining portfolio, we are on course to meet our return on capital employed target of more than 15%, our organic free cash flow target of $8,000,000,000 to $9,000,000,000 by the end of 2025. So let me now briefly recap on Oil Products. Oil products is a key component of Shell's world class investment case. We intend to seize the opportunities presented by the global trends in energy, mobility and digitalization to continue to meet the needs of our customers. And we plan to do this thanks to our unique strengths of brand, scale and capabilities. But it's also important to remember that sitting alongside our Marketing and Refining and Trading businesses is our Chemicals business, which we expect to help Downstream deliver transformational growth in a lower carbon future. So having talked to you about the unique strengths of our Oil Products business, how it is integral to Shell's strategic ambitions and how we are adapting and growing in a time of change, let me now turn and focus on our chemicals business. Petrochemicals are vital to our evolving modern society. In our offices, cars, home, whilst we're at work or whilst we relax, we continue to increase the use of products that began life as petrochemicals and we may not realize that. Economic growth drives demand in petrochemicals as you can see specifically on this slide. The desire of consumers and societies for lower carbon solutions will also increase this demand as well. Many finished products made from petrochemicals use fewer resources and have a lower environmental impact than the glass, paper or metal products that we've been used to using and that chemicals replace. Efficient insulation, synthetic textiles, low temperature detergents, for instance, all save energy and reduce CO2 emissions for society. We expect the Chemicals business to help Shell to thrive through the energy transition. And the fundamentals and the benefits of this business continue to be strong. Now as societies increase their recycling rates and use fewer single use plastics, I'm often asked if this will have an impact on the petrochemicals industry. And my answer is this. While these trends are expected to reduce petrochemicals demand in specific areas, so for example, packaging is just one outlet for plastics and actually single use packaging is one subset of that. In fact, demand for the core product, the plastic resin, is set for a strong growth even in a future of extremely high recycling rates for those single use packages. Environment. Plastic waste is the issue. Plastic belongs in our home, in our hospitals and in our schools, not in the oceans, in the rivers, and in our landscape. This is a problem that requires collaboration across the whole of society, and that is why Shell is proud to be a founding member of the Alliance to End Plastic Waste. This is a new cross sector organization with a clear mission to help to end plastic waste in our environment. So what is it that sets our chemicals business apart and makes it competitive? First, we have an advantage when it comes to feedstock. Ours comes from local sources under long term contracts. For example, in our Pennsylvania cracker, we'll use ethane feedstock sourced from the shale gas producers in the Marcellus and the Utica Basins. 2nd is our proximity to key markets. Again, in our Nanhai joint venture with C Nook in China's Guangdong province, we doubled the sites cracking and doubling the sites' styrene capacity as we speak to access the large and growing Chinese demand. And finally, use of our technology sets us apart. Recently, I was privileged to be at the start up of our 4th Alpha Olefins or AO unit at our Geismar facility in Louisiana. This project makes it the largest AO producing site in the And this new unit was built using Shell's proprietary technology. All of these projects I've talked about are highly competitive and actually are the pillars to our cash growth commitments to the end of 2025. In fact, representing about 75% of our projected cash flow increase. And I'm pleased to confirm that we plan to continue to grow with a healthy series of options we can choose from for our future growth projects. So the growth in our Chemicals business is based on solid foundations. Our strong underlying business has an organic free cash flow that is funding our capital growth program, enabling us to build the Chemicals business of the future. And as we see our projects move into operations, we expect to see cash flow growth enabling us to deliver on our commitments of $5,000,000,000 to $6,000,000,000 of cash flow from operations and $2,000,000,000 to $3,000,000,000 of organic free cash flow by 2025, representing a return on capital employed of around 15%. But that is not the end of the investment in this business. We plan to continue to invest $3,000,000,000 to $4,000,000,000 per year through the next decade. This is expected to ensure continued growth focused on the areas where we see further opportunity to use our strengths and also proximity to the markets where we operate. And I have highlighted where we believe economic growth will continue well into the 2030s and that petrochemicals growth exceeds economic growth. But there is an opportunity to be part of a larger growth market in chemicals, building on our existing differentiators and evolving these by an increased focus on our natural strength of technology, but also the Shell brand, we believe we can expand our business into selected performance chemicals, which are customized products that influence the performance of the end product and require that deeper customer intimacy for which we are known. This is an exceptional opportunity to make the Chemicals business even stronger. But as I've said, this is an opportunity, one that we will appraise as we go and continue to grow our business into the 20 20s. So I hope that you agree that there are very exciting times ahead in the whole of our Downstream business, both chemicals and oil products. And with that, I would like to hand you back over to Martin. Thank you. Thank you, John. New Energies, it's been about 3 ago since we launched our New Energies business and we have been growing this business, making quite modest investments and testing out new business models to deliver competitive returns to support the world class investment case that Shell is. We focus on 2 areas, new fuels and power. New fuels includes biofuels, which can help reduce CO2 emissions and air pollution from transport. Today, Shell is already one of the world's largest blenders and distributors of low carbon biofuels through our Raizen joint venture. In addition, we are also developing advanced biofuels, which produce fuels from feedstocks such as waste or inedible crops and we do this in collaboration with 3rd parties. And we look for high returns from biofuels in the order of about 15% or higher. Hydrogen also has a role in our portfolio as a clean fuel for light and heavy transport in fuel cell electric cars, trucks and ships, as a feedstock for industry and over time as a way to store electricity or move it across the globe. In hydrogen, we partner with OEMs, original equipment manufacturers, governments and others. And we're building hydrogen filling stations in places like Germany, California, but also here in the UK. The pace at which we proceed in this new fuels business depends on developments in technology, the regulatory framework and of course customer demand. We are positioning to scale up this business significantly when the time is right. New Energies will continue to lead the development and the deployment of advanced biofuels projects, but the related investment will be reported under oil products from 2020, which is the main channel to monetize biofuels. And power will be an emerging theme. Power could be a significant business for us. It has the scale and longevity that aligns well with Shell and could one day sit alongside our oil, gas and chemicals businesses. Now we're not interested in this business because of the returns that the utility industry has traditionally delivered. Instead, we believe that a modern integrated power business can deliver 8% to 12% return when on stream. We see potential for profitable involvement across almost the entire integrated power system from supplying power directly to customers and related services directly to customers to buying, selling and trading and optimizing power to low carbon power generation. Our core markets are in the Northwest Europe, USA and Australia, where customers want low carbon alternatives, where governments take action to promote decarbonization of power and where people are willing to pay a fair price for clean power. Beyond these markets, we may be involved in select markets where the opportunity makes sense or where we have distinct adjacent in country positions. Now let's talk a bit more about that in detail, starting with an overview of the macro environment. The world's demand for energy is rising and society expects this to be met in a clean way. As part of a move to realize the ambitions of Paris, we will see deep electrification of the global energy system. That will require strong growth in renewables like solar and wind to complement traditional fuels for sectors where the molecules will still be needed. In fact, natural gas will complement those renewables and together both have a critical role to help meet increased demand while lowering greenhouse gas emissions. The combination of the 2 offers a reliable, flexible and cost effective pathway to a lower emission energy system And this is what we see many of our customers demanding. Developments in technology spark new products, services and business models that offer rent to companies with a strong brand and an ability to deliver integrated energy solutions. And while the pace of change and exact solution may vary for the different markets, we expect to see growing valuables in this important segment of the energy system, presenting a commercial opportunity for a company such as ours. We see opportunity as the traditional power system is changing with a fundamental shift from power markets, competition and regulations from what used to be the relatively straightforward delivery of an electron from a centralized stable supply source to a customer with predictable demand and a modest financial reward for the investors to a more intricate system with more risk, more volatility and complexity and more opportunity for customer intimacy and hence the potential for higher returns than before. This is because the system is growing fast, it's becoming more interconnected and more complex. Customers of the future will have more choice driven by technology and we can expect to see increasing intermittent demand from charging, heating and cooling and of course, increasing the intermittent supply from sources such as solar and wind power. And also the rise of distributed energy sources and storage in the market will continue to change this system. This transformation is disrupting incumbents and challenging their business models creating opportunities for new entrants. We see new value pools being created in this integrated system. We see the potential for higher returns at the customer end, helped by new capital light business models such as EV charging and smart energy services. Trading will sit at the heart of our integrated approach and will be important source of value. And we will be involved in generating electricity with assets where this adds portfolio value and where the returns meet our criteria, but always with a preference to be asset light and buy the balance of the power from other producers. Now over the past 3 years, we have started to assemble the blocks of this business and let me highlight a few of these. On the customer side, we have existing businesses and customer relationships with all four customer segments. And we recently acquired retailers like MP2 in the USA focusing business to business and First Utility in the UK, which we rebranded to Shell Energy and I hope we find many customers in the room today. Otherwise, you can sign up in the lunch. You may have noticed that we have teamed up with PGGM to explore the joint acquisition of Anaco, a Dutch sustainable energy provider that would give us access to a bigger customer portfolio and a modern power generation portfolio. We've also invested in Sonnen, a leader in smart battery storage systems. We joined Ionity, which provides charging along major European highways and acquired New Motion and Greenlots giving us scalable positions in EV charging in Europe and in the USA. Now we are looking to stitch these together, for example, by offering our Shell Energy customers energy solutions to charge their electrical vehicle along major highways and at various charging points addition to providing them with 100 percent renewable electricity and offer them a Sonnen battery in the process. On generation, we have a position with onshore wind and are expanding offshore through Borcela in the Netherlands and with acreage that we secured in the USA. And in solar, we acquired an interest in Silicon RANGE in the USA and CleanTech Solar in Asia, which has increased our solar development capabilities. We bring several competitive advantages that we can draw on to drive returns in this business. First of all, power markets are very local and we have a legacy of over 100 years of being successful locally, currently operating in 70 plus countries where we understand the markets, we are a trusted partner to governments, we know the regulators, we know the local communities and we have millions and millions of customers. And indeed, we have the strongest brand amongst all energy companies. We have an edge when it comes to marketing and customer intimacy. Shell serves several 100 of millions of customers unique customers every year, many of whom will be turning to power to decarbonize their energy usage in decades to come. And with this, we can provide integrated offerings to our customers. For example, in the U. S, where we supply General Motors with fuels and lubricants, we are now also one of their main power suppliers. We have a well established trading business and market expertise, particularly in North America where we are the 3rd largest power trader. But from that position, we are expanding into Europe, Brazil, Japan and Australia. And of course, we also have deep technical and project expertise able to deliver big projects and manage risks. Across Shell, we have a large asset base that consumes substantial amounts of power. For example, at our Moerdijk plant, we installed 77,000 solar panels to support some of the power needs of that plant. Our assets give us an opportunity to scale this business. And these are just some of the advantages we see that will help drive stronger competitive returns from this business. So as you can see, we have been growing this business for the past 3 years, but from different starting points. In retail, we added some 750,000 customers and are looking to add more. Our trading business, as I mentioned earlier, is already quite sizable, but we have further expanded it and see more room for growth. And lastly, we've been scaling up our generation capacity. Now while we have big aspirations, we are investing with care and we will remain disciplined in how we commit resources and funding to this business. Since setting up New Energies 3 years ago, we have invested around 1 point $6,000,000,000 to date in power and new fuels. And as we continue to ramp up this business, we could see an increase of our power cash CapEx averaging $2,000,000,000 to $3,000,000,000 per year from the 2021 to 2025 period. But this ramp up in CapEx is subject to a few criteria. First, that business must demonstrate that it's on a path to be self funding before 2,030. Secondly, our investments must meet certain financial milestones that we establish for every investment. And last and as we've said many times before, we must deliver returns in the 8% to 12% range for our onstream integrated power business and all these three conditions will need to be met for us to scale up. Starting in 2021, we will provide additional financial disclosures for power. Now as we develop these low carbon products, we are seeing pull from our customers and increasingly a commitment from our regulators. And this combination is the perfect combination to develop a growing profitable low carbon business and we are determined to be a leader in that process. With that, I hand back to Ben. Okay. Thanks very much, Maarten. I trust you will agree with me that we did cover a lot of ground today. But let me summarize in a few very, very simple headlines for you. 1st, long term confidence in our portfolio. Increased organic free cash flow outlook and more potential for distributions for our shareholders. But all this together with an ambition to stay at the right side of history. Now with that, let's do some Q and A. We have I think almost 45 minutes to do that. And Jessica will join me for that. I suggest we keep it to relatively high level because this afternoon of course we have the opportunity to go into much more detail in the breakout groups where you can interrogate other EC members and EVPs that have joined us in the back of the room. So I'm going to go from left to right. And I think I'm not entirely sure you can cover everybody, but why don't we start with that table, Oswald. Thank you very much. Yes, Ben you mentioned 2020 targets being substantially derisked at this point. So and obviously you're rolling out 2025. So I assume there's still quite a bit of risk in those 2025 numbers. You've learned how to incorporate that into numbers given the last 5 years. So could you just talk about what are the key risks that you're looking at today? What have you learned about the last 5 years in setting 2025 numbers? I guess my the reason I'm asking is the distribution of €125,000,000,000 is half the market cap. It's large, but has that funny little word potential in front of it, which raises eyebrows and just causes some areas of concern. So it's just about conviction and your confidence in that €1,000,000,000 to €5,000,000,000 distribution plan is the first question. And secondly, please, I guess, one of the first things you did do stepping into the role was cancel a gas to liquids project. And here we have a slide today on expanding or an ambition to expand in gas to liquids. So I'm a little bit surprised by that. I know you talked about the margin or Martin talked about the margin uplift. But really the CapEx side of that we've seen issues with Sasol recently. So this is your conviction on building the CapEx side expanding gas to liquids here please? Thank you. Let me take your second question first. I'll also take part of your first question. But since that is such an important question, I'm sure that Jessica will want to add to it. So yes, absolutely, we at the time we I took over, we had a study, not a project. We had a study going on to do a gas to liquids project in the United States, which was essentially, if you think of it, of course, taking punt on the arbitrage between natural gas and international oil products. In a market that was increasingly, I think, also showing signs of overheating because of the significant capital being drawn into it. I think at that point in time, it didn't feel like the right thing to do. I didn't think that we had this as the top of list. We had many more other good things to do. And I hope you will have seen in the interim that we have done things that all made sense and that really have contributed the future. But we would like to start with natural gas of the future. But we would like to start with natural gas that is fundamentally low cost and derisked. We are not exposed to the vagaries of the market both on the supply side of the project and the offtake side of the project with a very large amount of capital in the middle potentially, yes. So the opportunities we are looking at is basically molecules that we own in the ground where we have the entire upside from in situ molecules to molecules in the market. We think of a few opportunities. You're aware that we're studying an opportunity in Oman. That would be a great prospect for us. It needs to make sense. So we have to understand indeed whether we can build this competitively. We believe we can. We have demonstrated we can do that. And therefore, I think it is a credible opportunity to evaluate. I don't think we will do many GTL projects, but I think having one that fits into the demand patterns of the future makes a lot of economic sense. And of course, it will be subject to the same intense scrutiny that we have for all our investment projects. On the outlook, well, yes, it is substantially derisked. I've learned over time that it's never a good idea to stand here and to guarantee things in a world that is as uncertain as it is at this point in time. So when I mean substantially derisked, the emphasis is very much indeed on substantial. It is things can happen. We still have to start up and deliver a few projects. We said we need another $5,000,000,000 of cash flow from operations to come from projects that are starting up. Well, that is basically Appomattox and Prelude and a few others that is happening. So you can judge how substantial substantial is, but I think it is by and large there. I think other risks are, of course, continuously operational risks, which I believe we have a pretty good track record to delivering operational excellence. But it's you can never guarantee everything. And even though we have said, listen, it's the for instance, the buybacks are subject to the macro and oil price that is very important small print. If the oil price would collapse to below $40 for the next 18 months, it's going to be tougher to deliver the $25,000,000,000 than when it bounces back or stays in the range we're at currently. So it is just sensible prudence to make these important qualifiers. For the period 2021 to 2025, well, let me answer your question in a different way. It says potential. Potential can mean more than 125. I'm very confident that we can put numbers out like this. We have built, I think, or we are building, I should say, a reputation of credibility with this company, which is was very much needed. That's what all of you have been telling us for quite a few years. The last thing I would want to do is to put numbers out there that we know are going to be almost impossible to meet. Believe me, when we put out $125,000,000,000 we know what we are doing. Any thoughts? Yes. So perhaps a few points in terms and you think about what was ahead of the company versus where we are today, I think we've created a much stronger sense of capability and confidence in our ability to execute against very ambitious targets. So whether it be bringing more capital discipline into the organization, being more cost effective, cost efficient across the organization, reshaping the portfolio, Where I started the conversation, the company has just delivered across the board. So I think our capability and our confidence in our ability to deliver ambitious targets has increased over the last couple of years. As Ben said, in terms of looking out to 2020, what needs to happen to achieve those numbers? I think a lot of that has been largely derisked. Those are a couple of large projects that are currently happening. If you go out to 2025, I think we've provided a lot of transparency in the pack today and in the speeches today in terms of what's going to move us from where we are today to 2025. And you can see your way through it quite easily. There's no first of all, this is organic. This doesn't require any kind of material inorganic activity for us to achieve this 35,000,000,000 dollars of organic free cash flow. And by theme, you can see where the additional incremental cash flow is going to come from. And there's nothing heroic in those numbers. It's all within kind of the sense in the realm of very possible. We've also provided transparency on the upstream business in terms of how things are playing out NFA, pre FID, post FID. And what you see is most of those the production and the cash flows associated with that are things that are already in hand. And in that sense, I have a good basis of standing up here and saying 125,000,000,000 dollars or more. I think the other piece that I would want to mention is just also providing a bit more flexibility. It is 7 years out. The world can change either positively or negatively. There may be different opportunities and different reasons for us to make different moves that we can't anticipate today. So I think having that potential in there is a sense of the capability, but also just reflecting, as Ben said, a very dynamic environment. Okay. Yes, table behind. Biraj Moll from ING. I have two questions. 1 about your exploration at €2,000,000,000 in that range. Do you think it's enough given the fact that you, for example, don't have a large resource base or a new frontier like Exxon, Giana, etcetera? And my second question is about renewables. You have now focused on power or electricity. Does that imply that you have stored other source of renewables or hydrogen or CO2 storage and that sort of things? Maybe you can elaborate on that. Yeah. Good. I suggest the details of the exploration question is probably best asked to Andy and Will going forward. But the very short answer to this is that, yes, we do believe we have what it takes to deliver the sustainability in upstream and integrated gas well through the 30s. You've seen we have included even some production outlooks in terms of how we see production develop, how much will depend on exploration, we believe we have what it takes to fill these wedges going forward. On renewables, I think maybe a bit of clarification. So nothing really has changed in terms of how we this business or how we approach it. Our focus when we talked about new energies before still is very much on the whole range. So on biofuels, on hydrogen, but also on power. But we thought based on a lot of comments and feedback we got, it is probably better to just say, let's take the fuel components and start reporting them under our products. And when we talked about power, we elevate that to a strategic theme in its own right. It's cleaner, it's clearer, it's easy for us to also disclose information. As Maarten said, we next year we plan to progressively disclose a little bit more how the business looks like. And it will be easier for you to see what not only our ambitions are, but also how we are delivering those ambitions. But we're still very much on track to pursue opportunities in these other spaces including CCS for that matter. Can we move to Irene? Thank you. Irene Himona, Societe Generale. Two questions, please. Firstly, you've great very materially today your free cash flow target by €8,000,000,000 to 2025,000,000 of which €5,000,000,000 is from downstream oil products and chemicals. I wonder if you can share with us, Ben, your view on what needs to happen to refining margins for the plan to deliver those targets? And secondly, Jessica, the role of disposals going forward, obviously, you completed the €30,000,000,000 But looking at Slide 33 sorry, €70,000,000 you seem to be signaling a halving in your number of refineries during sort of now in 2025? Thank you. Well, let me take the first question and you just got a second. I think nothing heroic on refining and chemicals margins. We have a fairly conservative outlook on chemicals margins. I think the uptick that you see in the chemicals cash flow delivery is very much these very large projects coming on stream, yes? So we've just earlier this year started up A04 in Geismar. We are we have started part of the non high expansion, the doubling already, but we still have a major second phase of that to come a little bit later. And then of course, we have the Pennsylvania cracker, which is a Of course, in the past, didn't do very much because we reinvested all the of course in the past didn't do very much because we reinvested all the CFFO into these large projects. And then on top of it, we will continue to invest at the sort of levels that you have seen before. So this is basically the current investment business. Margin assumptions, very conservative. In Refining, we are even more conservative. In Refining, we are even more conservative. In Refining, we are even more conservative. In Refining, we are even more conservative. In Refining, we are more conservative. In Refining, we are more conservative. In Refining, we are more conservative. Very conservative. In refining, we are even more conservative. We have basically said, listen, going forward, of course, there will be disruptions in the refining system and it may be transient pockets of value and everything else. But over time, we have learned the most prudent approach to refining margins assumptions is to take mean reversion to historical averages as the way going forward. It may well be that from time to time like with IMO, we have a blowout and we will take advantage of that and make sure that we are well positioned for it, but we're not going to rely on these types of things to make long term investment decisions, also not long term portfolio decisions. So that's our approach, which is actually probably more conservative than some of our competitors. On the portfolio piece, portfolio optimization will continue to be part of our strategy and way of running all of our businesses. Refining has a particular focus at the moment in terms of ensuring we've got the right positions, the right integrated positions integrated from a market perspective or integrated with our chemicals business. For the purposes of how we're looking at the $125,000,000 in the modeling, I'm not sure if you caught that or not. But we're assuming some $20,000,000,000 in divestments between $21,000,000,000 and $25,000,000 So that's the quantum that's considered in terms of the cash generation over that period. It's not a firm target. Yes, it's also part of what comes into this potential word. It's we will do what makes sense for the company and for the business. And but we think 'twenty is probably a good number to work with. Okay. I think you are next. Yes. Thank you very much. Natasha Landor Mills from Saracen and Partners. I just wanted to ask about the net carbon footprint ambition, which you've shown incredible leadership on, but also how that is consistent relatively speaking, investment, I would say, in terms of relatively speaking into fossil fuels. We've heard a lot about growth. We've heard a lot about exciting opportunities for growth. And not really sort of seeing how that circle is squared, if you like, with what you're saying about bringing down emissions. And ultimately, I think you referred to at the very beginning, which I think again is something to be applauded doing no harm. So it would be very good to understand how your CapEx plans, which you are articulating here and plans for growth square with that? Thank you. Okay. I think probably I will give a very short answer to it. But I suggest that we don't have a breakout group on Nat Karma footprint, but it we're happy to take that also offline in a lot more detail as we have recently done with a group of investors that really wanted to understand to what extent and how exactly our net carbon footprint ambitions are consistent with less than 2 degrees and everything else moving forward. But it's very important to recognize that our net carbon footprint is the footprint of the products that we sell, not the assets that we build. And you have to bear in mind that for every barrel that we produce, we refine 2 barrels, but we sell 3 barrels. And in the end, of course, it doesn't really matter whether the 3 barrels that we sell, 1 comes from Shell and 2 from somewhere else or 1.1 comes from Shell and a little bit less from somebody else. What is important is that the energy products that we place in society in the energy system are increasingly low carbon. And the first thing to do is to put more gas into the mix, more biofuels into the mix and then ultimately, as we can scale this up, also more renewable power into the mix. That actually is less capital efficient, less capital intensive. And but ultimately, when you drive down the net carbon footprint of the products, it doesn't necessarily mean that we have to stop investing the production of some of these products in our own facilities. It may mean that we will cause investment that we participate for instance in generating facilities in new energies in offshore wind or in solar. We may want to recycle that electrons cause new investment etcetera, etcetera, which is fundamentally a different investment model, a different business model than the traditional capital heavy investment model that is associated with producing molecules. So therefore, tracking investment as a means to see to what extent we are on track with our net carbon footprint is simply not the right approach. The right approach is to look at our net carbon footprint per se. I can tell you what we are doing is entirely consistent with meeting the 2% to 3% that we have set out there as a reduction for 2021 and ultimately of course meeting our ambitions. We'll go to these three tables, but we start with the first Thank you and thank you for the presentation. Two questions if I could. The first one, can I come back to the inorganic opportunities that you referenced and the idea that they have to be evaluated on a case by case basis? What limits do you put on those? And how do they compare when I think about that potential 125 dollars Do they always have to compare with the world class investment case of buying back your own shares? And then the second question is on capital discipline. Why is a 50% premium in CapEx to your sustaining CapEx budget the right number? And within that, what, if anything in the last 12 months has the investment committee said no to? Just as an example of discipline. I think let me start with the last question and you can I think we said no to quite a few things? I think it would be probably commercially unwise to say what we have turned down and which opportunities we walked away from. But believe me, we say no to quite a few things because we simply do not have the capital space to do everything that our our businesses can dream up. And believe me, they know very well that there is a constraint. And actually, that's a very good dynamic as well. What we have seen is not so much that people come back and say, well, I meet the hurdle or my breakeven price is low enough for you to find this an attractive opportunity. Everybody knows there have to be the next best project. And that actually brings a sort of discipline that we really enjoy. And that's why we will have a capital ceiling going forward as well. Now why do we work with a higher capital number than what we would strictly need to sustain the business. So I said, we would only need to invest about $20,000,000,000 of cash CapEx to keep the CFFO at 2020 levels. And we want to do more. As a matter of fact, we have been doing more. Yes. So we have been doing about €24,000,000,000 in the last few years, which of course we're very much constrained years as well. So we have been investing over and above the strict sustained levels. That's the reason why we are looking at growth in our free cash flow, of course, in these years and in the next few years to come. But at the same time, I think this is what you want from us. You want us to grow value in the business. So therefore, if we have the room to maneuver, if we can invest more to create even more value, I think that should be a welcome opportunity, particularly if every dollar cash that we invest in our business, we match that and more with extra shareholder distributions, yes. So don't think that the extra growth that we have talked about in our CapEx, cash CapEx numbers are basically coming out of shareholder distributions. If you do sums, you will find that 1.5 times that growth goes to extra shareholder distributions at the same time, which I think is roughly the right thing to do. Nobody would want to tell a story where we say we're going to profitably string the business. Don't worry, it will be good at the end of the currently have as well as a track record I hope that will allow us to do so. Okay? We just Sorry. No. Inorganic, yes. Sorry, Lydia. I just want to quickly make one comment on the last question as well. The better we are at clarifying our strategy and our portfolio objectives and the better we are with capital discipline and capital allocation through time, the organization also self selects. So I'd say that there's a bit of high grading that's happening within the company. And that's not to say things don't make it there and then we still have to say no. But I'd say that a healthy organization, actually, that becomes smaller over time. So it was just one point I want one other point I wanted to make is that, as I mentioned, there's a number of criteria. Returns are the most obvious, the value proposition, etcetera. But I do want to say some of these other license to operate elements are important to us. So things like the CO2 profile, etcetera, the HSSC profile are meaningful. There are reasons we don't do projects because of those as much as some of the value characteristics. Inorganic, it is a bit case by case, if you will. Again, it needs to fit within the strategic context. It needs to fit with the portfolio objectives. From a value proposition perspective, we're looking to at least achieve above our weighted average cost of capital. That should be kind of the minimum. And then for each of our businesses, we have different return expectations. Some of our businesses have higher return expectations than others for various reasons. And so need to make sure what we're doing is compelling from a value perspective. But it's going to be a bit bespoke by strategic theme in terms of how we define what that value proposition needs to look like. It's Martin Ratz, Morgan Stanley. I wanted to thank you for Exhibit 13, which is very interesting because it allows quite a bit of visibility on what CapEx is versus sustaining CapEx and therefore which business you want to grow and which businesses you perhaps more sort of want to run to be flat. And there are 2 things that I thought were sort of standing out. And one is shale and the other is oil products. I'd expected that shale arguably would have quite significant ambitions in shale. And I don't ask you to comment on things the press, but you were frequently mentioned around the BHP assets, around Endeavor. In the Energy Transition Report from last year, you mentioned there were a whole lot of positive comments around how shale enables the energy transition through its short cycle nature. The actual level of CapEx versus sustaining level of CapEx in in shale seems only a relatively small difference. I mean, I guess you're running it for growth, but maybe not so much. So my first question is, is there perhaps a little bit of a cooling down in the internal shale debate on shale relative to where you maybe were 6, 12 months ago when you arguably looked a bit more optimistic about this particular sort of theme. And the second one, which is on the flip side of this is oil products where sustaining CapEx is 0.5%, but you're planning to help to invest 5% to 6%. And it sort of builds a little bit on Irene's question. When I think about oil products, I think about refineries and I think about petrol stations and maybe that's arguably a little bit too simplistic, but it doesn't seem like you're going to invest large amounts of money in refineries. And at the same time, petrol stations are not particularly capital intensive either. So that incremental, what is it, euros 2,000,000,000 of investment above the sustaining level in oil products, can you talk a little bit more about sort of what that is then? Yes. Happy to do so. Shall I start and then I'm sure you will have a few points there? No, I don't think there is any cooling off in shale at or a change of heart or whatever else far from it. The investment levels that we show is to indeed sustain our cash flow generation at 2020 our cash flow generation at 2020 levels. And indeed, we do believe that for shales, we need to invest around 2 point $1,000,000,000 to sustain it at 2020 levels. It's not at today's levels, that's next year's levels. And of course, we are in a significant ramp up phase at this point in time in our Shell's business. If you can't remember the slide now, but to go back to the slide that Wael showed, then you will see that we're still significantly ramping up. To keep it there, dollars 2,500,000,000 To continue to grow, which we intend to do as well from our existing positions, maybe with a few sort of fill in M and A bits and pieces here and there is going to be the sort of level that you see here $3,000,000,000 to $4,000,000,000 So we think we can build a very strong business through essentially organic maybe with a little bit of add on which you tend have in this business to create more contiguous blocks and to infill some acreage, etcetera, etcetera. Could we do more? Yes, maybe we could. But again, we don't rely on it. We can generate this $14,000,000,000 to $17,000,000,000 of organic free cash flow in the Upstream with the sort of investment levels that we're looking at here. If good opportunities would come along, you would want us to look at that, whether that's in shales, whether it's in deepwater, whether it is in chemicals and eventually maybe even in power. But that is of course something for the somewhat longer term. So no change. And again, I would like to emphasize the point that the little caveat that this is without inorganic doesn't mean that we are looking at inorganic and finding a way to bump our CapEx up. Our CapEx up. It basically means to say we can deliver the $125,000,000,000 or more without inorganic. Yes, that's a very important point. On our products, a very important point. On our products, I think you're right. We're not going to grow an awful lot in refining, but we may do a bit. Yes, it of course, we have been historically strong in Europe, in North America and a few sort of near Asia and Africa positions. We have one good position in Singapore, but we may want to have a little bit more access to refining capacity in places like China, etcetera. So we have some designs to continue to invest and to continue to look at opportunities in the East where we do think it makes strategic sense to feed our supply chains that we have in that part of the world. But then a lot of it is indeed going to be a marketing growth. AMSLR retail station doesn't cost very much. Well, if you do 10,000 of them, it's a little bit more. And at the same time, we also want to strengthen our lubricants business and we want to continue to invest in our supply system and network. Maybe even when we reduce our refining business in areas where we want to have less exposure, we have to backfill that with distribution assets so that we can continue to serve the market because the marketing business is such a profitable part of Shell, strong double digit 20 plus returns percent returns, but we have to have some infrastructure also to continue to grow that business as well. And finally, on our products, bear in mind, this now includes some investment on biofuels where we intend to also make a major push. Next table. Hi, thank you. Christian Malek from JPMorgan. Two questions, please, and thank you for a very comprehensive presentation. The first question is with regards to resilience of the portfolio to low oil prices. Obviously, oil is volatile, but you're planning the entire financial framework around 60, 70 real to nominal. Within the capital framework, you've set out plenty of targets on CapEx, cash return and gearing. But the priorities as far as what gives in a weaker environment seem a bit more vague. You just have a quite nice clear sort of list of priorities going from left to right. So what's your commitment to return cash in the context of a weaker oil price outlook? Can you quantify minimum target? And also put another way, what comes first, harvesting or growth? Because it feels like it's not clear at the moment where you're running those two tracks, how they converge into lower price. And the second question linked to that is Slide 29, where you talk about building resilience using flexibility for your balance sheet. To what extent, say, you are in a position where you have dekked substantially? Does the focus become an energy transition? Because obviously, there's a lot of chatter on M and A and share and all the opportunities you can look at. But ultimately, if you're trying to solve for that as the end game, does it mean that any extrammer that you have should be really prioritizing power or something else even if it's a long term strategy as opposed to anything within the oil and gas sector? Thank you. Sounds like a question So how does this play out in a lower oil price environment, I think, is your first question. And a couple things. I think what we've demonstrated over the last couple of years is a pretty impressive capability or capacity to deal with a very low price environment and still be able to meet all of the commitments we just I highlighted at the beginning. So our ability to turn off the script program, to start the share buyback program, to deleverage, was during periods of time where obviously oil prices were not always favorable. So I think the company is structurally stronger today in terms of its ability to manage downturn. Our balance sheet is in a very different place today than it was 3 years ago. Those are all things for us to leverage should there be a challenging macro environment. The relationship of cash flow to oil price remains the same. Dollars 10 change is about a $6,000,000,000 impact on our CFFO. I think what we've laid out is a commitment to our sustaining CapEx. So we need to sustain your CapEx. But what you see is a company that actually has a tremendous amount flexibility in its capital spend in terms of maintaining the level of cash flow needed to achieve what we're achieving today, some $50,000,000,000 plus of cash flow from operations. So I think we have embedded flexibility in our company because of the company we are today and how relatively speaking the sustained CapEx I think is low relative to the total cash flow from operations. I think going forward, we're going to try and keep doing what we've done, which is balancing all of these things. Our balance sheet doesn't need as much attention as it did over the last couple of years. So at this level of cash flow generation, we don't need to allocate that cash back to the balance sheet as much. There's still some of that needs to be done over the couple of years, but that's going to free up more capacity for us to deal with challenge. We're a more capital efficient organization, a lower level of sustaining CapEx to maintain this level of cash flow. That creates some capacity as well. So our goal is to continue to deleverage to increase shareholder distributions. There may be moments in time where that's a bit more challenging, But I'm confident in terms of our ability to continue to manage balancing all three of those things going into the next decade. Let's take these tables here. Yes, 1 and 2. Thijs first. Thank you. Thijs Berkelder, ABN AMRO. Two questions. First one, what are the key reasons behind demoting deepwater from growth to stable boring core? Secondly, yes, maybe coming back on more time sheet, deforestation by 2025, what kind of CapEx will be spent on, let's say, reforestation. On reforestation and what part of what part is it, in Org Products or in other segments? Okay. Deepwater. I mean a lot of people would look at growth priorities, which is where Deepwater used to sit as the most exciting part of the story, of course. We don't have to cover dividend. We just can spend everything that we earn and we build a lot of new things for the future. That was seen to be the highest aim within the industry perhaps. What we've been very clear on inside the company, the highest priority you can aspire to is to be cash engine. Now the point is that if you look at the 7 strategic themes that we have at the moment, nearly every one of them is a cash engine. They all contribute at this point in time with the exception of power for some time to come because it's such an immature business to covering the dividend. So they all have been promoted to cash engines. Now to that 6 cash engines and one emerging opportunity didn't feel like the right message. So we thought let's look at it in a different way to communicate some other aspects of our strategy. Our strategy and the way we prioritized and categorized these strategic themes was very much driven by clarity on the sources and the use of cash. That was the story post BG. We had to be clear that up to now we were not just having everything in growth mode because we would get into trouble with shareholder distributions, yes? So we said very clearly this needs to be for dividend cover. Here we can continue to spend a little bit more on growth. Now going forward, I think it is better to articulate the strategic posture of the company differently, which is very much we believe in Upstream to be at the core of Shell and we will sustain that business well through the 20s into the 30s, which was a concern that we have heard a lot of times before. You guys talk about energy transition so much. Maybe you are leaving Upstream behind. Absolutely not. We believe in strong and resilient cash flow from 1. So I think that articulates the portfolio strategy better than to just one where we just say, here's the cash coming from and there's the cash going to. That by the way is of course still provided as clarity as well. Reforestation by 2025, I don't know if that's to be perfectly honest. We said let's get on the journey of nature based these types in these types of nature solutions that will help us a long way in introducing carbon offsets for our motorists in a number of countries. Depending on the speed, this will get uptake and we roll it out. It will be more by 2025. At this point in time, we don't have a clear line of sight how much it will be. John first and then we go to the table there after. I realize I'm going to run out of time. Apologies in advance, but it will be available of course also during lunch in the afternoon. But John? The first question is sort of an observation and a question at the same time. It strikes me that over the 5 years or so that you had to be fairly strict on the way that you determine the financial structure because you were from the place you were coming to, to the place you arrived at. And it seems to me, this is the observation, that it created a degree of structure that also meant that you had less freedom to operate outside. And I sort of referenced 2 transactions in the last year BP's $10,500,000,000 BHP, Total waking up on a Sunday morning and writing a check for $9,000,000,000 neither of which I think you probably could have done without having to go through enormous amounts of financial gymnastics on every quarterly call for 2 before and 3 after. So what I'm trying to understand is, 1, as you've got the point that you've got to, are you signaling now that with the way that you're describing potential future M and A, there's a little bit more freedom as you see it in that context, but also I want to understand what are the touch points we need to understand that are the perimeter around what you'd likely to do? I'm thinking perhaps maybe is it ROACE and gearing as the ways we should think about it? The second question is, I was struck way back when you did the post BG thing that the guiding principle and everything you were doing was this world class investment case, which it seemed to me was a sort of broader view of how Shell should fit into the market as a whole and not just within the sector. And of course, again, as you had a sort of structured approach for the 1st 4 or 5 years, but you've got more freedom now. And the key freedom, I think, is this $125,000,000,000 because it's dividend buyback. It's there's potentially more cash, which could go to debt reduction, etcetera. So as a Board, as a senior management group, have you done work looking at how you should position Shell in the context of equity markets? Maybe you could share some of those thoughts with us about how you think about this sort of how you use the largess moving forward if indeed that is what happens? Thanks. Okay. Jessica, if you take the second question. The financial parameters or parameters, I think they were pretty clear, John. I mean, we at the time of the BG transaction, we of course had to stretch the financial framework. We didn't know how much that would be because we did this deal relatively early still in the downturn. And we had to make some very clear concrete commitments to our shareholders that we knew what we were doing and we were going to constrain ourselves. And the story is quite simple. So where we are today, we do roughly $50,000,000,000 of CFFO. Another $5,000,000,000 may come from projects that are starting up. We may get another 5 from divestments. So we have 60 to play with, yes. And then we have some debt reduction that's still required, say 5. We have a buyback program of 25. So 10 a year roughly $15,000,000,000 of dividend. So that's another $30,000,000 So we have $30,000,000 left and that's it. There is no more. That's very clearly the story. You may say, well, that sounds very constraining and everything else. Yes, that's €30,000,000 left to invest in the business while we're also distributing €30,000,000,000 Yes. And that's the reality that we found ourselves in post BG, where we had made very strong commitments that I am still very proud of that we made them and that we are going to deliver on. Space to understand where we will be. Fortunately, we will be in a much stronger position. We will have more CFFO. We will have the fact that we invested at sort of investment levels well above our sustaining CapEx basically means that we now see the effects coming through in the early 2020s of increased free cash flow. So we can have an even faster focus or a stronger focus on value growth creation. And I think at this point in time 2019 all the way up to 2025, yes, we also want to give ourselves the opportunity to do inorganic things if that makes sense, yes. So very clearly, we continue to have a cap on what we spent this time around. It will be 32,000,000 and I'm sure it will we will find plenty of ways to exceed that gap if we wanted to. And I look forward to having the exact same dynamic in the Capital Investment Committee to find out what are the best opportunities. Then on top of it, if we wake up on a Monday morning and we find there's a great opportunity there's a great opportunity to take advantage of, I don't think it would be wise for us to say, well, we made commitments all the way to 2025. We're not going to do that. We have to make sure that if we consider something like that, we can come back to you and say, this really makes sense. This is value accretive. It's not going to go at the expense of the 125,000,000,000, yes? This really makes sense. And we have to convince you and we have to do it with everything, not with maybe something like $1,000,000,000 or $2,000,000,000 that will just have to fit in into the fray anyway. But if we do something large, which we may well do and we're not working on anything at this point in time, I want to have the freedom to be able to contemplate that. And I don't want to tell the organization, stop thinking about large value accretive transactions because we somehow ruled ourselves out of that game. That would not be the right approach for a company our size. As you would expect, we spend a considerable amount of time thinking about how we position ourselves in the equity market. At a business level, we consider how each of our businesses are competing within their sector within at the RDS level, how do we differentiate ourselves as a company strategically? And then ultimately, what is the investment case we're offering to our shareholders and hopefully new shareholders in the future? There's not one shareholder voice. So depending on who I speak to in the room, some may want me to increase dividends, some may want me to cut dividends. We have to see through that and basically focus on what we think is the most compelling investment case and what do you get when you buy Shell. And what you get when you buy Shell, we believe, is a company with a differentiated strategy that has a view on the future, that's going to be resilient in the future, and is going to have the largest cash flow in the sector and have a compelling return case for our shareholders, all the while maintaining a resilient balance sheet. So we think overall, that's a pretty compelling case that Gordon. Just Gordon. Just on the distribution, I think you mentioned Jessica earlier in your discussion that you expected to reduce the overall cost of the dividend, which implies that quite a lot of that incremental distribution is going to come by balance between the balance between share buybacks and dividends as you see them going forward. And then just sticking with the sort of financial framework idea, again, you mentioned total debt. And I think I heard Ben just mentioned cutting it by €5,000,000,000 Are you sort of thinking that €50,000,000,000 on an IAS 17 basis is the kind of target number that you're looking for to get to? And then after that, it's whatever flows out from the cash flows you're generating? Thank you. Good. So the absolute level of our dividends matter and just in the way that we want to be resilient from a balance sheet perspective with respect to debt. We have the kind of same concept, what is the right kind of total dividend level that is appropriate for the company going forward. I think we've demonstrated there's kind of no concern about our dividend level or no concern really about our ability to grow it. But how do we grow it appropriately and do it in a sustainable and resilient way? And so what we're trying to signal is a relationship going forward as we consider increasing dividends per share through time to offset that with share buybacks so that we don't have an ever increasing dividend burden through time. There's not an exact math formula. It's not it may be different one quarter to the next. I'm just signaling this as people will probably trying to understand perhaps what the algorithm is that's going to solve for all that. But I think it's the principle that we're trying to convey that we're paying attention to this. But we want to grow shareholder distributions. We want to increase dividends per share, but we want to do it in a way that's sustainable. And we're going to find that balance through time. Yes. And on the debt level, it's actually yes, it's 5 a year. So it's getting more it's below the $50,000,000,000 We're getting down. On an IAS 17 basis, it's closer to 15% than 20%. Yes. Okay. Jason, I'll ask you after that. Thank you. Chris Coupland from Bank of America Merrill Lynch. Two questions, if I may. Firstly, Ben, you've been very clear about allocating 50% of that step up in CapEx to also a step up in shareholder returns you clearly, as we've discussed, now have room to do a little more. So assuming that hypothetical next BG deal comes your way and you spend another question number 1, just to be very stupid and clear about it. Back to shareholders? That would be question number 1, just to be very stupid and clear about it. And secondly, in your 2025 cash flow outlook, I wonder with an increasing share of both investment and cash flow generation from downstream, are you telling us today that your oil price sensitivity will be lower than it is today? Is that something you are actively looking forward to or not? Thank you. Let me take the first one and then Jessica the second. Your question is indeed hypothetical. So any answer I would give is hypothetical as well, yes? And I'm not trying to dodge it. I'm just trying to say that we will have to communicate with you much in the same way as we did the BG deal, what it is that we are trying to achieve with it and how we're going to accommodate it. And again, without wanting to box myself in with anything, yes, of course, it has to make sense to you as shareholders that we would pursue something like this, which is it needs to be accretive of value and everything else, but it also needs to fit within the financial framework. How we would accommodate that? Yes, probably through a set of measures. We probably find ways and means to of course get synergies, cost offsets, maybe suppressing our normal organic investment for some time and indeed finding ways to return more to shareholders. But what exactly that story is, I cannot tell you. It would be foolish to somehow give you a formula of something that I don't even have a concept of what it is. But believe me, the main point of making the statement was that we do not need inorganic to get to 125 plus $1,000,000,000 of shareholder distributions. But if we find something really compelling, which we have to convince you of, we will not rule it out a priori. So I think those are the right connections that you're making in terms of the direction of the company. And if you connect the net carbon footprint frame that we provide to then our strategy and our focus on the transition themes, what that translates to is a company that's more market oriented, is changing the product mix of the company in terms of providing consumers. And over time, you would expect less exposure to oil because of that. It's a big company. These things don't happen overnight, but directionally that's correct. Getting some frantic signals that we're out of time, but we'll do 3 more questions. Is that okay? Okay, Jason. And then I will have 2 more in that part of the room. And again, apologies. Next time around, I'll start at that side. Thanks. I'll just ask one. It's Jason Gammel, Jefferies. It seems to me that the amount of growth CapEx that's being directed to the upstream is a change in thought process. And even if I include integrated gas, your CapEx allocation into the upstream is going to be amongst the lowest of your competitors. And I normally think of the upstream as providing some of the best rates of return are available to an oil company. So how do you think about the evolution of upstream business? And would you even challenge me then that you don't think that the upstream is going to provide superior rates of return on a move forward basis relative to some of the other businesses you're investing in? Can we bring up slide 19 again, the one that we had earlier with the table on it? 13. Sorry, 13, yes, 13, apologies. Yes, so indeed you're right. If you look at just the upstream themes per se, we say to sustain this business we needed about 11, but we're going to spend 11 to 13 minutes. So we will grow it modestly. And that basically means we're going to sustain the cash flows we have. So it's not production volumes or anything else. It is the cash flows well into not just the next decade, but a decade thereafter. The integrated gas is on top of that. That of course has an upstream component in it as well, yes. And you see that we proportionately invest more in it because we also see that the business has more running room over the decades and actually is a business with very compelling returns also from a market perspective. I think you're absolutely right. If you look at many of our upstream investments, particularly at the sanction moment, they have superior returns. But if you look at over the cycle on average, they are pretty much in line with the rest of our portfolio. If you look at this particular slide, our transition themes, if you look at the free cash flow we get for the investment levels that we are going to put into it, I think our transition themes are actually very, very compelling as well. And we believe that leaning deeper into the transition is positioning the company better for the future of energy. So yes, we will do both. We will sustain our upstream, GDP type growth etcetera. I think that's really all there is to say about it. Jessica, anything you want to add? Just to highlight that the return profile of our marketing business and our chemical business is some of the most compelling returns in the company. So if you were to ask the downstream people in the room, they'd be saying more capital should come towards us from a return perspective. So I think it's just a recognition of the strength that we have there. And I would hope through time that's supportive to our returns. There's one important point to make, which is you could look at this slide and say, oh, hold on. So why don't you just invest more than in these transition businesses? If they seemingly have a higher return or a more bank for the $80 all of a sudden this picture completely changes. And now we are looking at an upstream business that gives us a wall of cash that you could never get out of a marketing business simply because it gets competed away instantaneously. So therefore, to have that type of balance, we know that our business is going to be competitively positioned for the future with a very, very strong upstream core. I mean, this is still one of the largest upstream businesses that we can sustain with all the upside potential that the positioning of our business has, because we have not invested in low margin upstream barrels. We only have invested in high value barrels. I think is the right positioning for the for the company both from an upstream as well as an overall perspective. Okay. We're going to this table here. Michele Della Vigna from Goldman Sachs. Two questions, if I may. The first one is on your ambition to reduce the net carbon footprint by 50 how important how important is a broader application of carbon pricing across the economy to get the consumer behavior there compared with what today is largely a set of incentives on specific low carbon technologies? And secondly, looking at your deepwater business, it's a business with high barriers to entry where Shell has been a leader for a very long period of time. I'm surprised that given the strong free cash generation of that business, given the breakeven on new projects at or below $30 per barrel, the actual ROCE target for 2025 is 10 percent to 12%, which actually is below the average that you target for the upstream. And I was wondering if there are also some accounting reasons Karma pricing is essential, yes? It's we will not get to a Carbon pricing is essential, yes? We will not get to a very significant change in customer behavior or societal behavior without a price on carbon. But it will not do everything. Prices on carbon work very well for people who are highly sensitive to these economic parameters. So industry, particularly power generation, of course, has been. The reason why this country goes more than 2 weeks without coal fired power is amongst others because it has a floor carbon price, which incentivizes that shift away from coal. But it works less well for you and I when we fill up our car. Another little bit of carbon tax in your fuel is probably going to be insignificant. It's definitely not going to make you change your car. You change your car because of other preferences, not because of carbon pricing. So you will find and these are 2 extremes, of course, there's all sorts of things in the middle. But you will find that carbon pricing, yes, absolutely, but not enough. We will have to have other things that will change consumption patterns, that will drive energy efficiency in appliances, homes and everything else much faster and some of which will have to come through regulation as well. All of these things need to happen. Now we can of course do our piece by decarbonizing energy supply. We can do things like putting nature based solutions in place, which by the way are very competitive. $0.01 per liter to offset the carbon emissions from a liter of petrol or diesel is of course at a carbon price of less than $10 per tonne. So it's the most efficient way of doing it. If you do it at scale, it's a loss of forest by the way. But it goes to show that we have a number of tools and techniques that as society we need to deploy, we need to do our part, but carbon pricing is going to be absolutely part of the solution. Doris, you have the honor of being the last. On the teeth. Sorry, I'm sorry. The second time I do this, yes. You're so eager to involve everyone. So the Roache question on deepwater, a couple of things. As Wael pointed out, we've transformed and so did Harry transform the capital efficiency of this business. We've transformed the amount of cash generated per barrel in this business. We're a very different deepwater business than we were a few years ago, and that legacy position on our balance sheet does take time to work through. That does have an effect. The other piece, of course, is this is being modeled at the 60 RT. So that doesn't give you any sense of, as Ben said, certainly the upside or what that might look like depending on what the oil prices are. The actual returns we're striving for in achieving in the business today are, I would say, on average above those numbers. Yes. Okay. Now then, last question. Thomas Adolff from Credit Suisse. Two questions, please. Firstly, deepwater versus shale. Previously, you always argued that you wanted shale to be similar in size to deepwater. You've reshaped your strategy now. Is that still the case, your longer term ambition? And then secondly, your gearing today post IFRS 16 is at 25%. Presumably today, we're in the build resilience phase. You want to bring What happens to buyback? What What happens to buyback? What happens to CapEx? Will CapEx go down to $20,000,000,000 sustaining level? Or do you cup both? Thank you. Thanks very much. Let me take the first question again. The water shale balance. Yes. I think nothing really has changed there Thomas. And again, it's I would like to emphasize that the if you look again at this page 13, you see that we can build a very significant shale business in the early 20s with the sort of investment levels and the resource base that we have. This assumes no major acquisitions. But it is of course, it's a faster treadmill that we're on. So therefore, we would continue to have to add acreage to it. We can do it in an inorganic way, small steps or we can do it in a larger organic way and balance out a little bit more the shales versus deepwater sort of sizes in terms of capital and free cash flows that we have there. I think that still makes a lot of sense to do, but I've been very clear also every time I said, I don't mind having a rebalancing between shales and deepwater in favor of shales. We will only do this if it makes sense, yes? So first of all, if there is a compelling proposition that is really competitive for us to take on and that will then fit in the financial framework. And on top of it, we'll displace other capital, which is most probably also going to be deepwater capital. So it needs to be really compelling as well. We are not growing the business for growth sake or for size sake. We're going to do it to have a more resilient portfolio going forward. We to manage in a difficult macro environment is that there are many levers for us to pull, but we are a much stronger company today, and we have more options, more flexibility than we did a couple of years ago. So we have, as we indicated, substantial amount of CapEx that we have choice around in terms of growth. We have flexibility with our balance sheet more so today, and I think we'll continue to increase the amount of flexibility we have with our balance sheet. And then we have a significant amount of excess cash that we're going to generate where we can make choices around dividend growth or share buybacks. Now which one of those levers should be pulled at any moment in time is very circumstance dependent. CapEx can be more or less flexible depending on nature of the project, the moment in time that that's happening. Your debt, depending on where you are, you may have different views of what's appropriate to do. We're pretty firm about the or postpone a dividend per share growth at a moment in time. Or postpone dividend per share growth at a moment in time. It's really circumstance dependent. I think what's important though is that we're going to try and manage all of those. What we're clear is what we're trying to achieve as a company, increase shareholder distributions, grow the value of the company and maintain a resilient balance sheet. We're in a stronger position to do that today than we were a couple of years ago. Okay. I realize that there's a lot more questions in the room, but don't worry. We have, first of all, lunch. If you wanted to tackle me or Jessica on a particular question, feel free to do so. And of course, in the afternoon, we have very detailed breakout groups on 3 main themes. I'm sure that we will have some instructions for that. Mano, are you going to give them or anybody else on how we circle through the different breakout groups in the afternoon? Yes. So people will be kept in the right room. So your lanyards have different colors, which will mean that you start in a particular room, But people will take you through those after the lunch. Okay, very good. Thank you very much for your attention this morning and for the rest of the day. And I look forward to talking to you a little bit more as we progress through the afternoon and into the early evening. Thank you.

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