Shell plc (LON:SHEL)

Status Update

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Sep 8, 2017

All right. Good morning, ladies and gentlemen. Thank you very much for joining us this morning. My name is Georges Menon. I'm working in Investor Relations and I take care of investors and others in Europe. The purpose of today's session is to give you an introduction to the latest work we've done on the modeling of global long term energy supply and demands, some of our scenario thinking, but also to illustrate how we are actually including this work, leveraging this work in our actual decision making process. So that's the main purpose of today. We think it's relevant to investors for a number of reasons. One of them is that our communications at the moment are very focused and rightfully on short term and mid term performance. And we want to give you a sense of assurance that this is not happening at the expense of our longer term strategic thinking. We also want to give you a sense of how we include the complexity and uncertainty of energy transition in our decisions to actually future proof our business. Also through a few examples, we'll share with you some of the insights we gained through this work, for instance, on electric vehicles. This work and we'll talk about that is, we think, relevant for investors, but also very relevant to our customers, our partners, our regulators. And we also leveraged this work to differentiate further our interaction with these key stakeholders. And it will be illustrated during the presentation. Overall, think of this presentation in the wider context of our existing communication on energy transition, portfolio resilience, but also of our support to TCFD. So that's the bigger context of today's presentation. So to take us through the main story today, we will have Guy Alton, who is our Executive Vice President for Strategy and Portfolio and Wim Thomas, who is our Chief Energy Advisor. They will take you through the main presentation for 45 minutes, followed by 45 minutes Q and A session. Following which, we will have a bit of time to mingle at the back if you have further question to the presenters or to some of my colleagues from Investor Relations. Without further ado, Guy Win, over to you. Thank you. Thank you very much, George, and I'm really pleased to be here today. So this is the usual let me start with the usual disclaimer note. So I'm certainly going to be talking about the medium and longer term, so you know how to put that in context with your investment decisions. Right. So you know the context upon which Shell has talked a lot over the recent years, particularly since Ben's come in place about our strategy for the future, all inclusive and focused on being a world class investment. Now today, we're going to talk about some of the elements about, firstly, how we came to shaping the strategy that we're now following, inclusive of this element, and then particularly the role that scenarios play in helping us address this. We're making good progress on the strategy and but I'm not going to cover the details of that too much today. But you can see that many elements of it made good progress from the quarter 2 results. You've seen the IR program also helping people to further understand the context that we're operating in. So the LNG outlook was provided earlier this year. There'll be a chemicals event now upcoming soon. And then as we move through the latter part of the year, we'll also be broadening and giving you more insights into another important part of our strategy that we're building on, Fran, and advised you on last year in Capital Markets Day, which we'll also talk a lot more, particularly also on our Oil Products and Marketing businesses, which you'll hear in a minute, are a very key part of the future. Well, that's the broader context. Let me come then to the purpose of my talk, which is about how Shell goes about thinking about the future increasingly in an increasingly uncertain world. Now indeed, that's the role of my strategy and portfolio team is to help our executives, our board make better decisions under uncertainty. Now this has always been a really challenging task in our industry given our massive scale and the long time frames that many parts of our activities relate into and how these forces how these factors interrelate with very powerful forces that shape our industry such as government policy, rise of technology and the changes in technology and then even customer decisions and their preferences all shape and impact on our investment and our business. Now we see these challenges increasing and in fact, go into what many people call a radically uncertain future. So in today's session, we will talk about what's the decision making framework that we use to grapple and make decisions in that context. So I'll talk about the industry context to start with and then our decision framework. And then you'll see from that the key role that scenarios and deep understanding in energy systems under various scenarios play, and that's where Wim Thomas will take you through our, I think, peculiarly unique capabilities in this area. And then we'll have plenty of time for Q and A after that. So our industry has grown massively over the last 60 years. We're about 4x as big as we were back 60 years ago, and that's a massive change. But as for as much as our industry has got bigger, in many ways, it's arguably also pretty unchanged from the past. In the 1950s, hydrocarbons, so oil, gas and coal, were about 80% of the energy system. Today, they are about 80% of the energy system. Solar, PV and wind are less than 2% of the energy system today. Now the challenges that we faced in growing the energy system, they were challenging. We moved into deepwater. We created the LNG business, and we worked out how to operationalize onshore operations. But these were, in a way, focused and solvable, albeit complicated problems. But this won't be the case going forward. We're going to see the energy system change significantly over time. So in the next 3 decades, the 20% of non oil and gas and coal will change to maybe 40%. And within that dominated by PV, solar PV and by wind. And within that time, we could see that PV and wind will be half of the source of a much bigger electrified energy system. Now we'll also see the other major force that we see coming. So the first is that energy transition, as I just described. The second major force we see coming is the role of digitalization. And digitalization impacts not only costs and efficiency about how we more effectively produce supply and different types of supply, but more particularly, how we interact with our customers. We're able to relatively cheaply provide bespoke solutions and engage with our customers in a way that's been either expensive or prohibitive in the past. So the implication of these two forces individually, but particularly together, we see as impact in both supply demand, which we'll also see changes in deep much deeper electrification of our system and then thirdly and more importantly, where profits are likely to be made in this changing energy system. Now that's the big picture shape of the future, but what's unclear is actually the endpoint and the particular pathways to that future because the forces again of policy and technology and individuals' choice will change the actual future path that we go on. And frankly, nobody knows what pathway we will be on. So that takes the problem from being a complicated one to a complex one. And a complex problem, as you would understand, is not suited to forecasts. What we know is that forecast is likely to be wrong. But what we don't know is which forecast or which future path we're going to be on because by the nature, they are dynamic and will change. So forecast based decision making is not fit for purpose. Our old models of expectation basis for key decisions, I think, is also too limited. So rather, we need multiple views of the future. We need to think about future in different contexts. We need to be able to understand and explore boundaries much more than we have done needed to do before. And then our decision making processes need to be agile enough to understand and incorporate such uncertainties as we go about making decisions. Now, this is a much more demanding basis for making decisions going forward, But frankly, it's one that's well suited and leverages Shell's strong scenario thinking in the past. Now for those not familiar with scenarios, they're very simply they're plausible and challenging descriptions of the future. They help us think about complex and uncertain problems, but also in a way which interrelates and include feedback loops and various factors. Now we don't start with scenarios from an energy model perspective. We think about forces that are shaping the global systems And then we think about within those forces, then the energy implications that may come. Now scenarios are not our forecasts and they're not our business plan, but rather they're helpful to help stretch the thinking of our Board and our executives. Now we use scenarios in a whole range of decisions and in our thinking processes. We do them also externally. We engage with people interested in the energy space, be it governments, stakeholders, NGOs, others that are very interested in the general uncertainty about energy. And I think one of our examples that we commonly talk about is with the Chinese government's DRC who have incorporated Shell to help them think about their changing energy system going forward. Now internally, we use scenarios for a range of activities, firstly, in our individual decision making of particular projects. So we will have focused decision based scenarios as to what we see as the potential forces related to that particular investment. These may be competitive forces. They may be government policy. They may be technology changes. We then use them at a high level as well to help us think about the future in terms of shaping our portfolio, What weight of particular strategic themes we want to have? How robust are they in different futures? And then finally, we also have we use scenarios to help us think about the future in its broader sense, in its longer term sense, and that has helped shape our strategy and also test it as to its resilience. Now as I say, in the last few years, we have used scenarios to test and refresh our strategy. They help deepen our understanding, as I say, particularly of the two forces that we've seen emerging from those scenarios with great commonality around the energy transition and on digitalization. And they helped shape our purpose, our inspired future and our winning capabilities. And they highlighted the key changes likely to come in value chains over time as more renewables together with digitalization become more impactful from a relatively small part of the energy system today to something that's going to be a meaningful part over the next 20, 30 years. So accordingly, our strategy was refreshed and seeks now to leverage our brand as we get closer to customers. We're the leading brand in the energy system and we've seen the scenarios take us and the need to move closer to customers. Where we offer those customers with a customer centric approach, a way of thinking about what are their solutions that they need rather than the products we want to provide them. It also drove us to being very clear about the need to provide more and cleaner energy. The energy system will be much bigger change. And then finally, it takes us to embrace that digitalization particularly will make this world an increasingly transparent one and one where collaboration and how we work with communities, with governments, with our partners, with our customers will be really key going forward. So that's the role of scenarios that help us on our inspired future and our capabilities, you can see. And then today, we're going to talk about how scenarios help us with the key task then of shaping our portfolio, helping us to think about not only the direction but also the pace and the timing of changes in our portfolio going forward. And I'll share with you now a little bit more about how do we do this. So as I say, shaping and making major investment decisions of which we spend a significant amount each year to keep providing more energy, has an impact and will be impacted by the energy transition. But it's timing and endpoint. As I say, we don't know. So the challenge then is how do we make decisions given that uncertainty? And this is where we really use scenarios. Now we're at the moment, we have developed a number of scenarios that consider the forces of policy, of technology and customer choice to think about their impact on both energy demand as well as the pace and the application of new technologies, both within the hydrocarbon sector as well as in the non hydrocarbon sector. And we bring these forces together in what we call future worlds. We have a number of these future worlds which bring together these forces. We then explore importantly these future worlds on the potential value chains that exist within the energy system. And you can imagine the energy system will be different and driven by its shape and components under each of those different worlds. So the right hand chart is an example of for example, as we split up the value chains of the energy system, think about them then into different potential future worlds and think and understand or explore what are likely segments which are more vibrant or likely to attract capital and be profitable in what in some worlds and which of the sectors which are maybe more determined or reliant on a particular future world rather than be resilient to many. And that gives us insights into which parts of the sectors in the future may be more resilient than others, which are more robust to various futures, which are heavily dependent on maybe just one future world or one particular force. And then how relatively impacted these sectors are and then importantly understanding which parts of the energy sector are more dependent on supply forces and choices and which are more dependent on customer driven GDP and demand choices and forces. Now being detailed about this really helps our understanding in a much more operational way. And that's a critical part of inputting to final decisions, but it's not doesn't, of course, give us decisions in itself. So that's why I come to the last slide, which is about the decision making framework we then use. So it starts with, firstly, being clear about what our objectives are. And those objectives are a combination, of course, of financial and nonfinancial elements. At the group level, of course, our strategy sets what are the objectives for our decisions about shaping of our portfolio. But when we come to individual investment opportunities, then the objectives for those would typically then be set by the strategic intents we have set for each of the strategic themes, which are fitted within the overarching group strategy and Aspire portfolio. So once we've then with those objectives clear, relevant for the decision we want to take, we then think about the decision in terms of potentially different futures, so under different scenarios, and then understand the relevant impact on the value chains of that scenario as appropriate for this decision. And this gives us insights as to how resilient and attractive that decision may be in multiple futures. So we do that under a number of scenarios. And so that gives us multiple views about what the potential range and impacts might be. But then that leaves us with a challenge. What do we do with multiple outcomes? Because if we were to pick one scenario or one future, well then that's back to being a forecast. And what we know is we this basis says we shouldn't be using expectation cases as the prime basis for decision making. So importantly, we've in addition to the multiple lenses we use, which are traditional, we've also introduced the idea of minimizing the maximum regret. That's really about understanding both the value of the decision in terms of its upside or its potential downside. But also in case of decisions we make, but the decisions we don't make. So what if we were not to make the decision and certain futures came out? How would we be placed? How relatively competitive would we be? Now if we think about a simple example for you. So if you're a car manufacturer and you're thinking about your next production train, you may have a view about the pace of electric vehicles coming and your expectation case may be, yes, they're coming, they're important, but maybe not for my next immediate train, maybe the one that they're after. So our expectation case may be, not yet. Don't change to an EV platform. Keep it as an ICE platform, so combustion platform. This process would challenge you to expand the thought process and say, okay, let's think about different futures as well. What if there's a scenario where you chose not to invest, but your competitors at your part of the market did invest and there was quite an accelerated view of electric vehicle take up. That may put you at a very significant disadvantage. You may have missed a whole generation of buyers, the 1st buyers into an electric vehicle. You may have ultimately even created a great risk to your brand and your reputation. Should you have moved or not? That may be a defining event if you don't. But on the other hand, exploring what might be the downside of moving and being disappointed. So your expectation case may have come through. Well, it's probably a disappointing return. It's probably not going to be a company threatening one. So in that case, the logic may be to at least understand that the maximum may be not moving to an EV platform at this stage. That would then need to go into your thinking process. On the other hand, it may well be that moving precipitously may in fact be a very significant opportunity foregone And maybe for other decisions or some different decisions, it's better to indeed understand but wait and continue to invest in areas where there is indeed in most worlds or many worlds in your thinking, likely to see forces that would maintain the importance of investing in that part of the business. So you and I, we all do this in practice in our normal decision making in our lives. But I think what's important in this process is that we do that based on our own mental models. Now if you're a management team thinking about such decisions, having a discussion where you've got X number of people around the table, each having your view, there's no basis for exploring what's behind the mental models leading to that decision. So this process makes transparent the forces that may see behind particular scenarios, which may be these lead to outcomes, which have the maximum regret. And so making it transparent, we think, is a really important part of the decision making process and enabling better decision making. And so we then take this hard data, these hard facts and inputs, and they're then complemented by the normal soft factors as well, the things we can't easily quantify. And that goes into then the ultimate decision making process, and of course, that's what management get paid for, making judgments based on hard and soft factors. Now every decision Shell makes does not need this degree of complexity. But certainly, when we think about paces of change of shaping our portfolio and major longer term investments, they're really well suited to thinking about what could be the multiple future worlds we're moving into and when should we be starting to move and when should we be thinking but not yet ready to move on basis. So that framework, as you can imagine, is very dependent on and leverages deep insights into the energy system under potential different futures, which on a basis, however, which understand the realities of force and counterforce on an integrated basis. And that's where scenarios are really key and the ability to not only at a high level understand scenario futures but also go down to understand the forces within the energy system itself. So with that, I'm going to hand over to Wim, who's going to give you insight as to Shell how Shell is thinking in this place and our capabilities, which I think, in fact, are probably unique in this area. So over to you, Wim. Thanks, hi. So thanks, Guy. Yes, so my part of the presentation is really make that link between, okay, scenarios, giving context and frameworks for strategic decision making, but actually how do we make these scenarios and how we translate them for energy systems and because that takes quite a long period to overlook. So to reiterate, our story starts with this macro scenario, this global context, how things will work over a number of decades because energy systems are moving along very slowly. So you have very well to know something about how the world works today. But also for energy modeling, you need to have a kind of idea how it is in 5, 10, 15, 20 or even longer years' time. And the only way to do that is really to start thinking about that macro environment. How is the society, political, economics going to change over time? And then actually bear in your mind that scenarios is all to do about forces and counter forces. Therefore, we have intended consequences and inevitable unintended consequences. And that, of course, gives you a new dynamic for the future when the world moves on. So when you think very long term like we do, we need to kind of view there. And the other aspect, of course, that you can understand is that the world doesn't move at pace at the same in the same line. There are basically forces, counter forces. So maybe one part of the world decides to go for CO2 policy while the other one doesn't. How does it interact on a global level on the energy system? So all these dynamics are different. Countries develop at different paces, but even sectors within countries can develop at different paces. And that is really what we try to do with our modeling because once we have our stories, we say, okay, well, let's bring some reality in from what I call the law of physics or law of economics or what is really realistic human behavior in different parts, etcetera. So actually that modeling keeps us what I call it on the straight and narrow in our scenario thinking, right? Is it not too wishful thinking, right? Is it really still a plausible story? That's actually how it feeds back into these stories. And of course, the good thing about this way of quantification, numbers is also a communication tool, especially for very numerable minded management like our management is. Give them a chart, give them a table and they understand it much better than your story. So modeling is a very important part of our thinking, how scenarios energy scenarios may evolve. Here you see the covers of 2 little publications as published on our website. And in that publication, we just try to explain a little bit more the depth of our analysis, how we're going about it. And I didn't really highlight any booklets what's different with others, but we are quite distinct how we approach the problem in other people. But demand and supply is of course crucial to our business to understand that very well. So let me start with our world energy model, which is our which has 3 components, demand, choice and supply. But I'd like to start off with an overview here and then go to demand. First of all, it's quite a big model for a top down model with a lot of detail. There's 100 individual countries sorry, 100 countries, 82 countries and rest of regions, so about 100 in total. And it actually looks at 14 different demand sectors like in transport, residential, chemicals, industry services, you name it. And then actually, we're not jumping straight to primary energy stuff We do. We actually say, okay, well, there are also energy carriers like electricity, heat, liquid, hydrocarbon fuels, hydrogen, etcetera. So we actually look at 10 different carriers first because that's basically what customers really going to use in their homes and in their daily lives in the industry, those kind of products. But then in the end, you have to translate it into prime energy, where is these resources these energies, these fuels coming from, from rich resources. So that is actually how the model is constructed. It's also it's a global model. So it's not a summation of park models of certain sectors or certain regions. This is really one big integrated system model who looks at the whole globe as one integrated energy system. So you can imagine that with economic growth and population growth, they're all going to expand. There's more energy needed. But also like in balloon, if you squeeze here, it comes out there. So for instance, if there's a resource constraint somewhere in the world emerging or a technology disruption invented somewhere, it will reverberate throughout the whole system over time. So that I think is the nicety of that model that you can see that and it brings some of these unintended consequences to the fore. You think, hey, how did that work? But then you can explain it. Now before I go into the demand part, I would just like to remind you quickly of this what we call the 6 key drivers of the energy system. And one is population growth, it's economic growth, environmental stresses, we call that, or feedback loops. It is technology, resource availability, and people's choices. Now some of these key drivers, you can imagine, they are more trends like population growth. Well, there's some uncertainty around it, but generally we're going to be around 10,000,000 people by 2,050 onwards. Same in technology, a lot of technology we know, it's trends and it's going forward. But certain technologies is really still very much the question if it really is a breakthrough or not. And of course, at the moment, F1 expects that batteries will reduce its cost to around $100 per kilowatt hour or even less. But really, will that happen? And if it's not, what is then alternative world? Resource availability, well, that was very much part of our previous scenarios, right? Would shale oil and gas really take off and how fast and where, etcetera? But people's choices are the most important of uncertainty. And there, again, you need these macroeconomic scenarios to tell you, okay, what is the world's choice going to be for energy systems. So those are the 6 key drivers. Now you see in the gray box in our model, and I'll come back to it later, we have specific scenario levers as we call it, where we can actually bend historical trends very systematically based on new policies or aspirations or targets to the future. And I'll come back to that later how we do that. Now let me first start with the demand module. Now demand, of course, is very important here. And first, I'd like to say is we do not model energy demand directly. We model energy service demand, and that speaks to the point Guy mentioned, right? People don't necessarily want energy, they want energy solutions. And okay, if you have to if you're going in that space of thinking, you have to think, okay, what are the energy services people need? And of course, the services are that we want to travel in a certain distance for commuting, for holidays, we want to cool our homes or heat our homes, and we need some steel or cement on average. So it's actually that kind of energy service we model first. And that's very important. And later on when I explain you how we actually make energy choices in the model. So that's 1st energy services. Secondly, there's a nonlinear relationship between people's incomes and people's energy needs on a global on a macro level. And you see that actually is that well, when you relatively low income bracket, so it's 4,000, five $1,000 per person, you don't need much that much energy there. But once thereafter you start seeing industrialization in economies starting up, energy demand is accelerating. Until around 15,000, 20,000 income, then you see at certain sectors saturation coming in because, right, you can have your house will be a certain size, and you can you only need certain energy to cool or warm it. And I think most people are pretty fed up often in hours' commute, right? They don't want to drive more. And so certain sectors have kind of saturation points built in, and we can see that from historical data sets. But other sectors like in particularly chemicals, chemical use and transport, we haven't seen yet a decoupling with GDP growth. And that's important then to start thinking about what does that mean for the emerging economies. Because you see on this graph is that the top lines are all the developed economies. And say North America, on average, uses twice as much energy than Europeans for, I think, a similar welfare level and comfort level. But you can see that, say, the emerging economies, we assume that they only will use about 2 thirds of European levels of energies. Now why is that? Well, we first, we assume that they're going to leapfrog a technology. They're not going to take old stuff. They're going to take the best technology available now. And therefore, in that sense, they have a head start. But also, it assumes very much how they're going to organize their economies and cities in the future because most of population growth is in Asia, and it is actually there where a lot of large cities need to be built in the future. Now if these cities are compact structures and where government provides alternative means of transport, which you can electrify like metros and trains and other stuff, then you have a completely different energy system than when you go for sprawl in suburbs like Houston or Los Angeles. For instance, on personal mobility, probably it's about 2,000 kilometers a year less per person you need if you're in a compact city. So again, there's a lot of uncertainty when you actually take these demand curves, right, how society chooses to organize itself. Right. So actually these curves we make for all 14 different sectors and for these 100 countries individually. And we can actually calibrate them or actually treat them on local circumstances. So you can imagine a lot of permutations. This is not for the faint hearted if you're a modeler in my team. This is quite some work to do. Right. And then the second module, I think we are pretty unique in with other models is that we have a choice module. And this is actually it brings a behavioral choice element. It is not a cost optimization type of module. So which means is that if you have a very expensive technology, an emerging technology, a cost optimization model will always push it out. It's not going to happen. This model assumes that there will always be early adopters. There will always people think it's a good idea. There always people say, well, I can't afford it. I don't care about those cost, but I can afford it. And therefore, it actually brings in new technologies as well. With that effect means that actually the cost curve comes down with more capacity added and therefore more people can afford it. So all in the time steps, you see that in a natural process, even without the absence of any policies, that when you bring in new disruptive technologies, that disruptive technology will find its way in the system. And actually, policy then normally accelerates that or can also delay that in certain cases. But also say that first choice part, when actually and you can actually also when the societal preference we don't like nuclear in our NTC system, okay, you can switch it off, right? That's not an option for this country. While in other countries, it can be. So we have a 2 step approach in our choice in how we actually derive the energy demand in the primary energy sectors. So first of all, we look at these energy service needs and then we say, okay, consumers, what would be your choice on a number of ranges, not only cost of subsidies, taxes, preferences, etcetera, and technology, well, attractiveness. Are you going to do that basically with electrons or with molecules? That's the real question in the first step. So is it electricity or is it district heat or is it something else? And then this the second choice module is actually for producers, industry. So how are you going to satisfy this fuel demand of our customers? And then, of course, in electricity industry, you have a lot of options. You can coal, gas, oil, steel, but also you have all the renewables to choose from. And there, again, the cost curves are very important. Policies are very important. And so on, we can make these choices. Right. Maybe I should take a pause here with and where we are in the modeling. So actually, I covered this demand part of the world energy model, so and this choice part. And just to give you a kind of flavor, okay, well, what kind of outputs do you get then? Well, it's about a 55 megabyte output file. You can slice and dice almost anything you like. You can have the energy demand per sector as a carrier or as a primary energy source. You can have your energy demand per country. You can have it by primary energy source, coal, oil, renewables, etcetera. But also, for instance, there is example on the right lower hand corner is China. You can actually say, okay, the industries, so the electricity side Good morning, everyone, and welcome to Washington emerging growth in D and C hosted by Capital One Securities. My whole goal in the end most likely be replaced by 1st gas, but then very much more renewables. And it has a number of policy drivers like pollution and but also cost there. So you can actually look at many different ways in that model and examine actually your markets in that sense. Then I'd like to put 2 slides just to try to bring it together on demand side, right, when you start contrasting scenarios. And that's very important for the strategic decision frameworks, right? Okay, one world is good, but what about the other world? And before I go in there, you see there are 2 terminologies called mountains and oceans. Those are our scenarios we published in 2013. And just for a very quick refresher, mountains is very much a top down government driven world where social stability is paramount. So maybe you're not so keen to have institutional reform in your country, so therefore economic growth is maybe not at maximum potentials, economists would mention. And governments are actually big providers, so they can make really choices. This world, for instance, chooses compact cities, which reduces the personal mobility demand. It also chooses, in this case, to go for electrifying the energy the transportation system. So it is actually a big government with vested interest to protect in that sense. But while sorry, oceans, the other scenario is very much a market driven world, what I call live now world. So actually, we've continued using what we have till we actually get other constraints, say, sometimes resource constraints, pick pricing, also then you move to another system. And so 2 different type of mechanisms of decision making, say, broadly over the world. But then you see actually in these 15 years' time steps, I present that between the two scenarios, even if the world operates significantly different decision making, then by 2,030, you don't see that much difference still, right? I mean, it's but the blue is electricity, well, and the rest is oil and gas and a bit of coal. It's not so much different. And that is because inertia in our energy system, it takes a long time before it works through. The reason being, of course, that power stations last at least 40 years, cars 15 years, houses probably refurbished every 40 years. So although we make our headline decisions you read in the paper, actually when you look at a global scale, it takes a while to come through. But actually when you take then, call, 30 or 45 years forward, you start seeing distinctly different energy systems coming up. And this is really and the dark blue is electricity. And you can already see this that the trend or actually a common factor between the scenarios within the ranges is that electrification will continue to gain market share. That's over the last 50 years that happened continuously. We need to use more and more electricity and it will continue and probably to accelerate. And why is that? Well, if you want a higher efficient world and a decarbonizing world, you need more electrical appliances. So with these 2 key drivers, right, one almost say a certain point of energy transitions is that we will electrify the system much faster. And then the second example I like to give is the what is it the primary energy sources. Again, not much that much difference by 2,030, but you really see very much different worlds between oil and gas and renewables a couple of years, say, in 30 or 45 years. And that is the uncertainty ranges we need to think about because we don't give any chance factor to these scenarios. We think it's equally plausible, we say both could be happening. We don't really know. Right, so back to the world energy model. And before I go to the supply side, I'd like just to mention that we have published our energy resource database on our website. We believe it's the first time, the first attempt to bring a concise overview of energy resources and available for everyone. We do that to bring a transparency so that you can see what we use, but also actually we hope that it is a useful reference for other people doing this kind of analysis, the academics or elsewhere, to use for their own analysis. The headline is very simple is that there is enough renewable energies for 10,000,000,000 people that actually resources are equally distributed over the world. So there's some kind of problem solving around how do you transport it and store it, etcetera. But also when you look at the fossil side, right, there's enough fossil fuels left for an energy efficient and carbon efficient world. So in that sense, there's no real resource constraint. There may be an accessibility issue around that. Well, if you go on that website, it's quite nice, has a kind of crisp to it, right? So what is the did you know that there are only 4 countries will have 85 percent of all fossil resources. Australia is half is then the biggest renewable resource hold in the world, etcetera. So it's very good for the public as well too if you have to be signed on. All right. So very briefly then on the supply side. So the third part is the supply module, And I'd just like to highlight the oil and gas because that is a particular problem because, a, we have statistical volumes available, but we haven't found them all yet. So first, you need to invest and find them. Then you have a kind of stock of, well, scope for recovery. But then at a certain algorithm, it's called Kreening curves, right, these found resources then are matured into developed resources and then later on in production. Now production is not a problem in our industry because once you have production, it depletes and you have to replenish the whole time to stand still. And for that also, we have some algorithms, in this case, the RFP is reserves of production 1. And this actually gives a good estimate how existing basins can deplete. This is also quite detailed again, 100 individual countries and regions covered, 8 different resource categories like co ventures, oil, shale oil, LNGs, etcetera. Also our 5 different locations, so onshore, offshore, Arctic and other frontier. And it has just 5 maturation stages there. So I don't want to dwell too much on that, but I'm happy to take questions later on. But just to give you again a flavor of what kind of outputs we can expect from a model like this, well, of course, you get it per resource category. I mentioned you can get it per country. You can see it's an associated and non associated gases or fluids and where it comes from. And that is again is important for the slate or for refinery mixes, etcetera. And you can see actually which locations it come from. You can also hone in, for instance, say, okay, what's the future production ranges of deepwater, right? Do we see, under certain scenario, drivers a continuous growth or is actually flattening off? And that may be handy for your procurement strategies for rigs and other services there. So you can use it also for that kind of stuff. Right, 2 slides just around this presentation off, and that's actually to bring the supply and amount together. And I'd just like to touch upon a very topical subject at the moment, and that is electric vehicles. So we have assumed here a very aggressive uptake of electric vehicles. At the moment, it's less than 1% of global sales, but we say we postulate 10% by 2025% of new sales worldwide by 2,035. So that is actually, I think, really pushing the boundaries when you think about it, of course, that leading economies as one thing, but actually following economies that are probably a decade behind others. So the headlines is then, oh my god, it's going very fast. But actually look on the right hand side of the picture when you look at the fleet total, then you see that actually it's that the internal combustion engine is still continuing to grow to about 2030, 2005. And that's especially because developing economies will probably will still be very much ICE based. So that's one thing. So the headline sales are the same as the fleet average. And then when you look at the effect of Ode Nantes and the bright blue bars on the left hand side of the picture is actually passenger transport. And here you can see is that AFINCE with a significant uptake in electric vehicles is that we still see continued all demand growth in passenger transport to around 2,030, 35, around that range. But also, it's only about a third of total energy demand. So if you talk about sorry, oil demand, therefore, also when you think about total overall oil demand, actually you have to look at the other sectors as well. And here I'd like to remind again on the how our energy model works. So if you actually don't need it in one certain country and therefore, say, the prices will drop in the model, then other parts of the world says, hey, it becomes more affordable, and then I'm going to use that supply available and maybe I'm doing a bit less on energy efficiency uptake, for instance. So it's really dynamic there. But see, really in this aggressive case, you see that still that overall oil demand is still to continue to grow to the early 30s in our analysis in this scenario. The right hand side of the picture is the oil demand per country. And you see that the pink and the blue on the bottom, that's actually North America and Europe, actually there is a trend that we see less and less oil demand over time coming up. The peak oil was prop demand oil was probably already in 2,005 or something like that. But then you see the other colors, red China and orange India and the other Asian countries above that. And you see actually is that China still is to continue all the MAM growth, and India is following, but at a much smaller scale, it looks like, while they have more people there. And again, I'd like to emphasize the origin, the latter picture where we assume that these emerging economies are going to take the best technology available and do not make strong suburbs and be much more efficient. Of course, if that doesn't happen, then there's much more upside to all demand than we show in this case. So again, it's that communication between 1 and the other. All right. So with that, I'd like to conclude my presentation. I hope I've given you a kind of good overview how we use our modeling to actually quantify the scenarios we have and actually how they interact in the strategic decision making. And for instance, this very aggressive electric vehicle case is still more or less a mountain scenario where we explored electrification theme, and we published that scenario more than 4 years ago. So once again to say is that once you have that scenario range work, we have probably been thinking about these possibilities hopefully a couple of years earlier than maybe mainstream. And with that, I'd like to hand over to Guy. Thank you, Wim. Back for questions in a second there. So, let me summarize. What have we said today? So firstly, the key messages are as follows. We've moved from, I think, a long history of what's been an increasingly complicated challenge that we've faced now into one that's complex. And that requires different approaches to decision making. That really draws heavily on needing to understand multiple futures in helping to frame our decision making in that context. And here, of course, scenario framework, thinking, holistic ability to understand different futures and how they may play out in the energy system are absolutely key. And then fourthly, we need multiple lenses into thinking about those different potential futures and that requires the additional element, as I say, of thinking about and understanding the maximum regrets potentially of decisions made. And then finally, our decision making needs to be much more agile and more thoughtful about the relevant and potential implications and boundaries that we might be facing in our decision making going forward. So with that, I'm pleased to say we've now got, firstly, the booklets are available from the website and I think downloadable today now the databases on an app on your phone that will work, I think, as I say, as Wim says, for pub quizzes or professional purposes, to help people again further engage in the realities and the challenges that the energy system is facing and going through because they're fundamental and demanding. And the more we understand about them, the better outcomes I think we're going to get. So those things are available from today. And now we've got, about 45 minutes for Q and A. So we're looking forward to your questions. Now the process, I think it's her hand up and then there's a couple of mics that will be brought around. So why don't we come to the lady on the end? Drew, T. Rowe Price. I have a question on Page 17. So I was curious in general how much chemical demand kind of driven by petrochemicals figures into this calculation? And two questions on it. I guess, what is the outlook for the future? Because there seems to be a lot of sentiment around how consumers will just demand a lot less of this than they did in the past. And then secondly, you see the U. S. Really drop off and a lot of the European markets. To what extent does that just production move to other parts of the world and so the demand is elsewhere? Yes. So the latter part of the question, this is a cumulative graph of all of these sectors added up, so there's a cumulative effect. Yes, on the chemical side, it is really an enigma in that sense that this was the mild for products for these kinds. And actually, one of the things when you look at, say, pure econometric sense, the past can't be the future. We cannot assume that, say, emerging economies use the same amount of chemicals than we have used in the West. So we must assume dematerialization in that sense in the world at large. And that's, for instance, also a story of future mobility where it's light weighting, it's different components. So there's then the question was, okay, actually, I'm going to use even more chemicals because of these lightweighted car components. So there are some forces and other forces. So, yeah, that in that sense, you have to take a judgment with and having a lot of chemical specialists in the room and manufacturing specialists in the room to say, well, what is makes sense for a future projection of that energy demand in levers. And again, we sometimes have just sensitivity on high and a low letter in that sense because I think it's really uncertain what is the real level of chemical use per person in the future on a global scale. It's fair to say in summary though, the most of the world's we investigate, we see chemical demand being quite robust and resilient in most of those futures. To a great extent, that will be required. Otherwise, we probably go into the other scenario where we explore resource constraints. Indeed, I think, as Pim summarized before, we've built in a lot of efficiency. And so the future development paths that new industrializing companies countries are following will not be the same resource intensity and even product intensity that the West has gone through. Maybe just straight behind them. Hi, there. Thanks for the presentation. Chris Coopman from Bank of America. Just considering your history in modeling scenarios over the years decades, maybe you can tell us a little bit about how you've changed your approach in terms of what lessons you've learned, what scenarios were spot on and which trends you failed to pick up on? And I suppose that is the second question, how do you deal with those challenges, I. E, where was the shale technology scenario in the '90s? How do you try and even can include that in your outlook? Yes. So I think the scenarios, they explore broad developments. And in energy terms, I would say is that in the '80s, for instance, we explored what we called business as usual and dematerialization. That was called the 2 scenarios. And actually, we showed that actually business as usual, actually continuous growth in energy would probably very unlikely and the world had to go for demetrizedation, which means higher, higher efficiencies. And actually, you see then all scenarios has followed in a sense of demetrizedation pathway. Now in the '90s, it was actually pollution. It was an environmental constraint. And we made 2 economic scenarios then. And actually, when you look at it, all our future scenarios was actually, well, we're going to do something about environment, etcetera. And in the last decade, the fork in the road was what about CO2, right? AARON is the world serious about reducing CO2. And that was actually the scramble and blueprint scenario. And since actually we make really one form or another of a decarbonization scenario. So I think on the very broad line, I mean, I think we capture the nature, well, forks in the roads at least. And then, yes, how do we model that more in the brighter sense? When we look actually back, as we don't give a forecast that one is the other, right, so every answer is good. But we did do an exercise recently and say, well, we made these scenarios, Mountains and Oceans in 2012, some problems in 2013. Actually, how is the world moving on there? And these scenarios actually really had a big question mark well. Are we really having a peak oil supply or if it is not that because we have this new resource we don't seem to understand called shale oil and shale gas and actually is it really the game changer? Well, so mountains actually deals with that, right, the game changer and oceans wasn't the other way around. But when we plot that, you can see it actually on the gas side. The world follows very much the mountain scenario. While on the renewable side, the world follows very much more towards the ocean scenario. So in that sense, we are within the ranges where these couple of last couple of years, we can do a kind of sense check, if that's what you mean. Cross in the middle. It's Matthias Biar from BMO Global Asset Management, and thank you for the presentation. Building a bit on the previous question here, you started off the presentation talking about the energy transition digitization as sort of potential radical disruptors. Now looking then at the presentation you've given and the kind of examples you highlighted, including the aggressive EV adoption scenario, it sort of came away with a sense of not really such a big disruption modeling forward to 2025, 2,035, 2,040. If you could give us a sense where in your different future mappings are these radical disruptions likely to occur? If it's not, what are the factors on the supply side or demand side? Are you modeling more aggressively? And they lead to these very different futures. And what kind of sensitivity is built in, in terms of demand for oil and gas, in particular, given that a disruption, as we've seen in the previous years, of $2,000,000 2,000,000 barrels per day in the sort of supply demand equation can have a major impact medium term. So give us a sense of the sensitivity and the major disruption you're forecasting or you're modeling. Okay. Yes. I'm happy to give that example. For instance, digitalization theme is very much in the old amount on logistics, right? You can, of course, make a more efficient internal combustion engine, but actually by changing the logistics of trucks, right, you can actually make an enormous efficiency chain. Now on the passenger transport, if you look at the last 25 years, we have 15% overall fleet efficiency improvements, only 15%. But in the future, right, when we actually look at the targets, we have to assume 50%, 3 times more or 3 times more efficiency improvement in the next 25 years. So we work with that. And but we actually when we actually put it in our scenarios, we had actually about the moderate EV uptake, electric vehicle uptake. This scenario actually has a much well, twice as strong electric vehicle uptake. But then you have to ask yourself the question, well, hang on, these OEMs, are they going to spend their technology, their R and D money on both, on electric vehicles and on ICEs or actually is ICEs going to be on the back burner and therefore we're not going to make the 50% increase as we assume here. And if you would then take that sensitivity, actually the one with more moderate uptake of EVs and therefore KAVISANs have to be achieved with high combustion engine efficiencies, you would actually see flat oil demand in that sense over a period, say, between now 2,030. But if it's the other way around, right, you have a higher EV uptake and they don't do so much on internal combustion efficiency, actually the overall effect is that we might well see higher oil demand by 2,030 because the dominant effect of this flattening oil demand of passenger transport is really the efficiency improvements in ICEs. And when I take in this example, where you could take between now and 2,040, we have about this about 25,000,000 barrels of demand today and probably would add another 24, 25,000,000 in that period because of economic growth. And then actually when we take the reduction off, 2 thirds will be by high efficiency of taking internal combustion engines and then 1 third will be covered by EVs and then you have flat oil profile between now and 2,040. That's what's shown in that picture. Well, can I maybe then expand on that into maybe more of the commercial space because physical changes may be by the nature of legacy and history and just scale taking time to work through doesn't mean that they need to be at 40% of the energy system to start to disrupt how market and value may change? And so again, that's why we go into value chains and start to think about where might that start to shift and when you've then got today, an immaterial level, frankly, of, in general, renewable energy sources coming in. But once they start to become an important part of an energy system for a city or a country, then that may well lead to quite different and important changes, disruptive changes of the commercial issues around energy supply then. So it's not just about volumes, it's about how these quite different one dispatches basically when it's free. So wind and PV, when they dispatch, basically those electrons are free as opposed to a hydrocarbon system, which is the other way. So how are those 2 going to work? How are government policy going to set up storage, reliability, those sort of systems? That indeed could well be earlier in terms of disruptive forces than the physical volumes that we maybe traditionally think about. So we might come down to this side now. Thanks. Thanks very much, John. You started by commenting around complexity and radically different or radically difficult it is and ways to make decisions and see the future at this point. And slightly tangential maybe, but I think you probably got solid insight, allocation of capital and how the work here starts to impact and what changes you've seen in the way that the Board and the people that you feed into think about allocation and what financial metrics they should be using and adopting at a time when the future is so uncertain and in an industry where you are committing very large lumps for a very long time and you will wear the consequences of that commitment through history? Yes. So they're great questions. And indeed, that's what takes a lot of our focus of our Board and our Executive Committee thinking about just that because while today is, what, 2017, if we think about frontier exploration to deepwater developments or if we think about new greenfield LNG developments, we're into the late '20s before they're either constructed and built and started to pay back. And that's into this period where there's likely exposed then to one particular world and how impactful exposed then to one particular world and how impactful that could be on our financial performance, our resilience, our balance sheet, those sorts of forces. And also then the different risk profiles that are by nature, you know, there's no such thing as a dry hole in a renewable development. And so that's a different risk profile of the type of exposure you've got. So I would say, those are forces which, increasingly, we're having to make more broader in terms of the impacts and the implications of these decisions for the Board and the Executive Committee. And so that's part of why this work is really helpful for them. I think the decision making elements, there's not going to be a radical different way of looking at individual metrics. It's more that how do these things fit together, what's the shape of the total portfolio, and it also leads you into what's the regret of not moving and moving too quickly. And we do play those things out. And in some areas, if I think about our marketing businesses, where our futures generally tell us the shift to the customer is going to be important, the ability to differentiate, We really think that we're a leading energy brand. We can start to expand and leverage our brand, particularly into growing markets where Shell is clear brand share preference number 1. It's a good thing to be starting to build those relationships even if the nature of the products and the services we're offering in the 30s might be different from what we've got for the next 10 years. Those are probably pretty good things to be doing. So you'll hear us much more talk about in the downstream area, the marketing relationship, building brand in those areas, which by their nature both have relatively good short term profiles, 20% return, 3 year payback scope, but it's actually putting a marker down for what could be a very positive runway going forward as well. So great option value, too. So we try and set all of those forces up, both the hard data as well as the broader what ifs and the softer forces, too. Are you actually seeing behavioral change around allocation from Board? We get a lot of questions. It's now a very active decision about these futures. And so it isn't just forecast is not the basis for these major decisions. As I say, we then work with our board about just as we don't use this framework for everything, we have a framework with them about which types of decisions will use this and they'd expect to see us set up these decisions in this context and which are just do it. There are short term paybacks, they're traditional, they don't need all this complexity, but some portfolio shaping and major investments, they definitely now use this framework. Oh, telephone. Sorry, sorry, Claudia. Telephone, we have a question, I understand. Thank you, sir. Okay. John? This is John Ritchie from UBS. When you think about the scenarios, is there a boundary around which you place them? Because you're a listed company and you have investors who can choose to either invest in you as an energy company or not. And so is there scenarios which you would just exclude because effectively you're making a decision for your stakeholders. Your stakeholders would decide if effectively the energy world that you participate in is not relevant to them. The danger is, is you end up effectively hedging out yourself to the point where you actually don't make a return for the investor. You're taking the investor decision before they can make the decision, if that makes sense. So I think it's a good question. So I started with saying that we use scenarios in this broader sense of how the world and not from just an energy point of view but how the world may evolve. And that was used to frame to our board, we have a number of choices in these different worlds. And that led us to the choice of our strategy and our purpose and how we're going to play. So that was a key. It isn't a given. What we do in the future is not a given activity. How do we participate? We very much set up as a board conversation. And in answering and helping them to answer their question, as I touched on in the April, SOI Day materials, we looked at what are these likely forces of this future, this combination of energy transition and digitalization and how that's likely to see an energy system which is much bigger. So this is a growth industry. Energy is a growth business. It's going to change though likely by both the supply of its products and also how you're going to integrate with customers. But in a way, risk management is going to shift from traditionally subsurface, resource knowledge, through to managing an increasingly complex energy system. Now Shell has real skills and capabilities there. Firstly, as I say, from a customer point of view, where most of the growth in energy is going to come from, developing markets, Shell is brand share preference number 1. We give people a choice where we're cost competitive, people will disproportionately pick Shell. Secondly, then the behind, as Wim says so eloquently, people want the energy service. They want to be mobile, hot, cold, whatever. How we provide them with that ability, that energy service, that's the challenge for energy providers. And that's, again, where we're really well placed to do that through our capabilities. And then thirdly, the energy system is going as I say, being big is also going to require scale. The whole world is not going to be based on rooftop solar developments. And so there's still a role for a major player. And we know that in the solar business today, the largest market cap of the biggest players are in the low 1,000,000,000 of dollars. They don't have global experience. They don't know how to do things at scale. Where if we think about even some of these new digital players in new industries, once they get to scale, they're struggling. They're realizing the realities of dealing with governments, other stakeholders, etcetera. Of course, Shell has a great legacy there. We're used to working with regulators, government policymakers and helping to influence and provide solutions at scale for 75%, 70% of people will live in cities in by 2,050. And so they're the types of solutions we need to be able to provide. And we think Shell has a tremendous opportunity in that space. Now finally, to summarize, the energy system and where the rents sit are likely to change over time and evolve. What we do know though, reasonably presume, is that for that energy system to be delivered, there will need to be adequate returns and rents to enable people to invest to provide that system. It's too big for governments to provide the energy system of a country. And so there must be good opportunities. And by us being selective about where we play, leveraging our skills and capabilities, we think that's the right strategy for us. Can I just answer the question also from a scenario practitioner perspective? So I think I'm in a very lucky position that my salary and that's of my group is paid and we are allowed to think freely and it may be some challenges. Research for 1's research and more than what we want to do. And we have really, I can say, complete freedom in doing that. And quite often, we have very good discussions and people say, well, thank you for your opinion, Vin, we have to think about that. We have to tune over that. And so that's one thing. I'm really lucky that we're in a very free thinking department indeed. And secondly, we deliberately design our scenarios such that it has positive and concerning elements for our company or say for our industry and therefore our company. And so there is no real a good or a bad scenario to pick for our management because they would like if they could, they would choose a pick. But deliberately make such that these worlds are stretching and therefore, they keep thinking about all the possibilities. It's Jason Campbell with Jefferies. I appreciate what you were saying, Guy, about wanting to provide solutions that your customers are looking for. But I want to ask a question about portfolio construction. Ultimately, right now, you're still primarily a producer of primary energy, recognizing that hydrocarbons are going to continue to play a very large role in the system, but that most of the growth is going to come from non hydrocarbon sources. Do you continue to then put most of your investment into continued primary production of hydrocarbons? Or you start shifting more and more of investment towards the higher growth areas in renewables? And then maybe just one other quick one. Can you talk about how the scenario planning played into the decision to move forward with the BG acquisition? Okay. So Isaac, I think it's for many, many years, we will continue to see the bulk of our investment go into what we do, doing it better. So the oil and gas developments would be absolutely critical and chemicals, I should say, as well. That will continue to draw the great bulk of our investment for some many, many years to come. That's partly because the energy system itself in these new areas are themselves trying to work out how they're going to play with governments and economic systems around them. And we will investigate. We will look for things which are commercially credible. But it's unlikely that we will see this massive jump in yet because we're not comfortable yet that we understand where is that right place for Shell at scale to be playing. But we're certainly going to be participating and understanding where those value chains may be evolving and the forces around them to either make decisions to keep saying not yet or to make decisions to BG. BG. So BG firstly fits from 2 fundamental lenses. It really leverages Shell's core capabilities in obviously LNG and gas and in deepwater. Now they have different profiles. Gas, we see in the portfolio, we have from them and in general has a multi decade life. And I think as most of the modeling that Vim has outlined today in most of our scenarios, we see gas as being a really important complementary fuel for a long time as part of the energy system. And so that's a great fit. The deepwater part is likely to have a shorter time frame just by the nature of deepwater assets. But what it does is provide has provided us the ability to leverage our skills and capabilities to a good business decision, which also, however, sets us up really well for the next 10 years. We're very clear what the Deepwater business will do, how it will generate earnings and profitability for us while it allowing us to consider, address our balance sheet and but then more longer term, think about that future. Now deepwater is going to still be an important part of the energy system also going forward because of its scale, its cost effectiveness also. Because as VIMs and others forecasting talk about or scenarios talk about is that even in 2,040, 2050, hydrocarbons and oil will still be within ranges and a very important resource. And as you've seen, Brazil, which is a very large resource holder, very competitive resources, is likely still to be playing an important part in that space as well. So it fits. 1 is clearly more medium to longer term focus as part of a good business. The other is certainly sets us up for this near to midterm but with an option about being able to leverage that further going forward. Ian Reid from Macquarie. Just to play maybe a little bit of devil's advocate here. This is something which Shell is very well known for, and you've been doing it for decades, as you say. But your other your major competitors tend to be more kind of forecast driven in terms of what the stuff they put out. And it's not clear to me that with all the effort you put into this, you can actually show that Shell has is exactly ahead of the game in terms of your competitors, in terms of missing out on some of the kind of broad trends over the last 20 years, as I'm thinking of like the kind of mega merger era, etcetera. So when you kind of do a bit of navel gazing about the benefit of this to your business and your shareholders, what do you come up with as the kind of the key thing which you've actually achieved for this decade of scenario planning versus your competitors who don't do this in so much detail? Thank you, Ian. It's a good challenge. So I think there's 2 elements there. Firstly, in the past, I think it's given us so the fundamental role of snow is it helps you think about a potential problem or issue before it happens. And I think we're all better able to respond thoughtfully and sensibly to a challenge when it arises if we've thought about it before. And that's the fundamental bit. And that can apply to near term and midterm. And I think we've often talked or other people talk about our response in the oil crisis as in earlier periods. We've thought about it even back to the '70s better. We didn't knee jerk and response. I think and so I think that's a core. And therefore, how differentiated has that played out so far? Maybe there hasn't been so many radical differences where that's the case. I would say though, my fundamental thesis here is the past is not the future. The complication but still within hydrocarbons being that part and it not having to have the inconvenience of different energy resources which are priced differently and how countries are going to choose to develop differently based on policy or technology disruptions, that's a world that increasingly, I think, will differentiate our thinking, our ability to think and have thought through. And then, as I say, position either early or not position yet because of various uncertainties. So ultimately, that is the purpose though. We don't do these while Wim's team has given some free rein. Ultimately, it's to help us make better decisions. And if they're not, then either Wim's team or our management are not doing their job. We'll stick one more on this side, and then we'll go over. Thank you. It's Brendan Maughan from BMO Capital Markets. Guy, I guess you mentioned the word agility a number of times. I'm not sure if the market thinks of Shell as being agile. Can you just talk organizationally what you're seeing is being done internally to be more agile? And can you also touch on just other industries? We've seen the Teslas of the world be disruptors. Is there a risk she'll suffer the same fate as say Ford or GM? So indeed, agile is a 2 pronged, if you like. There's both that I've described in this presentation about our decision making, about futures and commitments and portfolio. And then, of course, there's agile in maybe the more topical space, which is around leveraging data, ways of working, scrums and all that stuff, which we do absolutely big time. So but I think my context was around this decision making framework. And we're really thoughtful. And it comes back to John's question a bit before. It's not comfortable, and our Board absolutely accept that their job isn't to turn up and simply look at a forecast and think that they're managing the company into the future. They understand that that is not the case. There are real issues. And some of those, as I said, require us to be choosing to participate, to explore, to make sure we really understand or have our best ability to understand before making those decisions. So the creation of the New Energies business a couple of years ago, was an example of their recognition of uncertainty. Choice, could we wait? Yes, absolutely. Was it the right decision to make in terms of So I think that's that agility in decision making. And also, thinking about how do we take the strategy that we've got and how do we apply that into our businesses. And here, I'll give you an example of our retail business. So you've seen our strategy and our direction about how we think the future may be playing out one of those major forces. So what are retail doing with that? Already the world's biggest number of franchises, 43,000 sites. We service 30,000,000 customers a day. We have more franchises than McDonald's and Starbucks. So we're a big business. We could keep doing just what we're doing. But they've taken this challenge and thought about what do we need to be doing shaping the business going forward. So firstly, they're saying, well, people are going to be mobile but maybe differently mobile. So let's make sure how do we leverage our footprint? How do we leverage those 43,000 sites? And so more servicing those customers better in shops, so the nonfuel retail income is a really critical part and doubling our earnings in that space within the next 7 years is a critical part of that. Secondly, we're also going to see that electrification of non hydrocarbons is going to be a key part of that energy system. It's all not going to be done at home likely. And so again, making renewable or new energy types of earnings from our energy sales is an important part to really improve and increase. Thirdly, our sites need to be halved in terms of their CO2 efficiency. And that's not just panels on the roof, but it's the design of the fridges and all those sorts of things. But that's something that we see coming, and it's something our customers also want from us. Fourthly, the welcome to shelf experience really needs to make sure we're really leveraging that not only on-site but through the digital space. And you see us a leader in a number of places trying new models. So in Rotterdam, you can get your phone out and have fuel delivered to you through Tap Up. And those who live in Rotterdam, I hope you're already customers. But also the lower tier programs, we're the biggest card issuer after the banks in terms of card issuing. And then finally, the shared value element of our program. Every site owner is charged and challenged with what's your community? How do you fit in that community? How your role in it? And how do people value what you do? And that's then overlaid with a global push on recycling and waste management. So we take those strategies, those elements. We're already starting then to craft a business which is the most profitable, the best, the growing, but they're also now starting to shape about that future early rather than waiting. Have you come down to the front? Sorry, and then we'll indeed go to the other side. Thank you. Also, Clint at Bernstein. I wanted to ask about China. You're heavily dependent on China in a lot of your scenarios, which is obviously a bit of a black box to most of us. But you say you share these scenarios, you talk with China quite a lot. So does that give you the edge? Does that give you the confidence with your view on China? Has that proved useful to you over the last years decades to get China right, given it's such an important part of your forecast? And then secondly, you show oil demand peaking at some point in these exhibits. What about the price or what about demand elasticity inherent within that? Clearly, last few years, demand is coming in better than people thought. Is that a key assumption or flexibility within the model? We can talk about pricing that. Maybe just touch on China and then Vim can also pick that up because members of his and elsewhere team are in there. So with the Chinese government and other governments that we work with, our aim is to work with them to share our thought processes and just the whole approach to potential futures and scenario thinking. So in the Chinese case, it wasn't necessarily our scenarios, but it was how do they think about the energy challenge that they're facing and how do they go about it. And indeed, you've then seen a number of things such as gas deregulation, access to pipeline, etcetera, which I think they've learned and seen the history of Europe, how they spur local development through people being able to develop and access pipelines. And so I think it's helped them craft their own thinking. And then our role is also to bring in not just us but real thought leaders in relevant parts of the energy system as well. So in a way, we're helping them in their broader thinking, which, of course, we debate and challenge with them as well. So I think it does give us good insights as well, but we're certainly not saying this is the future, but how would you go about it? This is the process of thinking and insights and different challenges that you should be thinking about in your energy system and how has that evolved elsewhere? What are the good lessons from elsewhere as well? Do you want to build on that? Yes. So on the DRC work, the real question there is coal, gas, renewables, really, and now the interaction. And that's very much their choice and how they want to also do the industrial policies. And being actually in the same room with their policy advisors and their technical experts and hear directly from their brains, right, where they really think and what I'm going to say, actually this helps us building our own scenario and say, well, probably it's fair to say is that they will actually, say, bring more balance between coal and gas and then bring renewables as strong as possible as we have postulated here. So it feeds back to us. But like I said, our role in there is basically process bringers, right? We try to bring the process, but helping themselves because you can't sell that too, of course. And your second part, do we have prices to sustain the model? Yes, we do. And I know this supply and demand model comes together. Sometimes you see price pressures because the cost of supply, right, is you don't need the high price. So there's things. But sometimes we still see pricing is assisted to reduce demand. So basically, there's too much demand stress and therefore so our model gives not prices, but it gives us price direction. Basically, it shows the stresses right where between the demand and the supply side. And that is, again, an enrichment of that modeling and thinking for long term price levels or price direction, not levels, but directions. Do we have anyone on the line? No, George? Very good. Okay. So maybe if we come down the front now. Yes. Hi, good morning. It's Thipan from Exane. I just I have two questions actually. Firstly, just on digitization. I think the oil industry talks quite a lot about the opportunity. I think you've mentioned it today. As an investor, how do we think about sort of quantifying the opportunity and differentiating Shell against its peers? And the second question I had was, I think you talked we've talked more broadly about energy and you mentioned storage. Would entry into sort of greater or the capacity to have more storage as an integrated energy company, is that something strategically of advantage to Shell and an opportunity for Shell? Thank you. Okay. Thanks. So digitalization, indeed, our industry our industries, indeed, if you look at most people, we are certainly behind a number of other industries in the application of digital technology, which is in a way a bit strange given the fantastic technology capabilities our industry has. But there's a lot of opportunity there. And to give you and digitalization often starts with data. So I think Shell has 100 petajoules of data. And someone was telling me yesterday that a peta not petajoule, petabyte of data and 1 petabyte of data is the same as 20,000,000 4 drawer filing cabinets of figures, text, data. And so we've got 100 of those. So it's tremendous amount of information. And we are just scraping the surface at having AXA that available to us in a way that we can provide real term deep insights. But it's going to be a multibillion dollar impact on Shell, multibillion dollars. And it's going to go from both the doing things better, cheaper, faster, using global leverage, even from the point of probably fully automated well selection because you can imagine today enormous data from across our industry. We've been an operator in a wide range of locations and where our data access is absolutely tremendous. And the way we can think about analogs, not only in exploration then, but applying to production is going to be tremendous. And then you're into, of course, digital helping you a much more cost effective, better solutions, uptime understanding, reliability performance, so very significant cost takeout opportunities. But I also was alluding to, it's going to change our relationship with our customers because in the past, reading meters, sending pieces of paper, it was a pretty inefficient process. And so many parts of our industry moved to wholesale. Customers were just seen as difficult to service. That is not the case anymore. And if we also think about different energy solutions, we can seamlessly, very low cost, differentiate the offering we have. And so one customer may want absolutely total reliable green power. Another may have a small business that needs high intensity heat likely through gas during the day and a different energy need at night. Others may say, I simply want the cheapest at the time, all the time. We can, by the second, behind the meter, manage the combination of energy sources to enable us to service that customer. So Shell being your total energy partner, be it being mobile, be it at home, be it at work, is now a very credible and capable thing we can be doing. And so it's going to change, I think, in our mind how we relate with our customers. And that's, therefore, our core capability starts with our customer centricity, not something you would have heard us say 5 years ago and I accept that. But we are, as I say, the best retailer in our industry. We touch more customers, best brand preference. We've got a tremendous ability to leverage this into customer segments where we think that, that will be profitable. We'll take one last question. It's Martin Ratz. I'm with Morgan Stanley. I wanted to ask you 2 things, and they're actually both for Wim. The first relates to peak oil demand, because you show this chart where peak oil is still quite far in the future relative to the time horizon that we typically care about. And actually, frankly, also, I guess, relatively far out in the future relative even your time horizons, the Shell asset base probably renews itself very sort of 10, 15 years. So if this is 20, 30 years out, it's still actually sort of quite long. But it's not very long if you have somewhere between 90 to 130 years of oil in the ground, like some so major resource holders in the Middle East, then actually all of a sudden 20 years is a relatively short period of time. So there could still be a supply response even if the outlook for peak oil demand is relatively benign. Maybe peak oil demand is not about demand, maybe it's all about supply. And I was wondering how that factors into your scenario analysis and whether you already see some of that. The second question that I wanted to ask you is perhaps a bit more conceptual. I'm not really sure there's an answer to it, but I'm going to ask it anyway. You clearly do a huge amount of work on this, which should prepare you better for the future. There are loads of other companies and people and institutions in this industry who are not doing this, but nevertheless will play in your industry. And they may make mistakes. They may completely misread all these signals. How robust are your conclusions and your scenario analysis and your overall effort in a world where your counter players are just doing random things and might misread all of this? Is that a risk? Maybe the second one is more for you, Andy. But let me start with the first one on the supply side and demand. So in the book, as you can see, we have this kind of cost of supply curves per resource category in it. And but also we all know that it's not supply is not produced on the merit order of cost. It is based on accessibility, and that's quite often political accessibility for the really low resource holders like the Middle East. And that's why we actually need the scenario stories again, right, because in a world where people start believing peak demand, right, are they still going to behave like an OPEC? Or actually they say, oh, sorry, I'm going to produce and we just before it's too late. And that kind of thinking comes back then into our scenario thinking on the supply side as well. So certain parts of the supply model can actually run on its economic merits because of like North America, right, it is really that kind of system. But other major resource holders really have to have that story, what you truly believe. And of course, then we take the range again. But also we look actually on societal developments, institutional developments in that country. Can they really do that? Are they going to, for instance, liberalize the markets? If not, well, probably they may want to wish it, but there's some limits to that. But certainly, that was the Mountain Ocean scenarios. They really try to explore the tension between supply and demand, right, and the responses of OpEx in that sense as well. I think to add to that, of course, our industry declines, as Wim talked about before, 4000000 or 5000000 barrels a day. So if we go out to 2,030, 2,040, we're building in a way a whole new of today's industry. And we've got a very efficient industry, don't we, typically through creaming application technology, picking the best, cheapest first. So we're going to have to keep seeing technology changes, etcetera, for many of the new resources that are yet also to be produced into that space too. So on your question, so how do we deal with unexpected, irrational, maybe losing behavior. Well, I think, we also part of the strategy is fundamentally to be financially resilient. We need to be able to deal with disruptions over short- to medium term through a strong balance sheet to either wear out the people who've, to wear or to work through periods of time where maybe, into hindsight, irrational actions were needing to work themselves through or frankly to take advantage of companies that put themselves into those situations and provide opportunities. So being resilient, that's a key part of Shell's financial world class investment element of having a strong, as we've always done historically, strong position to be able to invest through cycles so we don't have to turn on and off as appropriate given our fundamental understanding, but also then, have the opportunity to take advantage if should those things come up through such actions. George? Very good. So thank you very much, Guy. Thank you very much, Wim, for today's presentation. Thank you all for attending today in the room, on the web and on the phone. We have now a bit of time here in the location on location in London for refreshment at the back. But also if you have further questions, don't hesitate to call us. We'll follow-up either directly or through VIM and Guy. Again, Guy, VIM, thank you very much.

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