Welcome back everyone. During this session, we will take a deeper look into our businesses starting with IG and upstream, followed later by downstream, renewables, and energy solutions. We discussed our beliefs around the critical role of LNG in the energy transition and the continued need for investment in oil and gas production. Our portfolio in both IG and upstream is highly advantaged, positioning us for sustained value creation and cash flow longevity. IG and upstream generated roughly 70% of our organic free cash flow last year, and we expect them to continue generating competitive cash flows. Our LNG portfolio is the largest among our IOC peers, with significant cash flows sustainable into the next decade. We will continue to invest in our upstream business, ensuring it remains stable and resilient. We focus on value over volume, with the highest CFO excluding working capital per barrel among peers. We have reduced carbon intensity by more than 30% since 2016. We expect to grow our gas business, with LNG playing a key role in the energy transition. We aim to sustain material liquids production of 1.44 billion barrels of oil equivalent per day to 2030, with a total production growth rate of 1% per year. Our focus on value over volume and strong operational performance is delivering attractive returns. Our advantaged portfolio is weighted towards leadership in IG and prolific deep water basins. We are on track to deliver projects with a total peak production of more than half a million barrels of oil equivalent per day, including new platforms in the Gulf of America, FPSOs in Brazil, and gas platforms in the UK and Malaysia. We have structural cost reductions of $1.4 billion. We are showcasing projects that will add over a million barrels of oil equivalent per day of peak production, with a break-even price of $35 per barrel. We will bring on Sparta in the Gulf of America and expand in Brazil. We are confident we can sustain production levels to 2035. Our organic investment hurdle of 11 to 15% IRR will enable us to prioritize value over volume. We are growing our LNG business, with projects like LNG Canada, Nigeria, and Qatar adding 12 million tons per year of Shell equity capacity, increasing equity volumes by almost a third. These investments are top quartile on a well-to-arms basis and will reduce the average GHG intensity of LNG. We have a healthy funnel of options including Oman train 4 and LNG Canada phase 2. We reconfirm our LNG term sales trajectory of 4 to 5% CAGR until the end of the decade. Demand for LNG is increasing by roughly 60% by 2040, driven by economic growth in Asia, AI, and emissions reduction plans. Our portfolio depth, trading capabilities, low cost of supply, and conversion to Brent-linked sales bolster resilience. Our trading and optimization capabilities offer an unrivaled advantage. We are the largest publicly listed LNG market participant. Our global trading capability diversifies exposure to pricing, regulation, and geopolitical events. We are seeing new areas of demand growth, such as LNG bunkering. Let me now hand over to Chenade to talk about upstream.
Thank you. Our upstream portfolio is focused on deep water and conventional oil and gas. These businesses are highly complementary. We focus on basin mastery in key regions like the Gulf of America, Brazil, Oman, and Malaysia. We have reduced carbon footprint and are committed to lower carbon intensity. Shell's deep water business stands out for scale, efficiency, and infrastructure advantage. We are the only ones with a leading position in both the Gulf of America and Brazil. We have high-graded our conventional portfolio, generating 50% higher CFO per barrel compared to 10 years ago. In the Gulf of America, we are the largest operated lease holder and producer. We expect to maintain production around 300 KBOE per day into the 2030s. We have added 25% incremental volumes to our Gulf of America hubs and improved facilities uptime by 13% since 2018. Our well, reservoir, and facilities management capability is top quartile. We have reduced unit operating costs by 15% since 2018, resulting in a $1 billion uplift. In Brazil, we have a major pre-salt position in the Santos basin, partnering with Petrobras to develop high-margin, lower-carbon barrels across 19 FPSOs. We expect to maintain production of around 380,000 barrels per day into the 2030s. Our Brazil portfolio features long-life assets with high flow rates. We have been able to bring international experience and technical capability, while Petrobras leads with local expertise. Our partnership has grown estimated ultimate recovery by 14%. We recently sanctioned the Gato do Mato FPSO, our first operated asset in Brazil since 2009, with a 75% improvement in NPV. Our conventional oil and gas business provides a foundation to sustain material liquids production beyond 2030, with strong margins of approximately $18 per barrel. We have high-graded the portfolio, exiting higher-cost positions. We are implementing new business models, like the joint venture with Equinor in the UK North Sea. We have also divested onshore operations in Nigeria. This journey is about knowing our competitive context and positioning for efficiency and value. COG provides commodity price resilience, complementing our higher-margin deep water business. And with that, back to you.
Thank you very much, Chenade. In summary, our focus on value over volume, improved operational performance, and disciplined capital allocation have created a leading IG business and an upstream portfolio that supports our ambition to sustain material liquids production well into the 2030s. We are committed to oil and gas and to delivering long-term value. Let's now move to downstream and renewables and energy solutions, where we have made significant progress since CMD23. DSR brings together customer-facing businesses like mobility and lubricants, as well as our high-graded products portfolio underpinned by trading. These represent about half of the capital employed in DSR, with 15% return on average capital employed. On the other side, there are businesses representing $45 billion of capital employed where returns need improvement. In chemicals, we are repositioning the portfolio to unlock value. We are driving a strategic shift, reallocating capital to higher-return areas. Low-carbon options represent around $5 billion of capital employed, and we will continue to develop them with capital discipline. Our integrated business model provides a competitive advantage. We have deep customer relationships, the strongest brand in our sector, and unparalleled trading capabilities. During CMD23, we acknowledged performance was below expectations in DSR. A turnaround was required. In 2024, these businesses generated over $12 billion in free cash flow, the highest in several years. In marketing, we achieved the highest annual adjusted earnings since 2020 at almost $4 billion. We have delivered $1.5 billion in structural cost savings and reduced cash capex by one-third to $8 billion. We have high-graded the portfolio, exited assets, and paused projects. There is much more to do, and I'll hand it back to Chenade to explain how we will deliver this in more detail.
Thanks. Although we are on the right pathway, we will continue to be guided by performance, discipline, and simplification. We are actively reallocating capital from lower-return areas to businesses where we have clear competitive advantages. We expect our businesses to deliver over $15 billion in CFO excluding working capital per year on average through 2025 to 2030. We will work to ensure returns above 10% by the end of the decade. In mobility and lubricants, we are transforming our retail and convenience stores into convenience destinations, with premium fuels, EV charging, and food and beverage. In lubricants, we are investing in premium high-efficiency products. We will spend 30% less in cash capex over the next five years, with 80% of mobility capex in 10 key markets. We have increased gross margin per barrel by around 50% despite reducing sales volume. Premium Shell V-Power fuels are expected to contribute around 30% of gross margin by 2030. We have achieved our 2025 EV charge point ambition early and will retire the 200,000 by 2030 ambition, shifting focus to profitable growth. In lubricants, we expect premium contribution to grow 50% by 2030, driven by demand in Asia-Pacific, Middle East, and e-fluids for EVs. We expect margin expansion in convenience and e-mobility through 2030 and beyond. In our products business, we have a high-graded refining portfolio, reducing from 51 refineries in 2004 to seven today, with four core refineries. We are investing in decarbonization, like the Polaris CCS project at Scotford. In chemicals, we believe we have good assets but are not the natural owners. We intend to reduce capital employed by 2030, taking a regional approach. In Europe, our assets operate efficiently but face margin pressures. In North America, we have advantaged feedstock. In China, we have a successful joint venture. We will continue to high-grade and pursue closures where necessary. We are also pursuing strategic partnerships in the US. Our intent is to reduce capital employed in chemicals by 2030 and reallocate to more competitive options. Of the remaining $20 billion, power and low-carbon options represent $15 billion and $5 billion respectively, with negative ROACE last year. We are constraining capital employed to less than 10% by 2030. In power, we are pivoting to flexible generation like gas-fired power and batteries, targeting a ROACE of around 10% by 2030. We are divesting non-strategic assets and using a capital-light model. We are setting a ceiling for capital employed in power of around $15 billion. In low-carbon options, we are focusing on low-carbon fuels, CCS, and hydrogen. In low-carbon fuels, we paused construction at the Rotterdam facility but see long-term potential. We traded over 10 billion liters of low-carbon fuels in 2024 and are one of the world's largest traders of sustainable aviation fuel. CCS and hydrogen are nascent but we are making progress. They will help decarbonize our own operations. We see potential for CCS and hydrogen to support the future of our gas business. We will watch demand and scale up when market signals are right. We are investing in new technologies like GTL and cooling fluids for data centers.
Thank you, Chenade. Let me start by stating that we believe we have good individual chemical assets, but given our lack of scale and competing opportunities, we do not believe we are the natural owners of this chemical portfolio. We remain open to partnerships, but our intent is to reduce capital employed by 2030. We will take a regional approach, maintaining capital where we can drive differentiated value. In Europe, our assets operate efficiently despite margin pressures. In North America, Shell Polymers Monaca benefits from advantaged feedstock, and our US Gulf Coast linear alpha olefins business holds strong competitive advantages. In China, we have a successful joint venture with CNOOC, and we took FID on Nanhai Phase 3 and the polycarbonates project. However, given industry challenges, we may not be the natural owner of these assets. We will continue to high-grade and pursue closures in Europe. In the US, we will pursue strategic partnership opportunities. Our intent is clear: reduce capital employed in chemicals by 2030 and reallocate to more competitive options. Now, let's talk about power and low-carbon options. Power remains the most rapidly decarbonizing part of the energy system. We have set a target to increase ROACE from 3% to around 10% by the end of the decade. We are pivoting to flexible generation, such as gas-fired power and batteries, which are critical for our trading teams. We have already acquired the Rhode Island CCGT and the Rage Bank battery project in Australia. We will continue to high-grade our portfolio and use a capital-light model. We are setting a ceiling for capital employed in power of around $15 billion, with the share of trading and flexible assets increasing to about 80% by 2030. In low-carbon options, we are focusing on low-carbon fuels, CCS, and hydrogen. These are essential for sectors that cannot easily electrify. We are allocating up to 5% of group capital employed to develop these options. In low-carbon fuels, we paused construction at the Rotterdam facility but see long-term potential. We are leveraging our trading and optimization capabilities to grow sales and secure sustainable feedstocks. In 2024, we traded over 10 billion liters of low-carbon fuels and became one of the world's largest traders of sustainable aviation fuel. CCS and hydrogen are even more nascent, but we are making progress. They will help us meet our own emissions reduction targets. We see potential for CCS and hydrogen to support the future of our gas business, with abated LNG and new fuels like liquefied synthetic gas. However, without strong regulatory incentives, these solutions are unlikely to become economical. We will watch demand and be ready to scale up if market signals present themselves. We are not baking any of this into our plan given current uncertainty. We continue to invest in new technologies, such as our proprietary GTL technology, which we are expanding into new products like cooling fluids for data centers. Liquid cooling fluids can almost eliminate the need for power-hungry air conditioning systems.
Dramatically reduce required floor space, making it easier to scale facilities, reducing total cost of ownership and improving sustainability. And we're not stopping there. Our commercially proven GTL technology provides a flexible pathway to produce biofuels, e-fuels, or a combination of both from a range of synthetic feedstocks, allowing us to develop low-carbon options for the future. We're not new to this space. In 2021, the world's first commercial flight flew from Amsterdam to Madrid, fueled with certified synthetic kerosene produced by Shell from captured carbon and green hydrogen. Our researchers and scientists are working with our assets to extend this demonstrated capability into affordable production at scale. As we're bringing discipline and focus on our competitive strengths in our allocation of capital, we will do exactly the same as we allocate our technology dollars, driving value both in the short term and in the long term. So let me summarize. We will deliver more value from our core downstream businesses through focus on value by executing a differentiated strategy by enhancing our operational performance in terms of OPEX and capex spend and by reallocating capital to where we have conviction and above cost of capital returns. This is a continuation of our journey and these businesses should deliver over 15 billion dollars in CFO per year on average from 2025 through to 2030. This is a 25% increase compared to where we were over the past two years. Key to the improvement journey is capex discipline where we will spend $8 billion per year to 2028. We'll invest in line with or better than our IRRa hurdle rates of 12 to 15% in downstream and 10% in the renewables and energy solutions. We will grow in areas where we have unique advantages and where we see existing high returns among our core businesses and we will optimize for value in both power and low-carbon solutions harnessing the optionality that they provide. We are confident that we can achieve this given both the strong progress that we've already made as well as the credible pathways that we have outlined today. And with that, let's open it up for more questions. Muhammad, come to the stage, please.
All right. Thank you. Well, folks, you know the drill. We'll do it exactly as we did last time. One question each please or maybe two if we have time and please state your name and go to this table at the front please.
Thanks M. It's Josh Stone here from UPS. I wanted to ask about your approach to recycling capital inside the organization and how you intend to balance M&A and investments and because if I look over the last five years you've been a net seller of assets. So is that still the intention if you look to the next five years but look at your capital employed it's down over the period it's down even more if I consider the impairments so have we hit the bottom of the capital employed for Shell do you think you actually now start to grow it from here and then second question I wanted to challenge you a little bit on your low carbon fuel strategy you said you wanted to wait for the right market signals maybe to add more capital to that business but you know we had the right market signals five years ago the rug was pulled from the industry we're still seeing the fallout that now. So what would give you the confidence that the regulation did come back what would give you the confidence that you wouldn't have the rug pulled from you again.
Thank you for those Josh. Let me take the second one first and then invite Chenade to reflect on the first. We've I think we mentioned it in the speech we've learned a lot. The fundamentals are going to be key and so when we announced our energy transition 2024 plan we talked about a critical element being the affordability of these alternative lower carbon fuels and that the majority of our technology spend is going to be to bridge that green premium that we currently see. So there's two elements here. There's what we can continue to do to be able to reduce that premium. And by the way, that's why we like for example low-carbon fuels because as drop-in options, they are the lowest cost alternative for the carbon take out that they bring. But they're still more expensive which is why they need the regulatory help. So we need to do our part to reduce costs and we need the regulator to do their part. A lot of this is about how much confidence we have in the policies. There have been policies that have been consistent and we have been working through from in multiple regions. So this is about making bets, more selective bets in the countries where we see strong fiscal situation, strong appetite by both sides of the aisle as well as the population to be able to decarbonize and those will be the opportunities which we will invest in and so we will be very very clear and selective around where those are within the capital constraints that we have set for ourselves.
In terms of your question really around capital employed and is this almost the bottom of it in that sense, the capital employed it's a little bit of a difficult question to answer and the reason I say that is if I look at what we're going to see happening for instance in upstream or even LNG as we get projects online you'll start to see of course depreciation accelerating quite rapidly because they become productive so it really isn't stable as it goes through. At the moment of course we've got capital employed quite high because as we're building and we have not yet actually delivered to LNG Canada being a case in point and you'll start to see that coming. You could say the same for Sparta coming through, Gateway, Demato will start of course building in terms of the capital employed before it comes down so it's not a linear situation. Your point in terms of but you're actually saying you're looking to reduce your capital employed in chemicals we are but we're still investing as you look at it across the rest of the businesses and why we've said true by 2030 is we don't want to be rushed on any of this. We want to do it for value. So that's why there's not a linear answer to that. Of course, I model it out, but I'm very very confident that it will vary year to year to whatever I expect it to be.
All right, we have a couple questions coming in via Lumian line. So maybe I'll touch on one first. So we have Irene from Bernstein and Socianal. Two questions. First question, the chemicals industry has been at the bottom of the cycle for a while. Should that cycle improve and normalize as is generally anticipated? Is there a risk that you are reducing capital employed perhaps at a low low point? And then the second question from Marin is the capital discipline is impressive and with the enhanced share buyback at today's share price, your market cap may be 40% smaller by 2030 than today. Is there a risk that Shell is self-liquidating?
Two great questions. Thank you for those Irene. Let me maybe take the first one and then if you want to touch on the second one. I think on chemicals, important we again contextualize the sequencing of our journey. Over the past couple years the focus has been very much on ensuring that we are doing all the self-help we can and there were three elements to that. There was cost, capital discipline and making sure that we ramp up Shell Polymers Monaca to where it is today. We have more to do there in particular on continuing to create differentiated grades and we're well on that journey but that was an important part of the sequencing of the journey and what we're saying today is we are in essence going to look at opportunities to be able to create or unlock more value. We haven't said we are going to sell it nor have we said we're going to take one route or the other. As Chenade just mentioned, we start from a position of wanting to be able to really look at all the opportunities to create the scale and figure out how we will monetize that whether that is through partnerships with other strategic partners or other options which we will be considering in the coming months. So that's I think one part of it. I think the second part is to recognize that we are looking to reallocate that capital into high return opportunities. So back to this point around the key messages from this capital markets day, we have to be able to be a lot more unemotional about where our capital allocation goes in pursuit of where we have competitive advantage and where we see a long-term trajectory for the business for us to be able to create value. And that's exactly what we're doing in this context indeed.
And thank you Ariana. Yes, capital discipline is certainly alive and well that is across the organization and we've got that healthy tension that exists. But back to almost a comment I made earlier when I think about the financial framework when we have that debate we talk about protecting our dividend first then looking at the capital we need to invest across the company. We're not in a position where we have to be capital constrained. We're in a position where we are choosing to be capital constrained and if the businesses keep coming up with more and more ideas, we will keep reviewing those and look at allocating between them. The second part of that, so I don't feel constrained from that point of view in terms of capital investing in the existing businesses or in actually growing those businesses in terms of the sort of what you're alluding to is the buyback of shares in terms of self-liquidating. Hey, if the price continues as it is, I'll keep doing the capital allocation. We'll keep having that debate and we'll keep buying back our shares. So, yes, we will continue to reduce those and increase the stake of the pie for those shareholders who remain with us. And of course, at that point in time, at some point in the future, there will be that DPS increase. That is very clear. Remember, we've already done it. We've already done 25% over the last couple of years as well.
Maybe the only thing I'd add to that, Chenade, as well, Ariana, I keep coming back to that vision slide that we had. The vision is clear. We know the destination we want to get to and we will keep driving towards that destination. A smaller number of shareholders will enjoy some of the glory of the 2035 period and that's absolutely fine. They'll be much richer than they are today.
All right, setting the bar high. Okay, the question over here please Kelly.
Thank you Paul Chan Scotiabank. Wael or Chenade, in the power you're going to shift to 80% on the trading and flexible asset. Some of the utility company at least in the US and one of your peers saying that CCGT right now is not economic to build and is cheaper to buy. Should we assume that I don't know whether you agree and if that's the case should we assume that to shift it up you just going to use acquisition, organically don't going to build and also that a lot of the utility company actually believe solar and onshore wind is probably the only asset you could in the near term bring to the market due to regulatory constraint and permitting and all that. Wondering that whether you believe in that and if that's the case is it too much saying that shifting 80% to just on the flexible asset. The second question want to see if you can talk about the role of exploration in the longer hall for you. I think over the past several years that you guys have cut back quite a lot and you also have not done as much of the wildcat on the frontier exploration than in the past and whether that will remain to be the strategy and what is that role in replacing your production or reserve. Thank you.
Let me maybe address both starting with your second question Paul. I'm not sure of the validity of the point around where we sit compared to others. We're still very strong in our exploration spend, but you're absolutely right. The majority of it is going into Heartlands. Around 80 plus percent of where our exploration money goes today is into Heartlands. Not because of philosophical or ideological reasons, much more because that's where we have seen the best return on our exploration spend over the last 20 years. The Wildcats have been much more challenged and when you look at the infrastructure that you require to build with our break even price requirements, it's more challenged. But we are absolutely committed for a very long runway for our exploration programs in the basins where we have a particular competitive advantage. That includes for example the Atlantic and in particular our strength across Brazil, the Gulf of America, the west coast of Africa as well as key basins like Oman, Malaysia, Kazakhstan where we have good knowledge. On your first question, I think it's fair to say that we will play to where the longer term value pools are going to be. We are not, you don't see us building new combined cycle gas turbines. The move we made recently was exactly as you described. We bought the 600 megawatt facility in Rhode Island. Remember we have a strong solar platform here called Savon and what's interesting for us with our trading-led asset-backed strategy is that Savon gives us a very healthy pipeline of solar opportunities which we hybridize with our top three leading gas trading position here in the US that is underpinned with access to either capacity in CCGTs or in the case of Rhode Island where we own one. It is the hybridization there that we are looking for with the minimum amount of capex we can get. I'd leave that as one point. I think the second point I'd make is it's important to recognize that the power sector plays differently in Australia. There's a very different dynamic to what we see here and similarly in Europe. So it is much more of a local power strategy that we are implementing with flex playing up in certain markets more than others. On balance the 80% is what we feel is the appropriate direction and proportion.
All right table over here.
Martin, hi, hello, it's Martin Ram Stanley. Just ask you two things. So if in this discussion this trading clearly plays a very big role and if trading is a sort of two to four percent uplift to ROCI then it's probably somewhere as a share of earnings more than a quarter less than a third on a sort of ongoing basis which actually when you think about it makes it one of the very largest businesses in all of Shell. So clearly important in your vision of Shell by the end of the decade into the 2030s. Would you like to see trading to become a larger percentage of the overall earnings mix or will it still by 2030 be broadly that sort of more than a quarter less than a third that what it is today? And how large can it become in your view before it sort of starts to change the nature of the company? Because it is a bit different of course than all of the rest of Shell which is very much centered around physical assets. That's one thing and the other thing I wanted to ask you is in a number of locations like chemicals and refining seems very integrated and in your effort to restructure chemicals shrink the capital employed are there certain constraints where you might want to keep the refining but not the chemicals and like what constraint does that put on you in terms of the ability to restructure chemicals.
You want to touch on that second question? Sure. The first Yeah. So in terms of you're absolutely spot on. In many places we have integrated sites and you can see that whether that's in the Netherlands or we can keep going through the different locations. You're correct that we look at them as two different businesses and then look at the value that we create because of that integration. That's why we talked about the energy and chemicals parks in the past as well. So is it adding a constraint in terms of what MTO will look at as she moves her business? She's looking at that across the different areas to say where would I be disadvantaged if I were to separate these. But fundamentally, no, we can put in place long-term contracts. We can put in place different agreements and that's exactly what we're doing is looking at where are their interdependencies, where is there value created because of that. And how long can we do that? We have it in different divestments that we do whether it's in Singapore of course we continue to have a long-term relationship with Singapore in terms of either supply or uptake. So that's part of how we typically do these and of course what we're talking about is in particular in the US looking at strategic partnerships. So we see the ability to actually blend them together.
Yeah. Thanks Chenade. Martin, a couple of points. I mean I think maybe firstly the philosophy of how we see trading and optimization. We definitely do not see it as a business, right? We see it as a capability, a differentiated capability. And I just want to emphasize that because it's a capability that indeed is unified under one umbrella in the way we've structured the company, but that's to be able to really perfect risk management and put the right controls around it in service of different business outcomes. But trading and optimization fundamentally differs in a place like crude or products where we are working on commodities and where we are essentially creating flow versus LNG where it is central to an integrated value chains with our customers to a place like low-carbon fuels where the 10 to one where we market where we sell 10 times more biofuels liters than we actually produce means it is much more of a trading-led asset backed strategy. One of the refinements that we have brought today is a lot of those low-carbon options will be moving more towards that trading-led asset-backed. So we don't start from a position of constraints because we also recognize that each of these different businesses will have different market fundamentals at any one point in time. But we do not want to get into trading for the sake of trading. This is as much of an optimization game around the assets and the value chain that we have with selective trading around that because of the insights we get with the broad portfolio we have.
Thank you. Let's just stay here on this table. Can we get Jack mic please?
Thank you Jako Jeff. First question you highlighted how you are one of the largest offtaker of US LNG and this creates a natural position when it comes to North US gas. How comfortable you are with keeping that position especially as we go into a material ramp up of LNG in the US and increasing demand. Second question you highlighted a lot of changes in the DSR organization and portfolios in terms of where you capital employed and cost reductions. What are the key push backs you're getting from the organization as you change your investments and your cost structure in these areas?
