Upstream overview

Conventional oil and gas
Cash engine

Deep water
Growth priority

Shales
Future opportunity

Milestones in 2016

• Following the acquisition of BG in February 2016, we completed the integration of BG assets into our portfolio.
• Also in early 2016, in the United Arab Emirates, we decided to exit the joint development of the Bab sour gas reservoirs (Shell interest 40%) with Abu Dhabi National Oil Company (ADNOC) in the emirate of Abu Dhabi, and to stop further work on the project.
• In Brazil, the seventh, eighth and ninth floating production, storage and offloading facilities (FPSO) – Cidade de Maricá, (Shell interest 25%, production capacity of 150 thousand boe/d), Cidade de Saquarema (Shell interest 25%, production capacity of 150 thousand boe/d) and Cidade de Caraguatauba (Shell interest 30%, production capacity of 100 thousand boe/d) respectively – achieved first oil in various offshore blocks.
• In Brunei, the non-Shell-operated ML South development (Shell interest 35%) achieved first production. The expected peak production from this development is around 40 thousand boe/d.
• In Kazakhstan, first crude oil was exported on October 29, 2016, and the Commencement of Commercial Production milestone was achieved on November 1, 2016, from the non-Shell-operated Kashagan development (Shell interest 16.8%).
• In Malaysia, we started production from the Malikai tension leg platform (TLP) (Shell interest 35%), located 100 kilometres off the coast of the state of Sabah. Malikai is expected to reach a peak production of 60 thousand boe/d.
• In the USA, we started production at the Stones development (Shell interest 100%) in the Gulf of Mexico. Stones is expected to produce around 50 thousand boe/d when fully ramped up at the end of 2017.

We continued to divest selected assets during 2016, including:

• In Canada, we sold our interest in 145 thousand net acres in the Deep Basin acreage and 61 thousand net acres in the Gundy acreage.
• In the USA, we sold our 100% interest in the Brutus TLP, the Glider subsea production system, and the oil and gas pipelines used to transport the production from the TLP.
• Also in the USA, we sold a 20% interest in the Kaikias development in the Gulf of Mexico. We retain an 80% interest.
• In Malaysia, we agreed to sell our 50% interest in the 2011 North Sabah EOR Production Sharing Contract in Malaysia, subject to obtaining regulatory and partner approval.

Additionally, in 2017

• In January, we agreed to sell our interests in some of our UK North Sea assets, for up to $3.8bn. The transaction is subject to partner and regulatory approvals, with completion expected in 2017.
• In March, we agreed to sell all of our in-situ and undeveloped oil sands interests in Canada, and reduce our interest in the Athabasca Oil Sands Project (AOSP), for a net consideration of $7.25 billion. Upon completion, we will continue as operator of the Scotford Upgrader and Quest carbon capture and storage (CCS) project. The transactions are expected to close in mid-2017, subject to customary closing conditions, adjustments and regulatory approvals.

Upstream earnings and cash flow [A]

$ billion

[A] Earnings excluding identified items.

Production available for sale

mboe/d