Copyright of Shell Petroleum Development Company of Nigeria Limited 1June 2011Confidential

The Subsea Sector in Nigeria’s Oil & Gas Industry

Subsea North East

Conference & Exhibition

June 9, 2011

Engr. Uzoka Austin Emmanuel

NCD Manager

Disclaimer Statement

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All

statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements

of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties

that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking

statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing

management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of

terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’,

‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of

Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this Report,

including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group’s products; (c) currency fluctuations;

(d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks

associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions;

(i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments

including potential litigation and regulatory effects arising from recategorisation of reserves; (k) economic and financial market conditions in various

countries and regions; (l) political risks, project delay or advancement, approvals and cost estimates; and (m) changes in trading conditions. All forward-

looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this

section. Readers should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this

presentation. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as

a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred

from the forward-looking statements contained in this presentation.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved

reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing

economic and operating conditions. We use certain terms in this presentation, such as “resources" that the SEC's guidelines strictly prohibit us from

including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575 and disclosure in our

Forms 6-K file No, 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

Contents

� The Nigerian Oil & Gas Industry

� The Nigerian Oil & Gas Industry Content Development (NOGICD)

Law

� NOGICD : Challenges and Opportunities

� Road Map for Success in Nigeria

The Nigerian Oil & Gas Industry

1.0

Nigeria Oil & Gas Industry Facts

After four decades of production, the sector is still very much dependent on foreign

technologies

Nigerian Ambition

0

20

40

60

80

100

up to 2004 2004 - 10 2010 - 15

Nigerian Foreign

Attracts high foreign direct investment and is

the most developed amongst all economic

sectors

Accounts for 95% of country export earnings

and 80% of national income

Over 40% contribution

to GDP

Proven oil & gas reserves

� 37bbln blls

� 185 Tcf natural gas

Employs <10% of working

population

The Nigerian Oil & Gas Industry

35bn barrels

Proven Oil Reserves

187 Trillion Cubic Feet (TCF)

187 Trillion Cubic Feet (TCF)

Proven Gas Reserves

Estimated 600TCF

Estimated 600TCF

Undiscovered Gas Potential

R

E

S

E

R

V

E

S

DAILY PRODUCTION

�Oil - Over 2 Million Barrels �Oil - Over 2 Million Barrels �Gas - Over 8 Billion Cubic Feet �Gas - Over 8 Billion Cubic Feet

�Gas Export - Over 3 Billion Cubic Feet

�Gas Export - Over 3 Billion Cubic Feet

ESTIMATED ANNUAL SPEND

�Industry Wide - About $20bn Annually

�Industry Wide - About $20bn Annually

Source : Investment Opportunities in the Nigerian Oil & Gas Industry - Diezani Alison-Madueke (Mrs.) Honourable Minister of Petroleum Resources – OTC 3rd May, 2011

�Upstream Gas - $1.5bn to $2bn by FGN�Upstream Gas - $1.5bn to $2bn by FGNProven gas reserves ... We are clearly well positioned to move from the current 7th

position in the world to the top three in due course.

The Nigerian Oil & Gas Industry

Oil and gas will remain the major sources of energy for the next 25 years

Nigeria is a major player in the oil and gas industry

Oil and gas will remain the major sources of energy for the next 25 years

Nigeria has the 10th largest proven oil reserves Nigeria has the 7th largest proven gas reserves

OPEC Report 2009

� Ample opportunities exist in the Nigerian oil & gas ndustry

The Nigerian Oil and Gas Industry

Content Development (NOGICD) Act

2.0

History of the NOGIC Bill

• Titled “ An Act to make Provision for Nigerian Content Development in the Upstream Sector of the Petroleum Industry and for Matters Connected Therewith” sponsored by Hon. Chudi Offodile

Conceived in 2002 by the National Assembly

Stalled as the initial sponsor of the bill lost his seat in the 2003 election

Resurfaced in 2005 and sponsored by Senator Lee Maeba

• This policy trust was sponsored by NNPC

Government issued policy on local content 45% - 2006 and 70% - 2010

• Contracts to comply with LC requirements.

Shell Nigerian Content policy signed in 2006 by Basil Omiyi

The Senate passed Local Content bill in April 2008 and House Representatives in October 2009

Committee harmonized the report passed into law by Senate and HOR-2010Committee harmonized the report passed into law by Senate and HOR-2010

The NOGICD Act - Overview and Structure

The law was unveiled on April 28, 2010 with the formation of Nigeria

Content Development Monitoring Board (NCDMB).

It applies to all matters pertaining to Nigerian Content in respect to all operations or

transactions carried out in or connected with the Nigerian Oil & Gas Industry.

Part I – Nigerian Content Development in Oil &

Gas Industry

Part II – Establishment of the NCDMB

Schedule A – Minimum Nigerian Content (NC)

targets

The Act (110 Clauses in 3 Parts)

� 68 clauses on the provisions and application of the law

� 42 clauses on the structure, roles and activities of the NCDMB

� Stipulates % NC per category

� 17 Main and 285 sub categories listed

NOGICD Act – Nigerian Economy

Oil & Gas sector is the primary driver of economic activities

� Stimulate industrial development

and strengthen local industry

�Create linkages between oil & gas

industry and other sectors of the economy

� Build a globally competitive supplier base and energy

sector

�Highly skilled and innovative local workforce

�Increasing local capability and capacity

� Develop vibrant local economy

�Increase the pace of economic diversification

�Maximise overall economic

Local Content

Development

: Transformation that

is generated and

sustained over time

from withinLocal Content Development - part of government’s comprehensive agenda

NOGICD : Challenges and

Opportunities

3.0

Nigerian Content Act: Key Challenges for Investors

All operator, contractors and sub-contractors to maintain bank accounts in

Nigeria

Operators or project promoters to retain a maximum of 5% of management

positions as expatriate positions

1% of every contract awarded to any operator in the upstream sector to be

deducted for the purpose of funding the development of Nigerian Content

All operators engaged in Nigerian oil and gas industry must carry out all

fabrication and welding activities in-country

Before carrying out any work or activity in Nigeria, the operator or other body

submitting a plan must have an office and personnel with decision -making

authority, where the project management and procurement decisions on the

project are made

Investment Opportunities

“I am personally excited about the

explosion in opportunities that I

see unfolding in our industry, for

all current and prospective

investors. Our vision is focused

and we have a clear and

implementable roadmap and most

importantly, there is now

continuity in government

policies.”

Honourable Minister of Petroleum Resources – Diezani

Alison-Madueke (Mrs.) OTC 3rd May, 2011

Enabling Business Environment

� The NC Act sets out provisions that guarantee that investments made infacilities within the country will be fully utilized and ... that the rights of everyinvestor is protected under the laws

� Implementation of the most aggressive reform of the commercial frameworkfor

gas in Nigeria to address the observed inadequacies in the erstwhilecommercial terms that stunted investment

� The massive requirements for oil & gas infrastructure development, projectedannual tonnage of pipelines, welded steel products and other structures willsupport investments in fabrication yards, machine shops and related facilities

� An extensive Nigerian coast line, high volume of cargo into Nigeria, marinesupport vessels and equipment, rigs, offshore production units and thrivinginformal ship repair industry justify the further and increased development ofmodern dry docking facilities in the country

Source : Investment Opportunities in the Nigerian Oil & Gas Industry - Diezani Alison-Madueke (Mrs.) HMPR – OTC 3rd May, 2011

Investment Opportunities

• Support the development of the various petrochemical, fertilizer, gas processing plants, refineries

Engineering Design and Related Services

• Growth of gas utilization from 1 bcf/d to 5bcf/d requires considerable step growth in petroleum engineering studies, drilling activity...

Petroleum Engineering Services

• Current capacity is significantly smaller than required... need for investment in the area of modern fabrication yards

Fabrication and Construction

• Required for the laying of over 2,000 km of gas and oil pipelines over the next four years

Pipe Mills, Pipe Laying and Support Activities

• A major opportunity for investorsEquipment leasing

• Major construction effort, often in hostile terrainCivil Works

• Over $40bn is planned to be expended within the next few years in both oil and gas activities, logistics to account easily for 5-10% of this spend

Logistics and Haulage

Source : Investment Opportunities in the Nigerian Oil & Gas Industry - Diezani Alison-Madueke (Mrs.) HMPR – OTC 3rd May, 2011

Source: Category Gap Analysis, SEPCIN 2010

Nigerian Content Attainment 2010- Offshore Categories

Opportunities in Nigeria Oil and Gas Industry

Criteria

• Technological

requirement

• Skill requirement

• Level of capital

investment

• Employment

opportunities created

Criteria• Complexity of total cost of ownership considerations • Level of coordination required across divisions• Switching costs/switching difficulty• Cost of infrastructure

Size of circle = opportunity size(absolute spend projected for 2011-2012

BSWA Opportunity Dimensions and Scope

Project Objectives

• Develop 3.2 billion bbls of STOIIP in 7 deepwater

turbidite reservoirs

• Produce 820 million bbls, developed in two phases

(Phase 1 + 2) over 25 yrs

Project Scope – currently being optimized

as part of concept selection

• Subsurface & Wells

– Phase 1: 16 wells (10 producers/6 water injectors) pre-

FOD

– Phase 2: Additional 25 wells (11 producers/14 injectors)

drilled post FOD to maintain plateau

• Subsea & Topsides Facilities

— New Regional FPSO Hub

— Storage: Circa 2.5 MMbbls (non-segregated base case)

— Oil production capacity – 225Kbopd

Project Schedule – P50

FIDQ2-15

FEASIBILITY

SELECTION

Time Now

DEFINE EXECUTE

FODQ2-20

VAR 3 Q3-11DG3 Q4-11

Bonga North - Overview

Project Objectives

• Tie-back Bonga North Field to BongaFPSO – “keep Bonga full”

• Develop 1200+ MMbo of STOIIP in 5 deepwater turbitide reservoirs

• Produce 397 MMstb (Phase 1)

Project ScopeSubsurface & Wells• 13 oil producers and 12 water

injectors to mature 397 MMstb in BN Field (Phase 1 – incl. 7 Smart)

• 4 oil producers and 3 water injectors to mature ~ 40 MMstb in BN Field (Phase 2)

Subsea & Topsides Facilities• Single loop tie-back to the Bonga

FPSO with 4 Production and 3 WI manifolds

• Substantial brown-field modification of producing FPSO

FIDFIDFIDFID

2013201320132013

FEASIBILITY FEASIBILITY FEASIBILITY FEASIBILITY SELECTIONSELECTIONSELECTIONSELECTION

Time NowTime NowTime NowTime Now

DEFINEDEFINEDEFINEDEFINE EXECUTEEXECUTEEXECUTEEXECUTE

FODFODFODFOD

2017201720172017

Roadmap for Success in Nigeria

4.0

PSC/JV Requirements

SNEPCo (PSC)

NAPIMS Tender rules apply and require competitive tendering – only in very isolated cases will sole source be supported, needs very robust business case.

NCD laws require demonstrable and increasing Nigerian Content, Capability and Capacity Development.

NIPEX portal will automatically inject Nigerian Govt approved (domestic) vendors

All contracts to be through Nigerian companies, briefcase companies frowned upon –seeking genuine NCD commitment and progress.

EFA’s will need to compete on own commercial merits, Vendors with EFA’s will need to demonstrate clear NCD intentions, actions and actual accomplishments.

NAPIMS suspicions of any contract not tendered – IOC “bias/benefit”.

Minor contracts (<$250K or <NGN10m) at discretion of operator but use of consecutive contracts frowned upon and subject to challenge and even non recovery of costs(i.e. Shell exclusive – x20(JV) x3.5(PSC)).

NAPIMS referral contracts typically take 12+ months to put in place.

Preference to fix $ exchange rates for duration of the contract (pessimistic hedging).

Split currency contracts to 60/40 max ($/Naira).

SPDC (JV)

As SNEPCo but minor contract levels <$500K or <NGN10m

Contracting and Procurement Process

Process and timelines depend on value limit set by JOA & PSC

Pre-qualifySupplier

TechnicalBid Bid

Pre -qualifySuppliers

TechnicalBid

Commercial Bid

JV- >$.5/N10M

PSC- >$.25/10M

subject to 3 stage open tendering process

Involves NAPIMS and NCDMB

Historical cycle time approximately 24 months

Ongoing collaboration to reduce cycle to < 1year

Technical and commercial stages done via NIPEX

JV- <$.5/N10M

PSC- <$.25/10M

Not subject to open tender

Normally awarded within 6 weeks

� NIPEX prequalification process will be eliminated and replaced with Joint Qualification System (JQS) via NIPEX

NCD Contracting Flow & Required Documentation

STRATEGY1. Part A proposals2. Waiver application (if required)

ADVERT1. Proposed Advert to be published

PREQUALIFICATION1. Questionnaire issued2. Bidders’ Responses to adverts

PREQUA EVALUTATION

1. Evaluation Criteria2. Bidders’ responses3. Evaluation Score sheet

TECHNICAL1. Bidders’ list from Prequa

evaluation2. Technical ITT

TECHNICAL EVALUATION1. Evaluation Criteria

2. Site visit report (where applicable)

3. Bidders’ responses4. Evaluation Score sheet

Information Required in Documents

Stages & Documentation Required� NC Scope� Project Scope Duration� Schedule A targets & Compliance

� NC Plan including training� Office & facilities location� Company Ownership� Other NC requirements

� Company ownership�Staffing Structure�Bidders’ NC Plan

�Memorandum of Agreement �NC Scope (manpower, services, equipment, materials & sub contractors �Reporting & monitoring Requirement

�Cut-off marks�Bidders NC compliance level�Evaluation results

�Cut-off marks�Evaluation results

�Parameter for NC evaluation�Weighting mechanism

�Bidder’s name,�Head office & Facilities location

� Scope of work� Contract Duration� Advert closing date� Staffing structure

� Contract Strategy� Cost Estimates� Contract Plan� NC Plan

�Bidders’ names & company asset ownership, �Nigerian based locations, �Bid closing dates�Schedule A requirements�Parameter for NC evaluation�Weighting mechanism

Subm

issio

ns f

or

Adve

rt &

P

requa S

tage

Contr

act

Str

ate

gy

&

NC

Pla

n

Subm

issio

n

for

bid

ders

lis

t sta

ge

Bid

D

ocum

ents

&

Eva

luation

Crite

ria

NCD Contracting Flow & Required Documentation (Cont’d) Information Required in

Documents

Stages & Documentation Required

COMPLIANCE CERTIFICATE

1. Signed award notification letter2. NC compliance certificate template

AWARD1. Award Notification Letter2. Model Contract

REPORTING &

MONITORINGAll reporting obligations as listed in the reporting list

�Agreed NC scope of work & Value�NC delivery milestone

Information as contained in the different reports formats

� NC delivery Milestones� Schedule of prices for

NC scope

�Bidder’s NC delivery milestones�List of successful bidders

�NC Scope & value�Total contract sum�1% NCD fund contribution

�Reporting & monitoring obligations�Contract duration

COMMERCIAL1. Bidders’ list from technical

evaluation2. Evidence of waiver application if

required3. Commercial ITT

EVALUATION1. Bidders’ responses2. Summary of commercial evaluation

�Project title �Commencement of bid date�NC Scope & value

�Vendor’s quoted prices�NC Scope pricing�Award Price

� Bidders’ names� Contract Duration� Agreed NC Scope

Bid

Docum

ents

&

Eva

luation C

rite

ria

Waiv

er A

pplic

ation

Subm

issio

ns

for

Aw

ard

Periodic

R

eport

ing

Registration Requirements

Memorandum and Articles of

association, Form Co7 and Co2

endorsed and stamped by the

C.A.C

DPR certificate (2010)

VAT registration certificate.

Organisational chart.

Letter of financial competence from

the bank.

Audited accounts

Two local govt identification letter for

the directors.

Two (2) passport

photographs each of at least

2 directors endorsed by the

Nig. court of law.

Proof of medical

retainership.

Health Security, Safety and

Environment (HSSE) Policy

or (HSE-MS MANUAL)

QA/QC Manual.

Tax identification number

Registering to Do Business in Nigeria

Source: Nigerian Petroleum Exchange 2010

Prequalification Process

Source: Nigerian Petroleum Exchange 2010

Recipe for success

Economic justification

Openness to competition

Integrity

No political affiliations

Commitment to health, safety, security and the environment

Care for local communities

Continuous communication and engagement

Compliance with Nigerian Law