annual-report20fsec-2011.pdf - ROYAL DUTCH SHELL PLC FORM 20-F(Annual and Transition Report(foreign private issuer Filed for the Period Ending Telephone

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Unformatted text preview: ROYAL DUTCH SHELL PLC FORM 20-F (Annual and Transition Report (foreign private issuer)) Filed 03/15/12 for the Period Ending 12/31/11 Telephone CIK Symbol SIC Code Fiscal Year 31-70-377-9111 0001306965 RYDAF 1311 - Crude Petroleum and Natural Gas 12/31 © Copyright 2012, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 Commission file number 1-32575 Royal Dutch Shell plc (Exact name of registrant as specified in its charter) England and Wales (Jurisdiction of incorporation or organisation) Carel van Bylandtlaan 30, 2596 HR, The Hague, The Netherlands Tel. no: 011 31 70 377 9111 [email protected] (Address of principal executive offices) Securities registered pursuant to Section 12(b) of the Act Title of Each Class Name of Each Exchange on Which Registered American Depositary Shares representing two Class A ordinary shares of the issuer with a nominal value of €0.07 each American Depositary Shares representing two Class B ordinary shares of the issuer with a nominal value of €0.07 each 4.95% Guaranteed Notes due 2012 Floating Rate Guaranteed Notes due 2012 1.875% Guaranteed Notes due 2013 4.0% Guaranteed Notes due 2014 3.1% Guaranteed Notes due 2015 3.25% Guaranteed Notes due 2015 5.2% Guaranteed Notes due 2017 4.3% Guaranteed Notes due 2019 4.375% Guaranteed Notes due 2020 6.375% Guaranteed Notes due 2038 5.5% Guaranteed Notes due 2040 New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. Outstanding as of December 31, 2011: 3,580,649,474 Class A ordinary shares with a nominal value of €0.07 each. 2,639,434,437 Class B ordinary shares with a nominal value of €0.07 each. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes o No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. o Yes þ No Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer þ Accelerated filer o Non-accelerated filer o Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP o International Financial Reporting Standards as issued by the International Accounting Standards Boardþ Other o If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 o Item 18 o If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes Copies of notices and communications from the Securities and Exchange Commission should be sent to: Royal Dutch Shell plc Carel van Bylandtlaan 30 2596 HR, The Hague, The Netherlands Attn: Michiel Brandjes þ No Table of Contents ANNU AL RE PORT RO YAL DUT CH SHE LL P LC ANN UAL REPORT AND F ORM 20-F F OR THE YEA R END ED D ECEM BER 31, 2011 BUIL DING AN ENE RGY FU TURE ANN UAL RE PORT RO YAL DUT CH SHE LL PLC ANN UAL REPO RT AND FORM 20-F F OR THE YEA R END ED D ECEM BER 31, 2011 BUIL DING AN ENE RGY FU TURE Table of Contents OUR BUSINES SES BUILDING A N EN ERGY FUTU RE GL OBAL ENE RGY D EM AND IS RISING AN D SO ARE CONSU ME R E XPE CTAT IO NS — MORE PEOP LE WA NT E NE RG Y FROM CL EA NE R SO URCES. AT SHE LL WE WORK WIT H OT HE RS T O UN LOCK N EW E NERG Y SOURCE S AND SQ UE EZ E MO RE FROM WHAT WE HAV E. WE DO THIS IN RE SPON SIBLE AND INN OVA TIVE WAY S. IN BUILD ING A BET TER E NERG Y FUT URE WE ALL HAV E A PART TO PL AY . SH EL L IS D OIN G IT S PART. Producing oil and gas Extra cting bitume n Exploring for oil Refini ng oil into and gas Mining oil fuels and sands lubrica nts Producing petroc hemica ls D eveloping fields Supply a nd distribution T ra ding Conve rting gas to l iquid D eveloping products (GT L) biofuels T rading L iquefying ga s by c ooling (LN G) B2B sa les Generating wind energy CH EM ICAL PRODU CT S Regasifying Reta il sa les LNG for plastics, Retail sales coatings, detergents B2B sa les FUE LS AN D LU BRICANT S for transport GA S for cooking, hea ting, elect rica l power Table of Contents 2 Shell Annual Report and Form 20-F 2011 About this Report ABBREVIATIONS CURRENCIES $ € £ CHF US dollar euro sterling Swiss franc UNITS OF MEASUREMENT acre b(/d) boe(/d) MMBtu mtpa per day scf approximately 0.004 square kilometres barrels (per day) barrels of oil equivalent (per day); natural gas volumes are converted to oil equivalent using a factor of 5,800 scf per barrel million British thermal units million tonnes per annum volumes are converted to a daily basis using a calendar year standard cubic feet PRODUCTS GTL LNG LPG NGL gas to liquids liquefied natural gas liquefied petroleum gas natural gas liquids MISCELLANEOUS ADS AGM CCS CO 2 DBP EMTN EPS GHG HSSE IFRIC IFRS LTIP OML OPEC OPL PSC PSP R&D REMCO RSP SEC TRCF TSR WTI American Depositary Share Annual General Meeting current cost of supplies carbon dioxide Deferred Bonus Plan euro medium-term note earnings per share greenhouse gas health, safety, security and environment Interpretation(s) issued by the IFRS Interpretations Committee International Financial Reporting Standard(s) Long-term Incentive Plan oil mining lease Organization of the Petroleum Exporting Countries oil prospecting licence production-sharing contract Performance Share Plan research and development Remuneration Committee Restricted Share Plan United States Securities and Exchange Commission total recordable case frequency total shareholder return West Texas Intermediate Table of Contents Shell Annual Report and Form 20-F 2011 About this Report ABOUT THIS REPORT This Report serves as the Annual Report and Accounts in accordance with UK requirements and as the Annual Report on Form 20-F as filed with the SEC for the year ended December 31, 2011, for Royal Dutch Shell plc (the Company) and its subsidiaries (collectively known as Shell). It presents the Consolidated Financial Statements of Shell (pages 101-140), the Parent Company Financial Statements of Shell (pages 160-168) and the Financial Statements of the Royal Dutch Shell Dividend Access Trust (pages 172-175). Cross references to Form 20-F are set out on pages 176-177 of this Report. In this Report “Shell” is sometimes used for convenience where references are made to the Company and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. “Subsidiaries” and “Shell subsidiaries” as used in this Report refer to companies over which the Company, either directly or indirectly, has control through a majority of the voting rights or the right to exercise control or to obtain the majority of the benefits and be exposed to the majority of the risks. The Consolidated Financial Statements consolidate the financial statements of the Company and all subsidiaries. The companies in which Shell has significant influence but not control are referred to as “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. Joint ventures are comprised of jointly controlled entities and jointly controlled assets. In this Report, associates and jointly controlled entities are also referred to as “equityaccounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interests. Except as otherwise specified, the figures shown in the tables in this Report represent those in respect of subsidiaries only, without deduction of the noncontrolling interest. However, the term “Shell share” is used for convenience to refer to the volumes of hydrocarbons that are produced, processed or sold through both subsidiaries and equity-accounted investments. All of a subsidiary’s share of production, processing or sales volumes are included in the Shell share, even if Shell owns less than 100% of the subsidiary. In the case of equity-accounted investments, however, Shell-share figures are limited only to Shell’s entitlement. In all cases, royalty payments in kind are deducted from the Shell share. The financial statements contained in this Report have been prepared in accordance with the provisions of the Companies Act 2006 and with International Financial Reporting Standards (IFRS) as adopted by the European Union. As applied to the financial statements, there are no material differences from IFRS as issued by the International Accounting Standards Board (IASB); therefore, the financial statements have been prepared in accordance with IFRS as issued by the IASB. IFRS as defined above includes IFRIC. Except as otherwise noted, the figures shown in this Report are stated in US dollars. As used herein all references to “dollars” or “$” are to the US currency. The Business Review and other sections of this Report contain forward-looking statements (within the meaning of the US Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than 3 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 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”, “goals”, “intend”, “may”, “objectives”, “outlook”, “plan”, “probably”, “project”, “risks”, “scheduled”, “seek”, “should”, “target”, “will” and similar terms and phrases. There are a number of factors that could affect the future operations of 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 Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) proved reserves estimates; (f) loss of market share 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 regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with government entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. Also see “Risk factors” for additional risks and further discussion. All forward-looking statements contained in this Report 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 Report. Neither the Company 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 Report. This Report contains references to Shell’s website and to the Shell Sustainability Report. These references are for the readers’ convenience only. Shell is not incorporating by reference any information posted on and in the Shell Sustainability Report. Documents on display Documents concerning the Company, or its predecessors for reporting purposes, which are referred to in this Report have been filed with the SEC and may be examined and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, USA. For further information on the operation of the public reference room and the copy charges, call the SEC at 1-800-SEC-0330. All of the SEC filings made electronically by Shell are available to the public on the SEC website at (commission file number 1-32575). This Report is also available, free of charge, at or at the offices of Shell in The Hague, the Netherlands and London, UK. Copies of this Report also may be obtained, free of charge, by mail. 4 Shell Annual Report and Form 20-F 2011 About this Report TABLE OF CONTENTS 5 6 8 8 10 11 13 16 20 37 44 45 49 50 54 57 58 62 79 91 98 99 100 141 158 159 169 170 171 176 178 179 Chairman’s message Chief Executive Officer’s review Business Review Performance indicators Selected financial data Business overview Risk factors Summary of results and strategy Upstream Downstream Corporate Liquidity and capital resources Our people Environment and society The Board of Royal Dutch Shell plc Senior Management Report of the Directors Directors’ Remuneration Report Corporate governance Additional shareholder information Report on the Annual Report and Accounts Report on the Annual Report on Form 20-F Consolidated Financial Statements Supplementary information – oil and gas (unaudited) Independent Auditors’ Report to the Members of Royal Dutch Shell plc Parent Company Financial Statements Independent Auditors’ Report to EES Trustees International Limited as Trustee of the Royal Dutch Shell Dividend Access Trust Report of Independent Registered Public Accounting Firm Royal Dutch Shell Dividend Access Trust Financial Statements Cross reference to Form 20-F Exhibits Signatures EX-4.6 EX-7.1 EX-8 EX-12.1 EX-12.2 EX-13.1 EX-99.1 EX-99.2 Table of Contents Shell Annual Report and Form 20-F 2011 Chairman’s message 5 CHAIRMAN’S MESSAGE willing to invest substantial sums of money to secure tomorrow’s energy production. Global economic recovery progressed in 2011. But it has been put under threat by the eurozone’s financial turbulence. And that turmoil may extend into the medium term if the public debt continues to grow in the USA and Japan. Growth in the developing economies is also expected to slow because of a weakening global demand for their exports and a general loss of investor confidence. Our technical and financial means enable us to develop oil and gas resources in very deep water, in very “tight” rock and in the very cold climate of the Arctic. We aim to be an industry leader in these kinds of developments, demonstrating high standards of environmental stewardship and social responsibility. Nevertheless, population growth and rising prosperity in developing countries continue to drive upwards the long-term demand for all forms of energy – both renewable and nonrenewable. Volatility in the marketplace Meeting that demand will require the development of oil and gas resources that, so far, have been passed over because of their geological complexity or geographic remoteness. Such developments have implications for higher costs – and higher energy prices. With such fundamental market forces increasing the tension between energy supply and demand, the world will be vulnerable to economic and political volatility. Unpredictable events almost anywhere in the world – a rash regulatory decision, a populist revolt or a natural disaster – could trigger swings in cost and prices. We are living in a very interdependent world. Energy issues cut across geographic and industrial boundaries. Interlinked resources As a bigger, more diverse energy system is built, the economic, political and environmental impacts of extraction, processing, distribution and disposal of all raw materials need to be taken into account. From such a perspective, managing the emission of greenhouse gases is but one facet of a multifaceted problem. Even basic commodities such as water and food have to be managed in the context of the evolving world energy system. These developments are already influencing our own industry, and they will do so more strongly in the decades ahead. We at Shell seek to gain a better understanding of the inter-relationship between water, food and energy systems. We believe it is critical that these systems not be looked at in isolation. Planning for the future At Shell, we are applying our creativity to discover new energy resources and make previously uneconomic ones viable. And we are We are focusing on natural gas. About half of the energy we produce comes out of wells in that form already, and we plan to increase that proportion in the coming years. It is, after all, the cleanest fossil fuel. Replacing coal-fired power plants with gas-fired ones is the fastest and cheapest way for the world to reduce CO 2 emissions in the power sector. And gas-fired power additionally has the big advantage of 24/7 on-call reliability, complementing the intermittency of solar and wind power. Natural gas can also be cooled into a liquid that can be shipped across oceans. We expect the global market for liquefied natural gas to continue to grow, and we intend to retain our leading position within it. We are also big believers in biofuels. With our Raízen joint venture, we have now become a leading producer of ethanol from Brazilian sugar cane, which can cut CO 2 emissions by about 70% compared with standard transport fuels. The joint venture works with its suppliers, contractors and landowners to make sure that they follow sustainable practices ...
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