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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of December 2015

Commission File Number 1-32575

Royal Dutch Shell plc

(Exact name of registrant as specified in its charter)

30, Carel van Bylandtlaan, 2596 HR The Hague

The Netherlands

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            

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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

ROYAL DUTCH SHELL PLC

(Registered under the CA 1985 and incorporated in England and Wales

with registered number 4366849)

Recommended cash and share offer by Shell for BG

Circular to Shell Shareholders and Notice of the Shell General Meeting

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If you are in any doubt about the contents of this Circular or the action you should take, it is recommended that you seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser (who is, if you are resident in the UK, duly authorised under FSMA or, if you are not, from another appropriately authorised independent financial adviser).

If you sell or have sold or otherwise transferred all of your Existing Shell Shares, please send this Circular, together with any accompanying documents, as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee. If you sell or have sold or otherwise transferred part only of your holding of Existing Shell Shares, please consult the bank, stockbroker or other agent through whom the sale or transfer was effected.

This Circular does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security.

The release, publication or distribution of this Circular, in whole or in part, in, into or from jurisdictions other than the UK may be restricted by law and, therefore, persons into whose possession this Circular comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of one or more of such jurisdictions.

Any financial statements, or other financial information included in this document, have been prepared in accordance with non-US accounting standards that may not be comparable to the financial statements of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. Certain reserves information relating to the BG Group contained in this Circular has been prepared in accordance with the PRMS, rather than the SEC Rules, and, therefore, may not be comparable to the reserves disclosure made by US companies or companies whose financial statements are prepared in accordance with the SEC Rules.

This Circular and the accompanying documents have been prepared for the purpose of complying with English law and applicable regulations and the information disclosed may not be the same as that which would have been disclosed if this Circular or the accompanying documents had been prepared in accordance with the laws of jurisdictions outside the UK.

For the avoidance of doubt, neither the Announcement, the Management Day Update nor the Scheme Document has been incorporated by reference into this Circular.

Bank of America Merrill Lynch, which is authorised by the PRA and regulated by the FCA and the PRA in the UK, is acting as sponsor and financial adviser exclusively for Shell and no one else in connection with the Combination and other matters referred to in this Circular and will not be responsible to anyone other than Shell for providing the protections afforded to its clients, or for providing advice in connection with the Combination, the contents of this Circular or any matter referred to in this Circular and will not regard any other person (whether or not a recipient of this document) as its client in relation to the Combination.

Apart from the responsibilities and liabilities, if any, which may be imposed on Bank of America Merrill Lynch by FSMA or the regulatory regime established thereunder or under the regulatory regime of any jurisdiction where the exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, Bank of America Merrill Lynch and any person affiliated with it assumes no responsibility whatsoever and makes no representation or warranty express or implied, in relation to the contents of this Circular, including its accuracy, completeness or verification and nothing contained in this Circular is, or shall be, relied upon as a promise or representation in this respect whether as to the past, present or future, in connection with Shell, the New Shell Shares or the Combination. Bank of America Merrill Lynch accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise be found to have in respect of this Circular or any such statement. Any reproduction or distribution of this Circular, in whole or in part, and any disclosure of its contents or use of any information contained in this Circular for any purpose other than considering the terms of the Combination is prohibited.

Lazard, which is authorised and regulated in the UK by the FCA, is acting exclusively as financial adviser to the Shell Directors and no one else in connection with the Combination and will not be responsible to anyone other than the Shell Directors for providing the protections afforded to clients of Lazard nor for providing advice in relation to the Combination or any other matters referred to in this document. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this document, any statement contained herein, the Combination or otherwise.

No person has been authorised to give any information or make any representations other than those contained in this Circular and, if given or made, such information or representations must not be relied upon as having been authorised by Shell, the Shell Directors, Lazard or by Bank of America Merrill Lynch or any other person involved in the Combination. Neither the delivery of this Circular nor Admission shall, under any circumstances, create any implication that there has been no change in the affairs of Shell since the date of this Circular or that the information in this document is correct as at any time subsequent to its date.

This Circular is dated 22 December 2015.

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND INDICATIVE STATISTICS

PART A

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

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PART B

INDICATIVE STATISTICS

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PART I

LETTER FROM THE CHAIRMAN OF SHELL

22 December 2015

To Shell Shareholders, Shell ADS Holders and, for information only, to persons with information rights

Dear Shell Shareholder,

RECOMMENDED CASH AND SHARE OFFER FOR BG GROUP PLC

BY ROYAL DUTCH SHELL PLC

On 8 April 2015, the Shell Board and the BG Board jointly announced that they had reached agreement on the terms of a recommended cash and share offer to be made by Shell for the entire issued and to be issued share capital of BG.

Under the terms of the Combination, BG Shareholders (other than Restricted Shareholders) will be entitled to receive:

Based on the Closing Price of 1,469 pence per Shell B Share on the Latest Practicable Date, the terms of the Combination represent:

Based on the Closing Price of 2,208.5 pence per Shell B Share on 7 April 2015 (being the last Business Day before the date of the Announcement), the terms of the Combination represent:

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The Combination will result in existing Shell Shareholders and former BG Shareholders owning approximately 81% and 19%, respectively, of the Combined Group.³

BG Shareholders (other than Election Restricted Shareholders) will be entitled to elect to receive the share component of the Consideration in the form of Shell A Shares, as opposed to Shell B Shares, at the same exchange ratio.

Shell will also provide a Mix and Match Facility, which will allow BG Shareholders (other than Election Restricted Shareholders) to elect, subject to offsetting elections, to vary the proportions in which they receive New Shell Shares and cash. The Mix and Match Facility will not change the total number of New Shell Shares to be issued or the maximum amount of cash that will be paid under the terms of the Combination.

Shell intends to finance the cash consideration payable to BG Shareholders pursuant to the Combination from its own cash resources and, potentially, third party debt.

It is intended that the Combination will be implemented by means of a court-sanctioned scheme of arrangement of BG under Part 26 of the CA 2006.

The Scheme is subject to a number of Conditions summarised in paragraph 12.2 of this Part. The full terms and conditions of the Scheme are set out in the Scheme Document.

Subject to the satisfaction or, where applicable, waiver of the Conditions (other than those Conditions which relate to Admission), it is expected that the Scheme will become effective on 15 February 2016, with New Shell Shares (i) admitted to listing on the premium segment of the Official List and to trading on the main market for listed securities of the LSE by 8.00 a.m. on 15 February 2016; and (ii) admitted to listing and trading on Euronext Amsterdam by 9.00 a.m. (Central European Time) on 16 February 2016.

The aggregate value of the Consideration (based on the Closing Price per Shell B Share on 7 April 2015) represents approximately 35% of the market capitalisation of Shell (based on the Closing Price of Shell A Shares and Shell B Shares on 7 April 2015).

Therefore, owing to its size, the Combination constitutes a “class 1 transaction” for the purposes of the Listing Rules and so requires the approval of Shell Shareholders.

Accordingly, the Shell General Meeting has been convened for 10.00 a.m. (Central European Time) on 27 January 2016 at the Circustheater, Circusstraat 4, 2586 CW The Hague, the Netherlands. Shell Shareholders will be asked to vote in favour of the Shell Resolution to approve the Combination and the issue and allotment of the New Shell Shares.

I am writing to you to provide you with an explanation of the background to and reasons for the Combination and to explain why the Shell Board considers the Combination and the Shell Resolution to be in the best interests of Shell and the Shell Shareholders as a whole and unanimously recommends that you vote in favour of the Shell Resolution, as the Shell Directors intend to do in relation to their own individual beneficial holdings which amount in total to 470,450 Shell Shares, representing approximately 0.00731% of Shell’s total issued ordinary share capital as at the Latest Practicable Date.

The Combination has also been unanimously recommended by the BG Board, with the BG Directors having irrevocably undertaken to vote in favour of the Scheme in respect of their own beneficial holdings.

The Prospectus prepared in accordance with the Prospectus Rules, which contains further details of the issue of the New Shell Shares, has been published on Shell’s website (www.shell.com).

The Shell Board believes that the Combination represents a compelling opportunity for shareholders of both Shell and BG to benefit from the significant value arising from the combination of two highly complementary portfolios. The Combination should lead to:

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Enhanced cash flow, buyback potential and dividends potential

An enhanced set of upstream positions will be a springboard to change and re-shape the Shell Group, driving asset sales and refocused spending, resulting in a simpler, more focused group.

This in turn means the Shell Group can capitalise on its core strengths at greater scale, enabling more predictability in the group and smarter sequencing of the project opportunity funnels of the Combined Group.

The result will be a new shape for the Shell Group which Shell expects will be a higher return, higher cash generative group with better shareholder returns in any reasonably expected oil price environment.

The Combined Group will be concentrated around three pillars – the Shell Group’s upstream and downstream cash engines, deep water and LNG.

Shell aims to balance cash inflows and cash outflows over the business cycle, and to finance competitive investment programmes and shareholder distributions irrespective of short-term oil price fluctuations. Shell is becoming more focused on its core strengths and more resilient and competitive at all points in the oil price cycle while having a more predictable project development pipeline.

Following completion of the Combination, Shell’s priorities for cash will be: (i) reducing debt; (ii) dividends; and (iii) share buybacks and capital investment, and Shell plans to pay down debt from 2016 in order to maintain a strong balance sheet and credit rating to underpin its business model.

Subject to progress with debt reduction and recovery in oil prices, Shell expects to withdraw the Scrip Dividend Programme in 2017 and undertake a share buyback programme of at least $25 billion in the period 2017 to 2020. Shell expects this buyback programme to offset the shares issued under the Scrip Dividend Programme and to significantly reduce the equity issued in connection with the Combination. From 2017, Shell expects that buybacks of both Shell A Shares and Shell B Shares will be possible without significant dividend withholding tax implications for Shell. Shell intends to buy back the cheaper of the Shell A Shares and the Shell B Shares from a Shell perspective.

In the near term, BG Shareholders will benefit from the dividends enjoyed by Shell Shareholders. Shell confirms its intention to pay dividends of $1.88 per Shell Share in 2015 and at least that amount in 2016. BG Shareholders will be entitled to receive each Shell dividend for which the record date falls after completion of the Combination.

In the medium term, all shareholders will benefit from the potential for enhanced cash flow and a continued drive to grow returns and enhance capital efficiency from the combined portfolio.

A leading IOC LNG player

The Shell Group already has a competitive position in integrated gas, with a broad-based and growing portfolio. Return on average capital employed, excluding identified items, from the business was 18% in 2014. Underlying earnings of $10.4 billion in 2014 represented an increase of 470% since 2009. Integrated gas is one of Shell’s key growth priorities.

The Combination will further develop the Shell Group’s competitive position as a major producer and supplier of LNG, including in the core growth regions of Asia and the Atlantic basin. The Shell Group and the BG Group will realise immediate benefits from their complementary LNG production operations.

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The BG Group’s competitive supply position and focus on marketing and shipping will also be further enhanced by the Shell Group’s capabilities, volumes and relationships in these core areas for the future development of the global gas market.

The Combined Group’s equity LNG capacity is expected to be 44 mtpa in 2018, compared to the Shell Group’s 26 mtpa in 2014.

Deepening of competitive position in deep water Brazil

The Shell Group is well established as an innovation leader in deep water with approximately 10% of its total production already coming from deep water fields. The Shell Group’s technology and capabilities in this area are recognised as among the best in the industry and return on average capital employed for deep water, excluding identified items, is attractive at 12% in 2014.

In 2013, the Shell Group entered the Libra pre-salt discovery in Brazil. This experience with Libra, coupled with its 100 years of history in Brazil, provides the Shell Group with a high level of confidence in the profitability and growth potential that can be unlocked by combining the Shell Group’s capabilities, portfolio and relationships with the BG Group’s competitive deep water position there.

The Combination will enhance the Shell Group’s position as a major reserves holder and investor in Brazil, with the potential to increase the Shell Group’s production from 48,000 boepd in 2014 to an estimated 550,000 boepd for the Combined Group at the end of the decade.

The BG Group’s deep water Brazil acreage offers near-term growth and options in the Santos Basin, complementing the Shell Group’s existing production, and longer-term growth potential from the Libra project.

The Combined Group will be the principal partner alongside Petrobras, working to ensure best practice and learnings are applied for the Combined Group’s deep water development in Brazil in the coming decades.

Springboard for further portfolio change in the Shell Group

Shell continues to implement a strategy to improve financial performance, enhance capital efficiency and ensure strong project delivery.

The Combination accelerates this strategy, providing an enhanced set of upstream positions which will be a springboard to change and re-shape the Shell Group, resulting in a simpler more focused group, concentrated around three pillars – upstream and downstream cash engines, deep water and LNG.

The Combination will add some 25% to the Shell Group’s proved oil and gas reserves as at 31 December 2014,⁴ increasing them to approximately 17 billion boe, and 20% to oil and gas production for the financial year ended 31 December 2014, increasing it to 3.7 million boepd, with strong growth potential.

The enhanced suite of growth projects and options for development will create a more competitive cost structure which would be better suited to a potentially sustained period of oil price volatility and allowing a higher rate of portfolio restructuring and asset sales.

Capital investment and exploration spending for the Combined Group will be restructured and Shell expects a reduction of the capital investment programme to around $33 billion in 2016, $2 billion lower than previous guidance of $35 billion, assuming current macro-conditions, compared to the aggregate capital investment of the Shell Group and the BG Group on a combined group basis of $47 billion in 2014, with options to further reduce this spending level should conditions warrant. As part of this restructuring, combined conventional exploration spending will be reduced.

The Combined Group is expected to make substantial disposals following completion of the Combination. Subject to achieving what the Shell Board considers to be reasonable value for such operations, Shell expects these disposals to reach $30 billion during 2016 to 2018.

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Following the OPEC meeting in November 2014, oil markets have entered a downturn which could last for several years. Natural oil field decline accounts for several million barrels per day of production that needs to be replaced annually to match demand, which is also growing. Shell’s view is that the fundamentals of supply and demand, and in particular the requirement for significant and sustained global investment to deliver in excess of 5 million barrels per day of new oil supplies per year, means that oil prices today are unsustainably low.

The timing and magnitude of any oil price recovery are uncertain. In addition, the volatility of oil prices appears to have increased, meaning that Shell will need to manage its finances through significant swings in oil prices.

Shell believes that the Combination has the potential for significant value creation for both sets of shareholders.

High-grading of the Combined Group’s longer-term portfolio, increased asset sales and refocused capital investment should enhance Shell’s free cash flow and improve the ability to cover capital expenditure, interest and dividends in any reasonably expected oil price environment.

The significant equity component of the Combination means that the effective offer price changes with movements in the share price of Shell, which is in turn influenced by factors such as equity markets and oil price movements.

These estimates⁸ reflect the significant potential for creation of value for shareholders in the Combination.

Information regarding the presentation of the Combination in the Shell Group’s accounts under IFRS 3 and 13 is provided in paragraph 9 of this Part.

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As described in the Announcement, Shell believes the Shell Group has a strong and complementary portfolio and country fit with the BG Group, providing the opportunity for synergies to be realised in a number of areas.

Shell has been able, as a result of its analysis and its integration planning work, to identify pre-tax synergies that are expected to be $3.5 billion in 2018. This expected level of identified pre-tax synergies comprises $2 billion of operating cost savings and a $1.5 billion reduction in exploration expenditure in 2018.

The potential sources of quantified cost savings arising as a direct result of the Combination include savings from:

These savings are incremental to any savings already planned by Shell and BG which are expected to take place regardless of whether the Combination completes or not.

The cost savings referred to in the first two bullets above are expected to be recurring.

Shell estimates that the implementation of the operating cost savings would give rise to one-off costs of approximately $1,230 million incurred in the first two years following completion of the Combination to the end of 2017, of which approximately 70% would be incurred in 2016 and 30% in 2017. No material costs are expected to arise in relation to the implementation of the reduction in exploration expenditure.

The quantified estimated synergies referred to above are set out in more detail in paragraph 7 of Part VII (Additional information) which is substantially in the form of Part A of the Appendix to the Management Day Update, which was reported on under the City Code by Deloitte and by Shell’s financial adviser, Bank of America Merrill Lynch. The Shell Directors confirm that there have been no material changes since the Management Day Update to these reported synergies, which remain subject to the bases of belief, principal assumptions and sources of information set out in paragraph 7 of Part VII (Additional information). Deloitte and Bank of America Merrill Lynch have also confirmed to Shell that the reports that they produced in connection with these synergies, which were included in Parts B and C of the Appendix to the Management Day Update, continue to apply.

In addition, Shell is confident of realising additional synergies that cannot be quantified for reporting under the City Code. These include opportunities in LNG, project coordination and best practice learnings.

Shell expects 2018 exploration spend for the Combined Group to be less than $3 billion, a 40% reduction from 2014 levels on a combined Shell and BG basis.

Shell and BG have established a joint integration planning team that has commenced integration planning but will need to undertake further work to ascertain the appropriate areas and processes for integration. The joint integration planning team is led by Huibert Vigeveno of the Shell Group, EVP Integration and, formerly, Executive Chairman for the Shell Group in China, and Sinead Lynch of the BG Group, EVP Safety and Sustainability and a member of BG’s Corporate Executive Team, and consists of personnel from across the businesses and functions of both the Shell Group and the BG Group who have the relevant experience to manage effectively the integration process. The objective of this joint team is to deliver the benefits of the Combination as fast as possible after completion of the Combination while minimising disruption to the business of the Combined Group.

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Shell aims to have fully validated its synergy estimates and finalised a detailed integration plan as soon as practicable after completion of the Combination, following engagement with appropriate stakeholders. The final integration plan will set out the objectives of the integration programme and its scope (including any proposed changes to organisation structure, the processes subject to review and a communications timeline for stakeholder consultation).

Following completion of the Combination, the integration team will endeavour to ensure that the identified synergies of the Combination are properly monitored, reported and fully realised as planned. The Shell Directors are confident that the integration of the Shell Group and the BG Group can be achieved without undue disruption to the business of the Combined Group.

Shell attaches great importance to the skills and experience of the existing management and employees of the BG Group. The Combined Group will augment the capabilities of both the Shell Group and the BG Group, will offer significant opportunities for employees in a business of greater size and scope and will incorporate the skills and talents present in both the Shell Group and the BG Group.

The Shell Board recognises that in order to achieve the expected benefits of the Combination, including the operating cost synergies identified in paragraph 4 of this Part, operational and administrative restructuring will be required following completion of the Combination. Shell expects such restructuring will involve job reduction and rationalisation of office locations.

As noted in paragraph 5 of this Part, Shell is in the process of integration planning and will need to undertake further work to ascertain the areas in which such rationalisation would be appropriate. Until its integration planning is complete, any appropriate consultation with relevant employee representatives has taken place and Shell has engaged with the appropriate stakeholders, Shell cannot be certain of its post-completion actions and the impact they will have on the employment and places of business of the Combined Group. Therefore, the detailed steps for the expected operational and administrative restructuring are not yet known, however, according to current integration planning:

Shell currently expects an overall potential reduction of approximately 2,800 roles globally across the Combined Group or approximately 3% of the total Combined Group workforce. These reductions are in addition to the previously announced reduction in the Shell Group’s headcount and contractor positions by 7,500 globally.

Shell has given assurances to the BG Directors that, upon and following completion of the Combination, it intends to fully safeguard the existing employment rights and pension rights of all of the BG Group’s management and employees.

Shell will engage and consult with affected employees and any appropriate employee representatives in accordance with its legal obligations following completion. Shell aims to retain the best talent across the Combined Group.

Consistent with this aim of retaining the best talent across the Combined Group, the following members of BG’s Corporate Executive Team have been conditionally appointed to, and have accepted, roles within the Combined Group:

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These appointments are conditional upon, and effective from, completion of the Combination.

These individuals will be engaged on Shell Group terms and conditions comparable to those recruited to positions of equivalent seniority within the Shell Group in the ordinary course. Prior to their taking up these roles on completion of the Combination, these executives will continue to work exclusively for the BG Group.

Each of Goldman Sachs International, Robey Warshaw LLP and N M Rothschild & Sons Limited (the “BG Financial Advisers”) has reviewed the terms of the executives’ appointments, and their remuneration arrangements, with the Combined Group, and each of them considers them to be fair and reasonable. In providing its advice, each of the BG Financial Advisers has taken into account the commercial assessments of the BG Directors.

BG Executive Directors

Helge Lund, BG’s Chief Executive, and Simon Lowth, BG’s Chief Financial Officer, (the “BG Executive Directors”) will resign from their BG directorships with immediate effect from the Effective Date. Their employment will terminate on the day following the Effective Date.

Each of the BG Executive Directors has entered into an agreement with BG under which, in accordance with their service contracts, they will each be entitled to receive a lump sum change of control payment. They will also be treated as “good leavers” for the purposes of the BG Share Plans. Their replacement awards over Shell B Shares (as described in paragraph 8.12 of Part XVI (Directors, senior management and corporate governance) of the Prospectus) will continue and will vest on the normal vesting date, subject to the achievement of the applicable Shell performance conditions. Consistent with the determinations in relation thereto made by the BG non-executive directors, a reduction for time prorating in accordance with the rules of the BG LTIP (as described in paragraph 8.12 of Part XVI (Directors, senior management and corporate governance) of the Prospectus) is to be applied, reflecting service during the original three year vesting period.

Each of Mr Lund and Mr Lowth will be paid a cash bonus in March 2016 in respect of the 2015 financial year, subject to the BG’s remuneration committee’s assessment of performance during the year. Neither BG Executive Director will be entitled to a bonus in respect of any part of the 2016 financial year providing that the Court Order is made not later than 31 March 2016. If the Court Order is made after 31 March 2016, each of the BG Executive Directors will be paid a prorated bonus in respect of the part of the 2016 financial year during which he works, subject to the BG’s remuneration committee’s assessment of performance.

The BG Executive Directors will no longer be bound by their post-termination restrictive covenants (including their non-competition clause), save for a restriction on soliciting certain employees of the BG Group, which will continue to apply for 12 months following termination of employment (in the case of Mr Lund), and six months following termination of employment (in the case of Mr Lowth)

BG Pension Scheme

Following discussions between Shell Petroleum N.V. and BG Group Pension Trustees Limited, Shell Petroleum N.V. and BG Group Pension Trustees Limited entered into non-binding heads of terms in relation to the BG Pension Scheme. These heads of terms provide that Shell Petroleum N.V., BG and BG Group Pension Trustees Limited will, prior to the Effective Date but subject to and conditional upon the Scheme becoming effective, enter into binding amendments to the trust deed and rules of the BG Pension Scheme in order to vary the circumstances in which BG Group Pension Trustees Limited’s powers to windup the BG Pension Scheme will become effective. The heads of terms further provided that: (i) Shell Petroleum N.V. will guarantee all payment obligations of the employers from time to time participating under the BG Pension Scheme, subject to a cap of: (a) £1 billion until 2028; and (b) thereafter, no more than £500 million until 2033 (after which the guarantee shall expire); and (ii) there will be no change to the existing funding commitments or the pre-agreed discount rate and reserve for expenses in determining technical provisions.

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The BG Group is an international oil and gas company, with a broad portfolio of business interests focused on exploration and production and LNG. Active in more than 20 countries on five continents, the BG Group combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves.

The BG Group’s strategy is to create value by leveraging its capabilities in exploration and from its highly competitive LNG business. The BG Group has two business segments: Upstream and LNG Shipping & Marketing. The BG Group’s Upstream production is currently sourced from base assets in 10 countries and key growth projects in Brazil and Australia. Wide geological technical expertise combined with commercial agility enables the BG Group to access exploration opportunities, targeting low-cost early entry positions. The BG Group also explores at existing hubs, aiming to leverage basin knowledge and existing infrastructure. In LNG, the BG Group’s skills and capabilities span the whole LNG value chain.

As at the Latest Practicable Date, the market capitalisation of BG was approximately $46.3 billion. For the year ended 31 December 2014, on a business performance basis⁹, the BG Group generated revenue and other operating income of $19,546 million and profit before tax of $6,268 million. For the same period, the BG Group also generated pre-tax operating cash flow of $10,015 million and production of 606 kboepd. As at 31 December 2014, the BG Group had gross assets of $61,846 million.

Shell

Upstream

Nine months Upstream earnings excluding identified items were $1,287 million compared with $14,775 million for the first nine months of 2014. Identified items were a net charge of $6,617 million, compared with a net charge of $1,579 million for the first nine months of 2014.

Compared with the first nine months of 2014, earnings excluding identified items reflected significantly lower oil and gas prices, partly offset by lower costs. The weakening of the Australian Dollar and Brazilian Real reduced earnings by some $684 million and $446 million respectively compared with the same period in 2014. The impact of these items on the first nine months of 2015 was some $1,279 million after tax, compared with an impact of some $149 million after tax in the same period in 2014.

Global liquids realisations were 49% lower than for the first nine months of 2014. Global natural gas realisations were 25% lower than for the first nine months of 2014, with a 48% decrease in the Americas and a 22% decrease outside the Americas.

In the first nine months of 2015, production was 2,925 kboepd compared with 3,035 kboepd for the same period in 2014. Liquids production increased by 2% and natural gas production decreased by 9% compared with the first nine months of 2014. Excluding the impact of divestments, curtailment and underground storage reinjection at Nederlandse Aardolie Maatschappij BV (“NAM”) in the Netherlands, Abu Dhabi licence and Malaysia LNG Dua PSC expiries, PSC price effects, and security impacts in Nigeria, production volumes for the first nine months of 2015 were 2% higher than the same period in 2014.

In the first nine months of 2015, equity LNG sales volumes of 16.94 million tonnes decreased by 5% compared with the first nine months of 2014, mainly reflecting the expiration of the Malaysia LNG Dua JVA and the impact of the Woodside divestment.

Downstream

Nine months Downstream earnings excluding identified items were $8,224 million compared with $4,715 million in the first nine months of 2014. Identified items were a net charge of $483 million, compared with a net charge of $2,848 million for the first nine months of 2014.

Downstream earnings excluding identified items, compared with the third quarter of 2014, benefited from higher contributions from manufacturing reflecting higher realised refining margins and improved operating performance. Earnings also benefited from lower costs, including favourable exchange rate effects overall

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and divestments, and lower taxation. This was partly offset by the negative impact of exchange rate effects in marketing, despite stronger underlying performance. Contributions from Chemicals increased as a result of improved intermediates market conditions which more than offset the impact of unit shutdowns at the Moerdijk chemical site in the Netherlands.

In the first nine months of 2015, refinery intake volumes were 3% lower than the same period in 2014. Refinery availability was 93%, compared with 92% for the same period in 2014.

Oil products sales volumes increased by 2% compared with the same period in 2014, mainly as a result of higher trading volumes.

Chemicals sales volumes decreased by 1% compared with the first nine months of 2014. Chemicals manufacturing plant availability decreased to 86% from 92% for the same period in 2014.

Corporate

The results for the first nine months of 2015 relating to Corporate and non-controlling interests excluding identified items were a charge of $660 million, compared with a charge of $190 million for the first nine months of 2014. Identified items for the first nine months of 2015 were a net gain of $251 million, whereas earnings for the same period in 2014 included a net gain of $5 million.

Compared with the first nine months of 2014, Corporate results excluding identified items were impacted by adverse currency exchange rate effects, partly offset by lower taxation.

Compared with the third quarter of 2014, earnings benefited from the impact of the weakening Brazilian Real on deferred tax positions in Upstream by some $244 million. The impact of this on the first nine months of 2015 earnings excluding identified items was a gain of some $256 million after tax, compared with $12 million gain in the same period in 2014.

Operational outlook for the fourth quarter of 2015

Compared with the fourth quarter of 2014, Upstream earnings are expected to be impacted by some 50 kboepd as a result of divestments, some 30 kboepd related to a Malaysia PSC expiry and some 40 kboepd associated with the impact of curtailment and underground storage reinjection at NAM. The impact of maintenance is expected to be lower by some 25 kboepd.

Refinery availability is expected to decline in the fourth quarter of 2015 as a result of higher turnaround activity and increased maintenance compared with the same period in 2014. Chemicals manufacturing plant availability is expected to increase in the fourth quarter of 2015 as the Moerdijk chemical site in the Netherlands continues to recover.

Strategic outlook: Pulling multiple levers to manage shareholder returns in the downturn

The end-2015 fall in oil prices underscores that today’s oil price downturn could last for several years. Shell’s plan reflects market realities, making sure Shell is resilient.

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Shell expects to publish its 2015 fourth quarter results and full year results on 4 February 2016 via a Regulatory Information Service with such announcement being made available on Shell’s website at www.shell.com.

BG

BG published its nine-month results on 30 October 2015 and the information set out in this section reflects those results. The BG Group delivered a strong operational performance in the period from 1 January 2015 to 30 September 2015; however, notably lower commodity prices impacted the financial results and could impact the BG Group’s prospects.

Operational

E&P production volumes in the first nine months of 2015 increased 15% to 686 kboepd. Growth was driven by the ramp-up in Australia, Brazil and Norway. Volumes in both Australia and Brazil more than doubled, to 78 kboepd and 141 kboepd, respectively. In Norway, Knarr came onstream in March and continued to ramp up. This growth was partially offset by the expected decline in Egypt, down 13 kboepd to 46 kboepd, and the impact of shutdowns in the UK, down to 93 kboepd.

BG expects its 2015 E&P production volumes to be greater than in 2014 reflecting the ramp-up of its new projects in Australia, Brazil and Norway.

The LNG Shipping & Marketing segment delivered 194 cargoes (12.2 million tonnes) in the first nine months of 2015, 60 more cargoes than in the same period in 2014 (4.0 million additional tonnes). Increased supply was driven by 45 cargoes from QCLNG, which started up in December 2014, and 18 additional spot cargoes. Of the 194 cargoes (2014: 134), 139 were supplied to Asian markets (2014: 91). The BG Group delivered its first ever cargoes to Egypt and Pakistan this year.

2015 LNG supply volumes are still expected to be slightly lower than 2014, excluding the purchase of spot cargoes and the impact of new volumes from QCLNG.

Financial

Results on a business performance basis¹⁰

In the first nine months of 2015, revenue and other operating income decreased 20% to $12,119 million, reflecting a significant fall in realised sales prices impacting both the Upstream and LNG Shipping & Marketing segments. The BG Group’s average realised oil price decreased 48% to $55.99 per barrel, the liquids price decreased 46% to $46.41 per barrel and the gas price per produced therm decreased 26% to 37.62 cents, reflecting lower market prices. The impact of lower prices was partly offset by weather-related gains in North America in the LNG Shipping & Marketing segment and the higher volumes in both segments.

EBITDA decreased 43% to $4,207 million. In the Upstream segment, EBITDA fell 41% to $3,095 million primarily reflecting the lower revenues, partly offset by the increased liquefaction contribution from QCLNG. In the LNG Shipping & Marketing segment, EBITDA fell 44% to $1,184 million as margins reduced through a combination of lower sales prices and a greater proportion of relatively lower margin spot cargoes.

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EBIT decreased by $3,256 million to $1,956 million, reflecting the reduction in EBITDA and higher DD&A charges, which resulted from higher E&P production volumes and the start-up of QCLNG.

Earnings of the BG Group of $1,274 million and EPS of 37.3 cents both decreased 59%, with the reduction in EBIT only partially offset by a reduction in the BG Group’s effective tax rate to 32%

Total results

Total earnings for the nine months of 2015 were $2,357 million (69.1 cents per share) and included a post-tax gain of $1,083 million in respect of disposals, remeasurements and impairments primarily associated with the $1,650 million gain on sale of the QCLNG pipeline, partially offset by a $708 million net charge reflecting the impact of foreign exchange movements on deferred and current tax balances, especially in Brazil and Australia.

Outlook

In its nine months results published on 30 October 2015, BG increased its outlook for 2015 E&P production volumes to 680-700 kboed, excluding any changes to the portfolio, reflecting the strong operational performance to date and the reduced duration of planned shutdowns in the second half of the year.

In the current low commodity price environment, the BG Group is focusing on operating and capital cost savings. The BG Group’s 2015 cost and efficiency programme is progressing well, with the emphasis on lifting, organisation and infrastructure cost savings, and remains on track to deliver at least the $300 million target savings for 2015. With cash capital expenditure of $4.7 billion in the first nine months of 2015, capital expenditure in 2015 will be significantly lower than 2014, as projects complete and the BG Group reacts to a lower oil price environment. Capital expenditure in 2015 on a cash basis is now expected to be around 30% lower than 2014 at around $6.5 billion.

In addition, the current low commodity price environment may continue to impact the BG Group’s business, results of operations, financial condition and prospects, which, as BG conducts its ordinary course periodic review and reporting procedures, might result in the debooking of oil or gas reserves or resources, if uneconomic, and/or asset impairments.

The BG Group actively manages its portfolio and a number of transactions and opportunities, including further disposal and other business development opportunities, continue to be considered.

BG expects to publish its 2015 fourth quarter and full year results on 5 February 2016 via a Regulatory Information Service with such announcement being made available on BG’s website at www.bg-group.com.

If the Combination completes, an annual non-cash post-tax charge to the Shell Group’s income statement is expected through a step up in annual depreciation charges of approximately $1 billion¹¹ compared with the amount currently reported by the BG Group. The final figure will be assessed in accordance with IFRS 3 and 13 once the Combination has completed and will be influenced by market factors at the time of completion. This estimate excludes the potential impact of amending the reserve basis used for the unit of production depreciation methodology from the PRMS (as currently used by the BG Group for reporting) to the SEC Rules (as currently used by the Shell Group for reporting).

The Shell Board and the BG Board agreed that BG Shareholders would continue to be entitled to receive their final dividend for 2014 of $0.1437 per BG Share which had already been announced by BG at the time of the Announcement and was paid on 22 May 2015, as well as the interim dividend in respect of the six-month period up to 30 June 2015 of $0.1438 per BG Share which was announced on 31 July 2015 and paid on 11 September 2015.

In addition, should completion of the Combination occur after the record date for Shell’s 2015 fourth quarter interim dividend (being 19 February 2016), BG Shareholders will be entitled to receive a further BG dividend in respect of 2015 of not more than the final dividend for 2014 of $0.1437 per BG Share. If, however, as expected, completion of the Combination occurs prior to the record date for Shell’s 2015 fourth quarter interim dividend, BG Shareholders will receive that Shell dividend and will not receive a further BG dividend for 2015.

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If any BG dividend, distribution or return of value is or has been declared, announced, made or paid at any time in excess of those described above, Shell has reserved the right to reduce the value implied under the terms of the Combination at such date by an amount equal to the excess amount (based on the $ / £ exchange rate at the time of such declaration, announcement, making or payment). In such circumstances, to the extent possible, the cash component of the Consideration would be reduced by the amount of such excess.

BG Shareholders will benefit from access to Shell’s dividend policy in respect of each dividend for which the record date falls after completion of the Combination. Shell confirms its intention to pay dividends of $1.88 per Shell Share in 2015 and at least that amount in 2016.

In respect of 2015, Shell announced three dividends of $0.47 per Shell Share (the first being announced on 30 April 2015 and paid on 22 June 2015, the second being announced on 30 July 2015 and paid on 21 September 2015 and the third being announced on 29 October 2015 and paid on 18 December 2015).

Shell intends that dividends will be announced and paid quarterly. Dividends are payable to persons registered as shareholders on the record date relating to the relevant dividend.

Shell intends to grow the US Dollar dividend in line with its view of the underlying earnings and cash flow of the Shell Group. When setting the dividend, the Shell directors look at a range of factors, including the macro-environment, the current balance sheet and future investment plans.

Any new issue of Shell B Shares requires prior consultation with the Dutch Revenue Service. Shell and the Dutch Revenue Service have entered into the Final Settlement Agreement under which the Dutch Revenue Service has confirmed the Dutch tax treatment of the Shell B Shares to be issued in connection with the implementation of the Combination pursuant to the Scheme (as described in paragraph 1 of Part XV (Taxation) of the Prospectus).

Shell reserves the right to implement the Combination by way of an Offer in certain circumstances set out in paragraph 12 of this Part. In such circumstances, the agreement between the Dutch Revenue Service and Shell as described above would cease to be in force and the share component of the Consideration would comprise Shell A Shares only. BG Shareholders would in such circumstances be entitled to receive 383 pence in cash and 0.4454 Shell A Shares per BG Share.

For further details of the Dividend Access Mechanism and its operation, please see paragraph 7 of Part XVII (Additional information) of the Prospectus.

It is intended that the Combination will be effected by a court-sanctioned scheme of arrangement of BG under Part 26 of the CA 2006. However, Shell has reserved the right to implement the Combination by way of a takeover offer (as defined in Part 28 of the CA 2006), subject to the Panel’s consent and the terms of the Co-operation Agreement, which permit Shell to implement the Combination by way of an Offer: (i) with the consent of BG; (ii) if a third party announces a firm intention to make an offer for BG which is recommended by the BG Board; or (iii) if the BG Board otherwise withdraws its recommendation of the Scheme.

The Scheme is subject to the Conditions and further terms and conditions set out in the Scheme Document. These Conditions include: (i) the receipt of certain antitrust and foreign investment approvals, other regulatory consents and waivers or non-exercise of any termination rights, pre-emption rights, rights of first refusal or similar rights in a number of jurisdictions; (ii) the BG Meetings being held no later than the 22^nd day after the expected date of the BG Meetings set out in the Scheme Document (or such later date as may be agreed between Shell and BG (and approved by the Court, if such approval is required)); (iii) the approval of the Scheme and the special resolution authorising the BG Directors to implement the Scheme and the amendment of the BG articles of association by the requisite majorities of BG Shareholders at the BG Meetings; (iv) the approval of the Shell Resolution by the Shell Shareholders at the Shell General Meeting; (v) the Scheme being sanctioned by the Court no later than the 22^nd day after the expected date of the Court Hearing set out in the Scheme Document (or such later date as may be agreed between Shell and BG (and approved by the Court, if such approval is required)); and (vi) the Scheme becoming effective no later than the Long Stop Date.

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The Combination was subject to the Pre-Conditions, being the receipt of competition authority clearances in Australia, Brazil, China and the EU, as well as foreign investment approval in Australia. As Shell and BG announced on 14 December 2015, the Pre-Conditions have all been satisfied. Numerous other anti-trust and foreign investment approvals and other regulatory consents that are required to be obtained prior to completion of the Combination have been obtained. As at the Latest Practicable Date, only two such consents remain outstanding, being regulatory consents in Tanzania and Uruguay. It is expected that these consents will be obtained prior to the Shell General Meeting.

As noted above, to become effective, the Scheme requires the approval of Scheme Shareholders by the passing of a resolution at the Court Meeting. This resolution must be approved by a majority in number of the Scheme Shareholders present and voting (and entitled to vote), either in person or by proxy, representing no less than 75% of the Scheme Shares held by such Scheme Shareholders. In addition, a special resolution must be passed at the BG General Meeting to authorise the BG Directors to implement the Scheme and amend the articles of association of BG (which requires the approval of BG Shareholders representing at least 75% of the votes cast at the BG General Meeting (either in person or by proxy)). The BG General Meeting will be held immediately after the Court Meeting.

The BG Meetings are to be held no later than the 22^nd day after the expected date of the BG Meetings set out in the Scheme Document (or such later date as may be agreed between Shell and BG). Following the BG Meetings, the Scheme must be sanctioned by the Court no later than the 22^nd day after the expected date of the Court Hearing set out in the Scheme Document (or such later date as may be agreed between Shell and BG). The Scheme will only become effective once a copy of the Court Order is delivered to the Registrar of Companies in England and Wales.

Upon the Scheme becoming effective, it will be binding on all BG Shareholders, irrespective of whether or not they attended or voted at the BG Meetings. The BG Shares will be acquired fully paid and free from all liens, charges, equitable interests, encumbrances and rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto.

The Scheme will be governed by English law. The Scheme will be subject to the applicable requirements of the City Code, the Panel, the London Stock Exchange and the UKLA.

Fractional entitlements

Fractions of New Shell Shares will not be allotted to BG Shareholders. Instead, the cash value of the fractional entitlement to New Shell Shares of each BG Shareholder will be calculated based on the opening price(s) of a Shell A Share and/or a Shell B Share (as applicable) on the London Stock Exchange on the day of LSE Admission, and such amount will be paid in cash by Shell to the relevant BG Shareholders in satisfaction of their fractional entitlements. If a BG Shareholder has elected to receive part of the share component of the Consideration in the form of Shell A Shares, they may be entitled to a fraction of both a Shell A Share and a Shell B Share. If so, the cash value of each fractional entitlement, calculated as above, will be added together and the total aggregate amount will be paid to the BG Shareholder by Shell. However, individual entitlements to total aggregate amounts of less than £5 will not be paid to BG Shareholders but will be retained for the benefit of Shell.

Under the terms of the Co-operation Agreement, by way of compensation for any loss suffered by BG in connection with the preparation and negotiation of the Combination and the documents relating to it, Shell has agreed to pay or procure the payment to BG of £750 million if:

(each a “Break Payment Event”).

However, no payment will be made if: (i) certain termination events have occurred; (ii) if the Break Payment Event has been caused to a material extent by BG’s breach of certain obligations under the Co-operation Agreement relating to co-operation and assistance with regulatory clearances and authorisations and key

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transaction documents; or (iii) Shell has exercised its right to implement the Combination by way of an Offer in circumstances where a third party’s firm intention to make an offer for BG has been recommended by the BG Board or the BG Board has withdrawn its recommendation of the Scheme.

The New Shell Shares will be issued in registered form and will be capable of being held in certificated and uncertificated form.

The New Shell Shares will be issued credited as fully paid and will rank pari passu in all respects with the Shell Shares in issue at the time the New Shell Shares are issued, including in relation to the right to receive notice of, and to attend and vote at, general meetings of Shell, the right to receive and retain any dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date (in the case of the new Shell B Shares, including in respect of any dividends paid through the dividend access arrangements established as contemplated by the Shell Articles of Association and set out in the Trust Deed) and to participate in the assets of Shell upon a winding-up of Shell. As with the Shell Shares in issue as at the Effective Date, the New Shell Shares will not be subject to any redemption provisions.

Prior to the Combination completing, applications will be made: (i) to the UKLA for the cancellation of the premium listing of the BG Shares on the Official List; and (ii) to the London Stock Exchange for the cancellation of trading of the BG Shares on the London Stock Exchange’s main market for listed securities. It is expected that BG Shares will be suspended at 6.00 p.m. on 12 February 2016, with delisting to take effect at 8.00 a.m. on 15 February 2016.

On the Effective Date, BG will become a wholly-owned subsidiary of Shell and share certificates in respect of BG Shares will cease to be valid and entitlements to BG Shares held within the CREST system will be cancelled. Following the Effective Date, Shell intends to terminate BG’s ADR programme.

As soon as possible after the Effective Date, it is intended that BG will be re-registered as a private limited company.

If the Scheme is sanctioned by the Court, BG Shares held in treasury will be cancelled prior to the Scheme Record Time.

BG ADR Holders will be entitled to receive cash consideration and proceeds from the sale by the BG Depositary of the Shell Shares received pursuant to the Scheme (in each case, once exchanged into US Dollars) in respect of the BG Shares represented by BG ADRs. It is intended that the BG Deposit Agreement and the BG ADR programme will be terminated after the Effective Date.

Applications will be made to: (i) the FCA for the New Shell Shares to be admitted to the premium listing segment of the Official List; (ii) the London Stock Exchange for the New Shell Shares to be admitted to trading on its main market for listed securities; (iii) Euronext Amsterdam for the New Shell Shares to be admitted to listing and trading on Euronext Amsterdam; and (iv) the New York Stock Exchange in order that the New Shell Shares are capable of being deposited with the Shell ADS Depositary in exchange for the corresponding class and amount of Shell ADSs which may be traded on the New York Stock Exchange.

It is expected that the New Shell Shares will be admitted to trading on the London Stock Exchange by 8.00 a.m. on 15 February 2016 and dealings for normal settlement in the New Shell Shares will commence at or shortly after that time. It is expected that the New Shell Shares will be admitted to listing and trading on Euronext Amsterdam by 9.00 a.m. (Central European Time) on 16 February 2016, although the New Shell Shares will be able to be traded on Euronext Amsterdam from 9.00 a.m. (Central European Time) on 15 February 2016.

No application has been made or is currently intended to be made by Shell for the New Shell Shares to be admitted to listing or trading on any other exchange.

The BG Directors have irrevocably undertaken to vote in favour of the Scheme in respect of their own beneficial holdings totalling 231,187 BG Shares, representing in aggregate approximately 0.00638% of BG’s issued share capital as at the Latest Practicable Date.

These irrevocable undertakings remain binding if a higher competing offer for BG is made but cease to be binding on and from the earlier of: (i) the Long Stop Date; and (ii) the date on which the Scheme is withdrawn or lapses in accordance with its terms.

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As described in paragraph 12.2 of this Part, the Scheme is conditional on, among other things, Shell Shareholders passing the following ordinary resolution, being the Shell Resolution, at the Shell General Meeting which will be held at 10.00 a.m. (Central European Time) on 27 January 2016 at the Circustheater, Circusstraat 4, 2586 CW The Hague, the Netherlands:

The authority to allot the New Shell Shares represents approximately 24% of the total issued ordinary share capital of Shell as at the Latest Practicable Date. The passing of the Shell Resolution requires more than 50% of the votes cast in respect of the Shell Resolution to be in favour of it. If the Shell Resolution is passed, this authority will expire on 31 December 2016 (unless previously revoked, renewed, varied or extended).

The full text of the Shell Resolution and other matters is set out in the Notice of the Shell General Meeting attached to this Circular. If the Shell Resolution is not passed, the Scheme will not proceed.

Shell is seeking approval of the Combination at the Shell General Meeting. The Shell General Meeting is to be held at 10.00 a.m. (Central European Time) on 27 January 2016 at the Circustheater, Circusstraat 4, 2586 CW The Hague, the Netherlands.

Your support is important to us. Please read note 1 to the Notice of the Shell General Meeting on pages 91 and 92 of this Circular for an explanation of how to attend and vote at the Shell General Meeting, including how to appoint a proxy to attend and vote on your behalf.

If you have any queries relating to this Circular or attending and voting at the Shell General Meeting, please telephone the Registrar on one of the following numbers: 0800 169 1679 (UK) or +44 (0) 121 415 7073.

Your attention is drawn to the further information set out in Parts II to VII. In particular, Shell Shareholders should consider fully and carefully the risk factors associated with the Combined Group and the Combination, which are set out in Part II (Risk factors).

The Shell Directors have received financial advice from Bank of America Merrill Lynch in relation to the Combination. In providing their advice to the Shell Directors, Bank of America Merrill Lynch has relied upon the Shell Directors’ commercial assessment of the Combination. Lazard has also provided financial advice to the Shell Directors in respect of the Combination (and has also relied upon the Shell Directors’ commercial assessment).

The Shell Board considers the Combination and the Shell Resolution to be in the best interests of Shell and the Shell Shareholders as a whole and unanimously recommends that Shell Shareholders vote in favour of the Shell Resolution, as the Shell Directors intend to do in relation to their own individual beneficial holdings which amount in total to 470,450 Shell Shares, representing approximately 0.00731% of Shell’s total issued ordinary share capital as at the Latest Practicable Date.

The Combination has also been unanimously recommended by the BG Board, with the BG Directors having irrevocably undertaken to vote in favour of the Scheme in respect of their own beneficial holdings.

Yours sincerely,

/s/  Charles O. Holliday

Chairman

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PART II

RISK FACTORS

Prior to making any decision to vote in favour of the Shell Resolution at the Shell General Meeting, Shell Shareholders should consider the factors and the risks associated with the Combination and, in the case of the Combined Group, the business and the industry in which it will operate, together with all other information contained in this Circular including, in particular, the risk factors described below. The risks disclosed are those which: (i) are material risks to the Combination; (ii) will be material new risks to the Combined Group as a result of the Combination; or (iii) are existing material risks for the Shell Group which will be impacted by the Combination. Due to the fact that a significant part of the Shell Group’s and the BG Group’s operations are similar in nature, some of the risks set out below (not including those specific to the Combination) will not be new risks which arise only on completion of the Combination but will be existing material risks whose potential impact may be increased as a result of the Combination.

There are other risks relating to the Shell Group and the Shell Shares which are not within the scope of risk categories outlined above and such risks can be found in the Prospectus.

The following is not an exhaustive list or explanation of all the risks which may affect the Shell Shares, the Shell Group, and the Combined Group. Additional risks and uncertainties relating to the Shell Shares, the Shell Group, and the Combined Group, that are not currently known to the Shell Directors, or that the Shell Directors currently deem immaterial, may, individually or cumulatively, also have a material adverse effect on the business, results of operations or financial condition and prospects of the Shell Group and the Combined Group, and, if any such risk should materialise, the price of the Shell Shares may decline and investors could lose all or part of their investment.

The order in which the following risk factors are presented does not necessarily reflect the likelihood of their occurrence or the relative magnitude of their potential material adverse effect on the Shell Group’s, and / or the Combined Group’s business, results of operations, financial condition and / or prospects or the market price of the Shell Shares.

The prices of crude oil, natural gas, oil products and chemicals are affected by supply and demand, both globally and regionally. Moreover, prices for oil and gas can move independently of each other. Factors that influence supply and demand include operational issues, natural disasters, weather, political instability, conflicts, economic conditions and actions by major oil- and gas-producing countries.

Price fluctuations could have a material adverse effect on the business, results of operations, financial condition and prospects of the Shell Group, the BG Group and, if the Combination completes, the Combined Group, including on their cash flows and earnings. For example, in a low oil and gas price environment, less revenue would be generated from upstream production, and, as a result, some long-term projects might become less profitable, or incur losses. As a result of the Combination, a greater proportion of the Combined Group’s earnings and cash flow will be related to upstream and integrated gas activities, than relative to the Shell Group. As a result, the change in earnings and cash flow of the Combined Group as a result of oil price fluctuations may be greater, relatively, than that of the Shell Group.

Both the Shell Group and the BG Group use oil and gas price assumptions, which are reviewed on a periodic basis, to evaluate project decisions and commercial opportunities, including the Combination and, if the Combination completes, the Combined Group will do the same. If the Shell Group’s, the BG Group’s and / or the Combined Group’s assumptions proved to be materially incorrect, it could have a material adverse effect on their financial condition and, as a result, the actions derived from strategic decisions based on those assumptions may no longer be appropriate.

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The Shell Group and the BG Group face and, if the Combination completes, the Combined Group will face numerous challenges in developing capital projects, especially those which are large and complex. Challenges include uncertain geology, frontier conditions, the existence and availability of necessary technology and engineering resources, the availability of skilled labour, the existence of transportation infrastructure, project delays, the expiration of licences and potential cost overruns, as well as technical, fiscal, regulatory, political and other conditions. These challenges are particularly relevant in certain developing and emerging market countries, such as Iraq and Kazakhstan (where BG is joint operator of the Karachaganak oil and gas condensate field), in frontier areas and in deep water fields, such as in Brazil (where BG’s interests include significant positions in the Santos Basin). Such potential obstacles may impair the delivery of projects, as well as the ability to fulfil related contractual commitments, and, therefore, may have a material adverse effect on the business, results of operations and financial condition of the Shell Group, the BG Group and, if the Combination completes, the Combined Group.

There is continued and increased attention to climate change. This is likely to lead to additional regulations designed to reduce greenhouse gas emissions. Over time, the Shell Group expects that a growing share of its CO2 emissions will be subject to regulation and will result in increasing costs.

In the future, in order to help meet the world’s energy demand, the Shell Group expects its production to rise, including as a result of the Combination, with its CO2 emissions increasing as its business grows. In particular, the Shell Group expects that CO2 emissions from flaring will rise as long as no gas gathering systems are in place. The Shell Group intends to continue to work with its partners to find ways to capture the gas that is flared, but there can be no certainty as to its success.

If the Shell Group, the BG Group and, if the Combination completes, the Combined Group are unable to find economically viable, as well as publicly acceptable, solutions that reduce their CO2 emissions and/or CO2 intensity for new and existing projects or products, they may experience additional costs or financial penalties, delayed or cancelled projects, reduced production and reduced demand for hydrocarbons, which may have a material adverse effect on their business, results of operations and financial condition.

Developments in politics, laws and regulations can and do affect the Shell Group’s and the BG Group’s, and, will, if the Combination completes, affect the Combined Group’s operations. Potential developments include: forced divestment of assets, expropriation of property, cancellation or forced renegotiation of contract rights, additional taxes including windfall taxes, restrictions on deductions, retroactive tax claims, trade controls, local content requirements, foreign exchange controls, changing environmental regulations and onerous operational and disclosure requirements. A prolonged period of lower oil and gas prices may impact the financial, fiscal, political, social and legal stability of countries that rely significantly on oil and gas revenue streams. This, in turn, may have a material adverse effect on the Shell Group, the BG Group and, if the Combination completes, the Combined Group. The current operating environment in Brazil, being a country in which the BG Group has extensive operations, provides a number of challenges, including an economy in recession and with rising inflation, as well as potential litigation and instability in relation to partners, which have the potential to materially impact the business of the BG Group and, if the Combination completes, the Combined Group. In upstream activities, these developments may affect land tenure, rewriting of leases, entitlement to produced hydrocarbons, production rates, royalties and pricing. Parts of the Shell Group’s activities and the BG Group’s LNG Shipping & Marketing activities may be subject

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to price controls in some countries. From time to time, cultural and political factors play a role in unprecedented and unanticipated judicial outcomes that could have a material adverse effect on the Shell Group, the BG Group and, if the Combination completes, the Combined Group. Non-compliance with policies and regulations may result in regulatory investigations, litigation and ultimately sanctions. Certain governments and regulatory bodies may utilise their constitutional powers to unilaterally amend or cancel existing agreements or arrangements, fail to honour existing contractual commitments, or seek to adjudicate disputes between private litigants. Additionally, certain governments have adopted laws and regulations that could potentially force the Shell Group, the BG Group and, if the Combination completes, the Combined Group to violate other countries’ laws and regulations, thus potentially subjecting them to both criminal and civil sanctions. Such developments and outcomes may have a material adverse effect on the business, results of operations and financial condition of the Shell Group, the BG Group and, if the Combination completes, the Combined Group.

The estimation of proved oil and gas reserves involves subjective judgements and determinations based on available geological, technical, contractual and economic information. Estimates may change because of new information from production or drilling activities, or changes in economic factors, including changes in the price of oil or gas and changes in the taxation or regulatory policies of host governments or other events. Estimates may also be altered by acquisitions and divestments, new discoveries, and extensions of existing fields and mines, as well as the application of improved recovery techniques. Published proved oil and gas reserves estimates may also be subject to correction due to errors in the application of published rules and changes in guidance.

Currently, the BG Group reports its proved reserves on the basis of the PRMS. As the Combined Group will externally report its proved reserves on the basis of the SEC Rules, there may be adjustments stemming from the differences between the two classifications. In particular, an adjustment may be required if the economic assumptions used under the PRMS and the SEC Rules differ significantly (for example, if the Year Average Price used by Shell for the SEC estimates is significantly lower than the price assumptions used by BG under the PRMS, the proved reserves estimates under the SEC Rules are likely to be lower than the same calculated under the PRMS).

A re-estimation under the SEC Rules of the BG Group’s proved reserves as at 31 December 2014 is included in Part VI (Oil and gas information). This has been prepared for illustrative purposes only and, as with the other BG reserves information in this Circular, is unaudited and Shell has not had access to the underlying data and assumptions that have been used by BG in its production. Furthermore, due to the nature of the re-estimation, it addresses a hypothetical situation and is not capable of being aggregated with the Shell Group data to represent what the actual proved reserves of the Combined Group would have been if the Combination had been completed on the dates indicated and Shell had presented the proved reserves of the BG Group on an SEC basis itself.

Downward adjustments could indicate lower future production volumes and may also lead to impairment of some assets. This may have a material adverse effect on the results of operations and financial condition of the Shell Group, the BG Group, and, if the Combination completes, the Combined Group.

In cases where the Shell Group, the BG Group or, if the Combination completes, the Combined Group is not the operator, they will have limited influence over, and control of, the behaviour, performance and costs of operation of their joint arrangements or associates. Despite not having control, they could still be exposed to the risks associated with these operations, including reputational, litigation (where joint and several liability may apply) and government sanction risks, which may have a material adverse effect on their business, results of operations and financial condition. For example, their partners or members of a joint arrangement or an associate (particularly local partners in developing countries) may not be able to meet their financial

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or other obligations to the projects, threatening the viability of a given project. Where the Shell Group, the BG Group or, if the Combination completes, the Combined Group is the operator of a joint arrangement or associate, the other partner(s) or members may still be able to veto or block certain decisions, which may be to the overall detriment of the Shell Group, the BG Group, or, if the Combination completes, the Combined Group.

In particular, the Shell Group is aware that Petrobras, a material joint arrangement partner of the BG Group in Brazil, is subject to investigations regarding allegations relating to several large contractors (mainly in construction) forming a cartel and paying bribes in order to secure contracts. BG has not been directly involved in the investigations related to Petrobras. In the future, the situation may, depending on how it develops, have a material adverse effect on the business, results of operations and financial condition of the BG Group and, if the Combination completes, the Combined Group (for example, it may result in disruption to the supply chain or Petrobras may experience capital or liquidity constraints which could impact on project funding and delivery).

The Shell Group and the BG Group are and, if the Combination completes, the Combined Group will be subject to a significant number and growing range of laws, regulations and trade controls. Both the Shell Group and the BG Group have procedures and systems in place designed to ensure compliance with such requirements. However, due to the nature of their activities and spheres of operation, the Shell Group, the BG Group and, if the Combination completes, the Combined Group carry a significant risk of non-compliance and any violations of legal and regulatory requirements could have a material adverse effect on the business, results of operations and financial condition of the Shell Group, the BG Group and, if the Combination completes, the Combined Group, resulting from the imposition of substantial penalties, exposure to regulatory investigations, debarment from tendering, imposition of a monitor and, in the case of individuals, imprisonment.

The Shell Group and its joint arrangements and associates have, in the past, been fined for violations of antitrust and competition law, including by the European Commission. As a result of the European Commission’s fining guidelines, this means that any new violations could result in significantly larger fines both for the Shell Group and, if the Combination completes, for the Combined Group. Furthermore, it is now common for persons or corporations allegedly injured by antitrust violations to sue for damages.

As multinational companies, conducting their business across a number of jurisdictions and, to a material extent, through joint arrangements and associates which they may not operate, the Shell Group and the BG Group are, and, if the Combination completes, the Combined Group will be exposed to increased risks of bribery, fraud and corruption. Due to the scale of the Shell Group’s, the BG Group’s and, if the Combination completes, the Combined Group’s operations, bribery, fraud and corruption both internally and externally may be more difficult to detect and any violations of the US Foreign Corrupt Practices Act of 1977 (as amended), the UK Bribery Act 2010 (as amended) or other relevant anti-bribery, anti-corruption or anti-money laundering legislation may have a material adverse effect as described above. Further, penalties imposed on their partners in a joint arrangement or members in an associate for violations unrelated to the Shell Group, the BG Group and, if the Combination completes, the Combined Group could materially impact the ability of such partners or members to fulfil their contractual commitments to, and thereby result in a material adverse effect on the business, results of operations and financial condition of, the Shell Group, the BG Group and, if the Combination completes, the Combined Group. For example, while BG has not been directly involved in the investigations related to Petrobras, the BG Group, and, if the Combination completes, the Combined Group may be exposed to a material adverse effect arising from such investigations since Petrobras is a material joint arrangement partner for the BG Group in Brazil.

Similarly, the Shell Group’s, the BG Group’s and, if the Combination completes, the Combined Group’s joint arrangements and associates are by virtue of their activities, subject to a substantial number of trade controls, which regulate the movement of items or the provision of services or technologies across national boundaries and restrict or prohibit trade and other dealings with certain parties, and data protection laws and regulations. Therefore, despite any compliance systems and procedures in place, they are exposed to a significant risk of violations, which could also have a material adverse effect as described above.

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The Scheme is subject to the Conditions and further terms and conditions set out in the Scheme Document. These Conditions include: (i) the receipt of certain antitrust and foreign investment approvals, other regulatory consents and waivers or non-exercise of any termination rights, pre-emption rights, rights of first refusal or similar rights in a number of jurisdictions; (ii) the BG Meetings being held no later than the 22^nd day after the expected date of the BG Meetings set out in the Scheme Document (or such later date as may be agreed between Shell and BG (and approved by the Court, if such approval is required)); (iii) the approval of the Scheme and the special resolution authorising the BG Directors to implement the Scheme and the amendment of the BG articles of association by the requisite majorities of BG Shareholders at the BG Meetings; (iv) the approval of the Shell Resolution by the Shell Shareholders at the Shell General Meeting; (v) the Scheme being sanctioned by the Court no later than the 22^nd day after the expected date of the Court Hearing set out in the Scheme Document (or such later date as may be agreed between Shell and BG (and approved by the Court, if such approval is required)); and (vi) the Scheme becoming effective no later than the Long Stop Date.

There is no guarantee that the Conditions will be satisfied in the necessary time frame (or waived, if applicable) and the Combination may, therefore, be delayed or not complete. Delay in completing the Combination will prolong the period of uncertainty for the Shell Group and the BG Group and both delay and failure to complete may result in the accrual of additional and, in the case of a failure to complete, wasted costs to their businesses (for example, there may be an increase in costs or, in the case of a failure to complete, waste of costs already incurred / expensed in relation to the preparation and issue of documentation, the financing of the Combination (in particular, the pre-funding of the cash portion of the Consideration resulting in Shell holding a materially higher than usual cash balance) or other elements of the planning and implementation of the Combination) without any of the potential benefits of the Combination having been achieved. In addition, Shell’s and BG’s management would have spent time in connection with the Combination which could otherwise have been spent more productively in connection with the other activities of the Shell Group and the BG Group, as applicable. Shell may also, to the extent a Break Payment Event occurs, be liable for the payment of £750 million to BG. Therefore, the aggregate consequences of a material delay or failure in completing the Combination may have a material adverse effect on the business, results of operations and financial condition of the Shell Group, the BG Group and, in the case of a delay only, the Combined Group.

Shell’s ability to invoke a Condition to the Combination to delay the Combination beyond the Long Stop Date or cause the Combination not to complete is subject to the Panel’s consent. The Panel will need to be satisfied that the underlying circumstances are of “material significance” to Shell in the context of the Combination and this is a high threshold to fulfil. Consequently, there is a significant risk that Shell may be required to complete the Combination even where certain Conditions have not been satisfied (for example, not all of the Regulatory Conditions or consents from commercial counterparties have been obtained) or where a material adverse change has occurred to the BG Group. It may also be the case that certain Conditions may only be satisfied subject to onerous conditions or undertakings. If the events in this paragraph were to occur, they might result in additional costs and / or the delay or the failure to realise the financial benefits and synergies identified by the parties. Proceeding to complete the Combination without particular clearances and consents from third parties, which may include governments, regulators, associates and commercial counterparties, may impact the Combined Group’s future strategy and operations, result in the imposition of penalties, fines and other criminal and civil sanctions, the termination or variation of contracts and, potentially, the loss of concessions or assets and may cause damage to the Combined Group’s reputation and business relationships with governments, regulators and counterparties. If these events were to occur, there may be a material adverse effect on the business, results of operations and financial condition of the Combined Group and the market price of the Shell Shares.

The Combined Group’s future prospects will, in part, be dependent upon the Combined Group’s ability to integrate the Shell Group and the BG Group successfully and completely, without disruption to the existing

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business. Value delivery from a number of key jurisdictions, including, the BG Group’s assets in Australia and Brazil, as well as integration of the BG Group’s LNG Shipping and Marketing business and trading activities and successful execution of the substantial disposals that the Combined Group is expected to make following completion of the Combination are, in particular, critical to the overall success of the Combined Group. Subject to achieving what the Shell Board considers to be reasonable value for the relevant operations, Shell expects such disposals to reach $30 billion during 2016 to 2018.

Unanticipated events, liabilities, tax impacts or unknown pre-existing issues may arise which could result in the costs of integration being higher and the realisable benefits being lower than expected, resulting in a material adverse effect on the operations, prospects and financial condition of the Combined Group. No assurance can be given that the integration process will deliver all the expected benefits within the assumed time frame or that the full $30 billion of disposals will be made as planned.

The Combined Group will face challenges when integrating the business, including, among others, ways of working, standardising policies and procedures, processes and systems and retaining key employees of the Combined Group and the corporate memory of the BG Group. If the Combined Group does not properly manage these challenges, they may affect the effective running of the business in the ordinary course and the efficient allocation, including redeployment, of resources in the Combined Group.

The Shell Group, the BG Group and, if the Combination completes, the Combined Group, must continue to attract, retain and motivate key employees in order to succeed and safeguard their performance, operations and future growth. Competition for suitably skilled personnel in the oil and gas industry is intense and the Shell Group, the BG Group, and, if the Combination completes, the Combined Group may lose key employees, among other things, to competitors. If the Shell Group, the BG Group, and the Combined Group fail to maintain adequate levels of remuneration and / or are not able to find employees with the necessary skills, it could have a material adverse effect on their business, results of operations and financial condition.

Uncertainty about the effects of the Combination, including effects on employees, host governments, partners, contractors, regulators, suppliers and customers, may have a material adverse effect on the business, results of operations and financial condition of the Shell Group, the BG Group and, if the Combination completes, the Combined Group. These uncertainties could cause parties that have business or other relationships with the Shell Group or the BG Group to defer the consummation of other transactions or other decisions concerning the business of the Shell Group, the BG Group and, if the Combination completes, the Combined Group, or to seek to change their existing business or other relationships with the Shell Group or the BG Group. The Combined Group will need to take action to prevent or minimise any detrimental impact of the Combination and the integration process on its relationships with employees, host governments, partners, contractors, regulators, suppliers and customers of the Shell Group and the BG Group, to avoid such a material adverse effect.

If the Combination completes, existing Shell Shareholders will own a smaller percentage of Shell than they currently own. Existing Shell Shareholders will own approximately 81% of the outstanding Shell Shares.¹² As a consequence, the number of voting rights which can be exercised and the influence which may be exerted by them in respect of the Combined Group will be reduced.

The cash component of the Consideration is denominated in Pound Sterling. This creates for the Shell Group, which reports in US Dollars, an exchange rate exposure which may have a material adverse effect on the financial condition of the Shell Group and, if the Combination completes, the Combined Group. If Pound Sterling appreciates significantly in value against the US Dollar, the cash component of the

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Consideration will materially increase for Shell in US Dollar terms. If there is a delay in completing the Combination, the period of exposure to such exchange rate fluctuations will be prolonged. If the Combination fails to complete, the Shell Group may be exposed, especially in the case of declining Pounds Sterling, as it has locked in some of its exchange rate exposure to this Pounds Sterling denominated cash consideration.

Following completion of the Combination, the Shell Shares and the Shell ADSs will continue to be publicly traded and, as a result of a number of factors and events, including, but not limited to, those referred to in this Part, their market price may be volatile. Some of these events, for example, market conditions, geopolitical developments or the action of competitors, will be outside the control of the Combined Group. The sale of a substantial number of Shell Shares and / or Shell ADSs in the market after completion of the Combination, or the perception that such sales may occur, could depress the market price of the Shell Shares and / or the Shell ADSs.

Shell A Shares, Shell B Shares, Shell A ADSs and Shell B ADSs may trade, and have historically traded, at different prices. The difference in price may be based on, among other things: the extent to which BG Shareholders elect for and receive Shell A Shares or Shell B Shares, the fact that dividends to be received by holders of Shell A Shares or Shell A ADSs will have a Dutch source and dividends to be received by holders of Shell B Shares or Shell B ADSs are intended by Shell to have a UK source (pursuant to the Dividend Access Mechanism), differing levels of demand in different markets for reasons external to the Shell Group, such as index inclusion and relative index performance and the type of securities bought back by Shell or issued by it under the Scrip Dividend Programme.

Following completion of the Combination and the issue of the BG Dividend Access Share to the Trustee, dividends paid by BG on the BG Dividend Access Share will form part of the Dividend Access Mechanism.

Following completion of the Combination, under their respective articles of association, Shell Transport and BG will each only be able to pay a dividend on their respective Dividend Access Share up to a maximum equal to their respective proportions of the aggregate dividend announced by Shell on the Shell B Shares in respect of the relevant period (with such proportions being calculated by reference to, in the case of Shell Transport, the number of Shell B Shares in existence immediately prior to completion of the Combination and, in the case of BG, the number of Shell B Shares issued as part of the Combination, in each case as against the total number of Shell B Shares in issue immediately following completion of the Combination). Accordingly, in order for the holders of Shell B Shares to receive an amount equal to the full dividend announced on the Shell B Shares in the form of a dividend having a UK source for Dutch tax purposes, a dividend on each Dividend Access Share must in fact be paid by Shell Transport and, following completion of the Combination, by BG from their respective distributable reserves in each case equal to their respective proportions of the dividend announced by Shell on the Shell B Shares. There can be no assurance that Shell Transport and, following completion of the Combination, BG, will have sufficient distributable reserves to pay any dividend on their respective Dividend Access Share or will exercise their discretion to pay such a dividend.

In addition, under the terms of the Trust Deed, if Shell requests them to do so, Shell Transport (and, following completion of the Combination, BG) would be required to redeem the Dividend Access Shares at par value. Further, in accordance with the terms of the Dividend Access Trust, if Shell and Shell Transport (and, following completion of the Combination, BG, as a subsidiary of Shell) (as issuers of the Dividend Access Shares) (acting jointly) request it to do so, and there is no property remaining in the Dividend Access Trust, the Trustee shall dissolve the Dividend Access Trust. The Dividend Access Mechanism may, therefore, be discontinued at any time, for any reason and without financial recompense.

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If the Dividend Access Mechanism were discontinued, any dividend announced on the Shell B Shares, thereafter, would be paid by Shell and would, therefore, always have a Dutch source rather than a UK source for Dutch tax purposes. Also, if Shell Transport and, following completion of the Combination, BG does not, for any reason, pay a dividend on its respective Dividend Access Share that is equal in amount to its proportion of the dividend announced on the Shell B Shares, a dividend having a Dutch source will be paid by Shell in an amount equal to the difference between the dividend announced on the Shell B Shares and the dividend paid on that Dividend Access Share (with such dividend being paid pro rata to the holders of Shell B Shares).

Holders of Shell B Shares who receive dividends which have a Dutch source are currently subject to Dutch withholding tax at a rate of 15% although, depending on the terms of any applicable treaty for the avoidance of double taxation, they may be eligible to make a claim to reduce the rate at which such Dutch withholding tax is levied or, alternatively, to seek a full or partial refund of such Dutch withholding tax levied.

The statements above made in relation to Shell B Shares will also apply to the dividends received by the Shell ADS Depositary in its capacity as registered holder of Shell B Shares represented by Shell B ADSs.

Subject to progress with debt reduction and recovery in oil prices, Shell expects to withdraw the Scrip Dividend Programme in 2017 and undertake a share buyback programme of at least $25 billion in the period 2017 to 2020. Shell expects this buyback programme to offset the shares issued under the Scrip Dividend Programme and to significantly reduce the equity issued in connection with the Combination. There may be circumstances in which Shell does not implement the share buyback programme due to factors such as market conditions and the cash needs of the Combined Group. Due to the same factors, the Scrip Dividend Programme may continue for longer than is currently intended. If implemented, the share buyback programme may not have, or may only to a limited extent have, the desired effect (for example, where there is a delay in withdrawing the Scrip Dividend Programme). In addition, Shell intends to buy back the cheaper of the Shell A Shares and Shell B Shares from Shell’s perspective. Consequently, not all holders of Shell Shares may receive the full benefits of the share buyback programme.

Shell’s performance and financial condition will be, following completion of the Combination, dependent on the trading of the members of the Combined Group. Following completion of the Combination, if dividends on Shell Shares are to be maintained at the same levels as before the completion of the Combination, additional cash resources and distributable reserves will be required to cover the dividend payments due to the increase in the number of Shell Shares in issue.

Shell intends to pay dividends of $1.88 per Shell Share in 2015 and at least that amount in 2016. However, when setting the dividend, the Shell directors look at a range of factors, including the macro-environment, the current balance sheet and future investment plans. Furthermore, Shell’s ability to pay dividends in 2015, 2016 and thereafter will depend, among other things, on the distributable reserves, if any, of its subsidiaries and other interests. Certain of these subsidiaries and other interests may, from time to time, be subject to restrictions on their ability to make distributions to Shell or return cash to it by other means and this could have a material adverse effect on the market price of Shell Shares. There is, therefore, no guarantee that Shell Shareholders will receive a return on their investment and they may receive a negative return and lose some or all of the capital invested.

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PART III

PRESENTATION OF INFORMATION

The contents of Shell’s website (www.shell.com) and BG’s website (www.bg-group.com), the contents of any website accessible from hyperlinks on such websites or any other website referred to in this Circular do not form part of this Circular and Shell Shareholders and Shell ADS Holders should not rely on them.

Furthermore, Shell does not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, or the fairness or appropriateness of any forecasts, views or opinions expressed by the press or other media regarding the Combination, the Shell Group, the BG Group and/or the Combined Group. Shell, the Shell directors, the Shell Group, Bank of America Merrill Lynch, Lazard or other persons involved in the Combination make no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication.

This Circular contains certain forward looking statements with respect to the financial condition, results of operations and businesses of the Shell Group and the BG Group, and certain plans and objectives of Shell with respect to the Combined Group, including those in Part I (Letter from the Chairman of Shell) and Part II (Risk factors).

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 the Shell Group, the BG Group and the Combined Group to market risks, statements as to accretion and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions, including as to future potential cost savings, synergies, earnings, return on average capital employed, production and prospects. 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”, “seek”, “should”, “target”, “will” and similar terms and phrases.

There are a number of factors that could affect the future operations of the Shell Group, the BG Group and the Combined Group and that could cause results to differ materially from those expressed in the forward looking statements included in this Circular, including (without limitation): (i) price fluctuations in crude oil and natural gas; (ii) changes in demand for the Shell Group’s, the BG Group’s and the Combined Group’s respective products; (iii) currency fluctuations; (iv) drilling and production results; (v) reserves estimates; (vi) loss of market share and industry competition; (vii) environmental and physical risks; (viii) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (ix) the risk of doing business in developing countries and countries subject to international sanctions; (x) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (xi) economic and financial market conditions in various countries and regions; (xii) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement of shared costs; and (xiii) changes in trading conditions.

All forward looking statements contained in this Circular 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. Readers should specifically consider the factors identified in this Circular that could cause actual results to differ before taking any action in respect of the Combination. All of the forward looking statements made in this Circular are qualified by these cautionary statements. Specific reference is made to Part I (Letter from the Chairman of Shell) and Part II (Risk factors).

Each forward looking statement speaks only as of the date it was made. None of Shell, the Shell Group or the BG Group undertakes any obligation to publicly update or revise any forward looking statement as a result of new information, future events or otherwise except to the extent legally required and, in particular, Shell will comply with its obligation to publish supplementary circulars containing further updated information as required by law or by a regulatory authority and, in particular, its obligations under the Prospectus Rules, the Listing Rules and the Disclosure and Transparency Rules (as appropriate). In light of

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these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this Circular.

The statements above relating to forward looking statements should not be construed as a qualification on the opinion as to working capital set out in paragraph 5 of Part VII (Additional information).

No statement in this Circular (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period.

Accretion statements or statements as to the effect of the Combination on free cash flow per share, earnings per share, cash flow from operations per share, or return on average capital employed, should not be construed as profit forecasts and are, therefore, not subject to the requirements of Rule 28 of the City Code.

No statement in this Circular should be interpreted to mean that free cash flow per share, earnings, earnings per share or income, cash flow from operations per share or return on average capital employed for the Shell Group, the BG Group and/or the Combined Group, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations, free cash flow or return on average capital employed for the Shell Group or the BG Group, as appropriate.

In this Circular, any reference to pro forma financial information is to information which has been extracted without material adjustment from the unaudited pro forma financial information contained in Part V (Unaudited pro forma financial information). The unaudited pro forma information consists of a pro forma income statement for the financial year ended 31 December 2014 and a pro forma net assets statement as at 30 September 2015 relating to the Combined Group. These have been prepared in accordance with Listing Rule 13.3.3R and in a manner consistent with the accounting policies and presentation adopted by the Shell Group in relation to the consolidated financial statements for the year ended 31 December 2014 and the unaudited condensed consolidated interim financial statements for the nine months ended 30 September 2015.

The unaudited pro forma financial information has been prepared for illustrative purposes only to illustrate the effect on the Shell Group’s income statement and net asset statement of its acquisition of the BG Group as if it had taken place on 1 January 2014, in the case of the income statement, and on 30 September 2015, in the case of the net assets statement. Due to its nature, the unaudited pro forma income statement and unaudited pro forma net assets statement address a hypothetical situation. They do not represent the Shell Group’s actual financial position or results, or what the Combined Group’s actual financial position or results would have been if the Combination had completed on the dates indicated.

This Circular contains information regarding the BG Group which has been accurately reproduced from the information provided to Shell by BG for inclusion in this Circular, the BG 2014 Annual Report, the BG 2013 Annual Report and/or the BG 2012 Annual Report. As far as Shell is aware and is able to ascertain from information published by BG or otherwise provided to Shell by BG, no facts have been omitted that would render the reproduced information inaccurate or misleading.

The synergy numbers are unaudited and are based on analysis by Shell’s management and on Shell’s internal records. Further information underlying the Quantified Financial Benefits Statement is contained in paragraph 7 of Part VII (Additional information).

Information on sources and bases is provided in paragraph 9 of Part VII (Additional information).

The meanings of defined terms used in this Circular are set out in Part VIII (Definitions).

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PART IV

HISTORICAL FINANCIAL INFORMATION RELATING TO THE BG GROUP

PART A

The audited consolidated financial statements of the BG Group for the financial years ended 31 December 2014, 2013 and 2012 included in the BG 2014 Annual Report (as originally published), BG 2013 Annual Report (as originally published) and BG 2012 Annual Report (save that the financial information relating to the BG Group for the financial year ended 31 December 2012 has been extracted from the restated comparatives presented in the consolidated financial statements of the BG Group for the year ended 31 December 2013), together with the auditors’ reports thereon and the notes thereto, and the BG Group’s unaudited interim results for the nine months ended 30 September 2015 and 30 September 2014, are incorporated by reference into this Part from Part B of Part XI (Financial information in relation to BG and the BG Group) of the Prospectus.

PART B

Unaudited reconciliations of the BG Group financial information to the Shell Group’s accounting policies

The following unaudited reconciliations summarise the material adjustments which reconcile the BG Group’s income/(loss) for the nine-month period to 30 September 2015 and each of the three years ended 31 December 2014, 2013 and 2012; as well as the net assets (total equity) as at 30 September 2015, and as at 31 December of the three years 2014, 2013 and 2012, as previously reported by the BG Group to estimates of those that would have been reported had the BG Group applied the accounting policies used by the Shell Group in the preparation of its consolidated financial statements for the year ended 31 December 2014.

These differences relate to methods for recognition and measurement of the amounts shown in the consolidated financial statements. The reconciliation does not seek to reflect any changes to the judgements made by the directors of BG in preparing the underlying BG Group financial information and does not reflect any fair value adjustments which the Shell Board will need to make as a result of the Combination or would have made had the Combination happened at any other date during the historical period shown.

The following unaudited reconciliations present the effect of the material differences between the BG Group’s accounting policies and the Shell Group’s accounting policies; the adjustment to net assets (total equity) is a cumulative adjustment whereas the net income adjustment represents the effect for the accounting period only and therefore does not correspond with the net assets adjustment amount for the corresponding accounting period.

($) (MILLION)

($) (MILLION)

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Notes:

The consolidated profit/(loss) of the BG Group for the years ended 31 December 2014 and 2013 and consolidated net assets of the BG Group as at 31 December 2014 and 2013 have been extracted without material adjustment from the BG Group’s consolidated financial statements for each of the respective years. The consolidated profit/(loss) of the BG Group for the year ended 31 December 2012 and consolidated net assets of the BG Group as at 31 December 2012 have been extracted without material adjustment from the restated comparatives presented in the BG 2013 Annual Report.

Significant Accounting Policies – Depreciation

The Shell Group and the BG Group both apply the unit of production (“UoP”) method of depreciation to assets which have a useful life that is related to oil and gas reserves. However, the reserves base used in their respective UoP calculation is measured differently. BG Group oil and gas reserves are measured under the PRMS definition, whereas the Shell Group applies the SEC reserves definition. This results in a different basis for estimating the UoP depreciation which has not been reflected in the reconciliation above as it does not represent a difference in accounting policy or judgment.

Similarly, the BG Group depreciates Upstream unconventional assets over its total proved plus probable reserves and Upstream conventional assets over its total proved developed reserves (except for acquired interests and for facilities which use total proved reserves). The Shell Group generally depreciates Upstream assets over its proved developed reserves. This is also considered to be a difference in estimating the depreciation basis of assets, and not a difference in accounting policy or judgment. Consequently, it is also not reflected in the reconciliations above.

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PART C

Accountant’s report on the unaudited reconciliations of the consolidated financial information of the BG Group

The Directors

Royal Dutch Shell plc

Shell Centre

London

United Kingdom

SE1 7NA

Merrill Lynch International

2 King Edward Street

London

United Kingdom

EC1A 1HQ

22 December 2015

Dear Sirs

Royal Dutch Shell plc (“Shell”) and its subsidiaries (the “Shell Group”): Proposed acquisition of BG Group plc (“BG”, with BG and its subsidiaries being the “BG Group”)

We report on the unaudited reconciliations of the BG Group financial information to the Shell Group’s accounting policies (the “Reconciliations”) of the consolidated net income for each of the years ended 31 December 2014, 2013 and 2012 and of the net assets as at 31 December 2014, 2013 and 2012, together the “Financial Information”, as previously reported in the financial statements of the BG Group prepared under International Financial Reporting Standards (as adopted by the EU), showing the adjustments necessary to restate it on the basis of the Shell Group’s accounting policies used in preparing the Shell Group’s last set of annual consolidated financial statements, set out in Part B of Part IV of the (Historical financial information relating to the BG Group) of Shell’s Circular dated 22 December 2015 (the “Circular”). This report is required by Listing Rule 13.5.27R(2)(a) of the United Kingdom Listing Authority and is given for the purpose of complying with that Listing Rule and for no other purpose.

We express no opinion on the unaudited reconciliations of the BG Group financial information to the Shell Group’s accounting policies of the consolidated net income for the nine months ended 30 September 2015 and of the net assets as at 30 September 2015.

Responsibilities

It is the responsibility of the directors of Shell (the “Directors”) to prepare the Reconciliations in accordance with Listing Rule 13.5.27R(2)(a).

It is our responsibility to form an opinion, as required by Listing Rule 13.5.27R(2)(a), as to whether:

and to report that opinion to you.

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The Reconciliations are based on the audited consolidated balance sheets as at 31 December 2014, 2013 and 2012 and consolidated income statements for each of the years then ended of the BG Group which were the responsibility of the directors of BG and the audited consolidated balance sheets and consolidated income statements were audited by Ernst & Young. We do not accept any responsibility for any of the historical financial statements of the BG Group, nor do we express any opinion on those financial statements.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may have to shareholders of Shell as a result of the inclusion of this report in the Circular, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this report or our statement, required by and given solely for the purposes of complying with item 13.4.1R(6) of the Listing Rules, consenting to its inclusion in the Circular.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of checking whether the unadjusted Financial Information of the BG Group has been accurately extracted from an appropriate source, assessing whether all adjustments necessary for the purpose of presenting the Financial Information on a basis consistent in all material respects with the Shell Group’s accounting policies have been made, examination of evidence supporting the adjustments in the Reconciliations and checking the arithmetical accuracy of the calculations within the Reconciliations.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Reconciliations have been properly compiled on the basis stated and that the adjustments are appropriate for the purpose of presenting the Financial Information (as adjusted) on a basis consistent in all material respects with the Shell Group’s accounting policies.

Opinion

In our opinion:

Yours faithfully

PricewaterhouseCoopers LLP

Chartered Accountants

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PART V

UNAUDITED PRO FORMA FINANCIAL INFORMATION

PART A

Unaudited pro forma financial information relating to the Combined Group

The unaudited pro forma income statement of the Combined Group has been prepared based on the consolidated statement of income of the Shell Group for the year ended 31 December 2014 and the consolidated income statement of the BG Group for the year ended 31 December 2014 to illustrate the effect on the income statement of the Shell Group of the Combination as if it had taken place as at 1 January 2014.

The unaudited pro forma statement of net assets of the Combined Group has been prepared based on the unaudited consolidated balance sheet of the Shell Group as at 30 September 2015 and the unaudited consolidated balance sheet of the BG Group as at 30 September 2015 to illustrate the effect on the net assets of the Shell Group of the Combination as if it had taken place as at 30 September 2015.

The unaudited pro forma income statement of the Combined Group and the unaudited pro forma statement of net assets of the Combined Group together form the unaudited pro forma financial information.

The unaudited pro forma financial information set out in this Part has been prepared for illustrative purposes only and, by its nature, addresses a hypothetical situation and, therefore, does not represent the Shell Group’s or the Combined Group’s actual results or financial condition.

The unaudited pro forma financial information has been prepared on a consistent basis with the accounting policies and presentation adopted by the Shell Group in relation to the consolidated financial statements for the year ended 31 December 2014 and the unaudited condensed consolidated interim financial statements for the nine months ended 30 September 2015 on the basis of the notes set out below and in accordance with Listing Rule 13.3.3R. The adjustments in the unaudited pro forma financial information are expected to have a continuing impact on the Combined Group, unless stated otherwise.

Furthermore, the unaudited pro forma financial information set out in this Part does not constitute statutory accounts within the meaning of section 434 of the CA 2006.

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Unaudited pro forma income statement relating to the Combined Group

UNAUDITED PRO FORMA INCOME STATEMENT

($) (MILLION)

Notes:

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UNAUDITED RECONCILIATION OF BG GROUP CONSOLIDATED INCOME STATEMENT UNDER SHELL GROUP ACCOUNTING POLICIES AND INCOME STATEMENT PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2014

($) (MILLION)

Notes:

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For the purposes of the unaudited pro forma income statement, transaction costs expected to be incurred by the Shell Group of $467m and transaction costs expected to be incurred by the BG Group of $161m as well as change in control costs and landholder tax (totalling in combination $113m) have been reflected as an expense. In addition, non-resident capital gains taxes (totalling $248m) have been reflected as income taxes. These costs are not expected to be incurred on an ongoing basis in the Combined Group. The calculation of taxes to be paid as part of the transaction includes a number of assumptions. Accordingly, the final taxes paid post completion may be different. Completion of the Combination will trigger an accelerated vesting of some of the BG Share Plans. As at the Latest Practicable Date, it is not possible to estimate these costs as the valuation is pending future decisions and events. Accordingly, they have not been included in the pro forma financial statements in this Circular.

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Unaudited pro forma statement of net assets relating to the Combined Group

UNAUDITED PRO FORMA STATEMENT OF NET ASSETS

($) (MILLION)

Notes:

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UNAUDITED RECONCILIATION OF THE BG GROUP’S CONSOLIDATED NET ASSETS UNDER THE SHELL GROUP’S ACCOUNTING POLICIES AND BALANCE SHEET PRESENTATION AS AT 30 SEPTEMBER 2015

($) (MILLION)

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Notes:

⁽¹⁾ The calculation is based on a USD/GBP exchange rate of 1.4908 and assumes that there will be 3,427,243,681 BG Shares in issue (both taken from the Latest Practicable Date) and that each BG Shareholder will receive 383 pence per BG share. It is assumed that this amount will be cash settled without the issuance of new debt by Shell.

⁽²⁾ The calculation is based on the Closing Price of Shell B Shares of 1469 pence, a USD/GBP exchange rate of 1.4908 and assumes that there will be 3,427,243,681 BG Shares in issue (all taken from the Latest Practicable Date) and that each BG Shareholder will receive 0.4454 Shell B Shares per BG Share.

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PART B

Accountant’s report on the unaudited pro forma financial information relating to the Combined

Group

The Directors

Royal Dutch Shell plc

Shell Centre

London

United Kingdom

SE1 7NA

Merrill Lynch International

2 King Edward Street

London

United Kingdom

EC1A 1HQ

22 December 2015

Dear Sirs

Royal Dutch Shell plc (“Shell”) and its subsidiaries (the “Shell Group”)

We report on the unaudited pro forma financial information relating to the Combined Group (the “Pro Forma Financial Information”) set out in Part A of this Part V of Shell’s circular dated 22 December 2015 (the “Circular”) which has been prepared on the basis described in the notes to the Pro Forma Financial Information, for illustrative purposes only, to provide information about how the proposed acquisition of BG Group plc might have affected the financial information presented on the basis of the accounting policies adopted by Shell in preparing the consolidated financial statements for the year ended 31 December 2014 and the unaudited condensed consolidated interim financial statements for the nine months ended 30 September 2015. This report is required by item 13.3.3R of the Listing Rules of the UK Listing Authority (the “Listing Rules”) and is given for the purpose of complying with that Listing Rule and for no other purpose.

Responsibilities

It is the responsibility of the directors of Shell to prepare the Pro Forma Financial Information in accordance with item 13.3.3R of the Listing Rules.

It is our responsibility to form an opinion, as required by item 13.3.3R of the Listing Rules as to the proper compilation of the Pro Forma Financial Information and to report our opinion to you.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

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Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may have to shareholders of Shell as a result of the inclusion of this report in the Circular, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 13.4.1R(6) of the Listing Rules, consenting to its inclusion in the Circular.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of Shell.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Shell Group.

Opinion

In our opinion:

Yours faithfully

PricewaterhouseCoopers LLP

Chartered Accountants

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PART VI

OIL AND GAS INFORMATION

The oil and gas information set out in this Part, including the reserves estimates, is unaudited; it is not covered by the audit opinion of the independent registered public accounting firms that have audited and reported on the Shell Group’s or the BG Group’s financial information.

All the information in this Part should be read in conjunction with Part II (Risk factors).

The oil and gas information in this Circular contains reserves estimates.

The reserves estimates for the BG Group in this Circular (except as otherwise stated) have been compiled on the basis of the PRMS. In addition to the information about the BG Group’s proved reserves, the oil and gas information for the BG Group also includes certain information about its probable reserves and discovered resources and risked exploration resources.

The proved reserves estimates for the Shell Group in this Circular have been compiled in accordance with the SEC Rules. In line with the approach taken by other IOCs and supported by the SEC, the Shell Group does not report on its probable reserves or other resources. Shell intends that the Combined Group’s reserves will be determined and reported on the same basis following completion of the Combination.

The SEC Rules and the PRMS are closely aligned, but a few key differences exist. The most notable is that the SEC Rules define the criteria for the determination of economically producible reserves to allow for comparability in the Standardized Measure¹³ reporting of proved reserves. The corresponding concept under the PRMS, the “commerciality” determination, introduces a subjective aspect to the price and costs used to establish existing economic conditions by factoring in elements such as the rate of return required by a particular company before it will commit resources to the project. This rate of return varies among companies, reducing the comparability of company reserves generated on a PRMS basis. The SEC proved reserves estimates are thus based on “existing” economic conditions (Year Average Price or YAP, Year End Cost or YEC, no escalation or depreciation) and hydrocarbon income only, while the PRMS uses “defined” economic conditions (defined by each company) and can include non-hydrocarbon income.

For illustrative purposes only, to enable more direct comparability with Shell’s reserves and to present the information in this Circular in a manner which is more consistent with how the Combined Group will report on an ongoing basis, a re-estimation under the SEC Rules of the BG Group’s proved reserves estimates as at 31 December 2014 and as at 31 December 2013 has been set out in the tables at paragraph 4 of this Part (the numbers which have been re-estimated for the purposes of the Circular are presented in italics).

As noted in paragraph 6 of Part A of Part II (Risk factors), following completion of the Combination, there may be adjustments in the reserves estimates of the Combined Group stemming from, among other things, the differences between the two classifications and such differences could be material.

The following oil and gas information of the BG Group set out in this paragraph has been extracted without material adjustment from the BG 2014 Annual Report. The information has been reproduced verbatim and, as such, page numbers and other references may no longer be valid.

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12
STRATEGIC REPORT
WHAT MAKES US DISTINCTIVE: WORLD-CLASS EXPLORATION
Exploration is a core driver of value for BG Group. Our track record in exploration reflects the technical expertise that is at the heart of our business.
A JOURNEY OF DISCOVERY
Since 1997, our teams of geologists and geophysicists have participated in 17 giant or super-giant hydrocarbon discoveries. Each of these discoveries has recoverable resources greater than 500 million barrels of oil equivalent (mmboe) or 3 trillion cubic feet (tcf) of gas.
Across our portfolio, we have been successful in converting discovered resources to economic reserves and we will continue to monetise our resources to drive value for the business.
Some of our strongest recent successes have been in Tanzania where, since 2010, we have drilled 16 consecutive successful exploration and appraisal wells. We now have 16 tcf of total recoverable gas resources – equivalent to around 2.5 billion boe.
Our success is demonstrated by our organic proved reserve replacement ratio where we have consistently outperformed our peer group.
Over the past three years, our organic proved reserve replacement ratio has been 158%.
VALUE FOCUSED
Our track record is reflected in the most recent survey by industry consultants, Wood Mackenzie. Based on their rankings, excluding unconventionals and discoverable resource opportunities (DROs), we lead all the super major energy companies, and are second overall in conventional new-field value creation from exploration (see chart below).
In the lower oil price environment we face in 2015, our focus will be on progressing our existing exploration opportunities across new and existing basins. Our exploration will be focused around hubs in Australia, the North Sea and Trinidad and Tobago, while our work in new basins will be concentrated on prospect generation.
CONVENTIONAL NEW FIELD VALUE CREATION 2004-13(e)
($bn)
VALUE FOCUSED
Our track record is reflected in the most recent survey by industry consultants, Wood Mackenzie. Based on their rankings, excluding unconventionals and discoverable resource opportunities (DROs), we lead all the super major energy companies, and are second overall in conventional new-field value creation from exploration (see chart below).
In the lower oil price environment we face in 2015, our focus will be on progressing our existing exploration opportunities across new and existing basins. Our exploration will be focused around hubs in Australia, the North Sea and Trinidad and Tobago, while our work in new basins will be concentrated on prospect generation.
CONVENTIONAL NEW FIELD VALUE CREATION 2004-13(e)
($bn)
2 500
2 221
2 000
1604 1 652
1 500
1 058
1 000 837
692
500 326 392
180
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(SPE (SPE
—
PRMS) (d) PRMS)
(c) Source: BG Group.
(d) Organic Reserve and Resource Additions measured
on an SEC basis until 2012, and SPE-PRMS thereafter.
BG Group Majors Peers
100 30 20 10
0
–5
(e) Source: Wood Mackenzie “Exploration Company Benchmarking” – net value creation, excluding organic unconventionals and DROs (2004-13, excluding National Oil Companies, but including Petrobras and PETRONAS).
“BG Group creates an environment where everyone can and wants to participate in a highly collaborative way – it means that we have the best ideas and technical expertise to explore. I lead an exploration team in a dynamic and exciting industry, exploring environments that existed millions of years ago, to find future hydrocarbon resources. We strive for technical excellence, working with the best people, technology and tool kits to find the next exploration opportunity, whether it be a high-value near-field tie-back in a mature basin or a multi-billion barrel field in an emerging frontier area.”
CARL CUTHBERT-BROWN | EXPLORATION TEAM LEADER, EUROPE E&P
THREE-YEAR ORGANIC PROVED RESERVE
REPLACEMENT RATIO(a)(b) (SEC/SPE-PRMS data)
250%
200%
150%
100%
50%
0%
2005 2007 2013 2014
BG Group Combined companies
(a) Source: Evaluate Energy. Peer group includes Super Majors, and US and European Integrated Majors.
(b)BG Group three-year organic proved reserve replacement ratio measured on an SEC basis until 2013, and SPE-PRMS thereafter.
BG GROUP | ANNUAL REPORT AND ACCOUNTS 2014
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STRATEGIC REPORT | WHAT MAKES US DISTINCTIVE – WORLD CLASS EXPLORATION
13
“Our Exploration business provides young geologists with the opportunity to take on responsibility in high-profile projects from a very early stage in their careers. With the right support to climb a steep learning curve and insight into the decision-making process, you quickly understand how your work directly impacts the success of the exploration programme. I work in the Emerging Assets team, evaluating basins where gas and oil exploration is in its infancy. You need to be able to communicate your ideas, both with your sub-surface colleagues and with those who have limited geological background. The success of the venture is dependent upon effective stakeholder engagement and requires a multi-faceted approach, with expertise from sub-surface to environment to social performance.”
LUCY RAMSEY | EMERGING ASSETS GEOLOGIST
OUR MOST IMPORTANT ASSET
We believe our track record is the result of how we apply our technology, our rigorous but fast decision-making process on which prospects we develop and, most importantly, the difference our people make.
A core part of our approach to exploration has been to develop our talent internally, from graduate level upwards. Our graduate programme has been a competitive advantage, with a retention rate of around 82% over the last 10 years. We believe this is the result of the individual attention we pay to development plans for our geoscientists and the trust and responsibility we place in them from early in their careers.
BG Group encourages and supports a creative and entrepreneurial culture among our exploration teams – our 280 geoscientists initiate and develop new ideas and prospects on a regular basis.
AGILE ORGANISATION
The Group prides itself on its ability to make decisions swiftly, which we attribute to our flat management structure. Opportunities are evaluated using state-of-the-art technology.
In 2014, we delivered on our new frontier basin strategy entering four new basins – Aruba, Colombia, deep water Trinidad and Tobago as well as Myanmar.
For example, as part of our early-stage exploration activity offshore Honduras, a region which has not been drilled for over 30 years, we deployed a new technology not used by BG Group before known as a gravity gradiometry survey.
EXPLORATION AND APPRAISAL ACTIVITIES
During 2015 the Group will be exploring a mix of existing and frontier basins including:
In combination with other analyses, we are able to build up a more detailed picture of the opportunity, increase our confidence and progress it towards a drilling decision. We seek a balanced view of the risk profile of the project, considering both technical and commercial aspects and then evaluate whether it will meet our economic screening criteria.
As with every part of our business, safety remains paramount in exploration, particularly when we reach the stage of drilling. With this in mind, we are constantly seeking ways to improve the safety of our operations.
RETENTION RATE OVER THE LAST 10 YEARS
82%
Retention rate 2005-14 for our geoscientists in the graduate programme
Seismic
Drilling activity
Australia
UK
Norway
Trinidad and Tobago
Brazil
Uruguay
Honduras
Bolivia
Myanmar
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
BG GROUP | ANNUAL REPORT AND ACCOUNTS 2014
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STRATEGIC REPORT | OUR PERFORMANCE
19
ADDITIONAL KPIs FOR 2015
Consistent with BG Group’s focus on improving return on capital and delivering earnings and cash-flow growth, it is intended that return on average capital employed (ROACE) and earnings before interest, tax, depreciation and amortisation (EBITDA) be adopted as additional KPIs for the business and will be first reported in the Annual Report and Accounts for the financial year ended 31 December 2015.
PRODUCTION VOLUMES
The graph shows BG Group’s net production from all of its producing E&P interests and is measured in thousands of barrels of oil equivalent per day (kboed).
In 2014, E&P production volumes decreased 4% to 606 kboed. The continued ramp-up of production from new developments in Brazil, Bolivia, Australia and the UK were
more than offset by reservoir decline and lower entitlement in Egypt, declines in the USA, lower entitlement in Kazakhstan and shutdowns in Tunisia. The proportion of oil in the portfolio increased, with oil production rising from 15% to 22% of the total, reflecting the growth in production in Brazil. The Group expects production in 2015 to be in the range of 650-690 kboed.
EXPLORATION AND PRODUCTION VOLUMES (NET)
(kboed)
800
646 641 657 633 606
600
400
200
2010 2011 2012 2013 2014
For the year ended 31 December.
TOTAL RESOURCES
The size of BG Group’s total reserves and resources is a key determinant of the Group’s ability to replace production and deliver production growth in the future. It is measured in mmboe. From the year ended 31 December 2013 onwards, BG Group adopted the reserves definitions and guidelines consistent with the Petroleum Resources Management System published by the Society of Petroleum Engineers (SPE-PRMS). See page 132 for more details.
In 2014, BG Group’s total reserves and resources decreased 4% or 755 mmboe to 17 016 mmboe. The Group’s proved and probable reserves fell 7% to 6 525 mmboe (2013: 6 990 mmboe). The Group monetised 221 mmboe of resources through production, and close to 500 mmboe of the decline was through disposals and relinquishments. Approximately 350 mmboe was progressed from risked exploration to discovered resources.
TOTAL RESERVES AND RESOURCES
(mmboe)
18 511
18 000 17 130 17 771 17 016
16 180
12 000
6 000
2010 2011 2012 2013 2014
SEC SEC SEC SPE- SPE-
PRMS PRMS
Proved reserves(a) Discovered resources(a) Probable reserves(a) Risked exploration(a)
(a) For an explanation of these terms, refer to page 132. For the year ended 31 December.
LNG VOLUMES
This is a measure of the volume of LNG that BG Group has delivered, excluding fuel gas. The Group has a portfolio of flexible, long-term LNG supply, sourced from its own liquefaction plants in Trinidad and Tobago, Australia and Egypt, as well as from third-party suppliers in Equatorial Guinea and Nigeria. Delivered volumes also includes third-party spot purchases. It is measured in millions of tonnes per annum (mtpa).
LNG delivered volumes in 2014 were 11.0 mtpa compared to 10.9 mtpa in 2013, equating to 178 cargoes in both years. Overall volumes
increased 1% despite fewer cargoes delivered from Egypt (falling from 25 in 2013 to one in 2014) primarily as a result of an increase in spot cargo purchases which totalled 28 in 2014 versus nine in 2013. The Group continues to expect very limited cargoes to be lifted from Egyptian LNG for the foreseeable future. However, QCLNG will add new LNG volumes in 2015. Excluding QCLNG cargoes and spot purchases, supply volumes are expected to be slightly lower in 2015.
LIQUEFIED NATURAL GAS DELIVERED VOLUMES
(mtpa)
15
12.9
12.8
12.1
12
10.9 11.0
9
6
3
2010
2011 2012 2013 2014
For more information on delivered volumes, see page 26.
For the year ended 31 December.
BG GROUP | ANNUAL REPORT AND ACCOUNTS 2014
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20
STRATEGIC REPORT OPERATING REVIEW
“Despite the challenges of a lower oil price and the many risks we have to manage on a daily basis, I expect to see us deliver higher volumes in 2015.”
SAMI ISKANDER | CHIEF OPERATING OFFICER
UPSTREAM
TOTAL OPERATING PROFIT(a) BUSINESS PERFORMANCE
$3 947m
2014 –21%
2013 $4 967m
EXPLORATION AND PRODUCTION VOLUMES (NET)
606kboed
2014 –4%
2013 633 kboed
2014 was a year of solid progress in our Upstream business as production increases from our growth assets in Brazil and Australia largely offset a 13% decline from our base assets, driven principally by reductions in Egypt and the USA. In total, production volumes declined by 4% in 2014.
Increased production from Brazil also drove an increase in the proportion of oil in our portfolio from 15% to 22% of the total, although this was offset by lower average realised oil prices which were down around 9% before the benefit of our programme of hedging the Brent oil price.
The result was total revenues of $12.0 billion, down 1% from 2013.
Costs increased during the year due to the ramp-up of production in Brazil and higher maintenance costs and higher costs arising from new developments coming onstream in the UK. As a result, Upstream operating profit reduced to $3.9 billion, down 21% on last year.
We made good progress with our key growth projects.
At our QCLNG project in Australia, despite the challenges and cost overruns encountered during construction, we achieved the major milestone of start-up of the first LNG train. The first train started loading at the end of December and seven commissioning cargoes had been shipped as at end
February. The plant is operating at levels of capacity to be expected during a commissioning phase. The current expectation is to start LNG production from Train 2 in the third quarter of 2015. This should enable us to reach plateau production of around 8 mtpa in mid-2016.
In Brazil, we saw significant production growth as the first three FPSOs in the Santos Basin reached full capacity, and we commissioned two further FPSOs at Iracema South and Sapinhoá North. This enabled net production to double in 2014 to an average rate of 78 kboed over the year, and in January 2015, we were producing at around 130 kboed, making Brazil our highest producing country. In 2015, we expect to see further production increases as the Iracema South and Sapinhoá North FPSOs continue their ramp up. We are on track to commission our sixth FPSO at Iracema North towards the end of 2015.
Despite the challenges of a lower oil price and the many risks we have to manage on a daily basis, I expect to see us deliver higher volumes in 2015. I would like to thank all of our employees for the commitment and dedication they have shown throughout the year and look forward to building on our successes in 2015.
SAMI ISKANDER
CHIEF OPERATING OFFICER
2014 MILESTONES
At the start of 2014, BG Group set out the key milestones for the year, which encompassed several major projects being brought onstream in Australia, Brazil and Norway, as well as additional phases of development in some of the Group’s other assets.
Q1
Brazil FPSO 2 second well connected Second well on FPSO Cidade de São Paulo started
production in February
Thailand Bongkot South Phase 4b Phase 4b came onstream in February
Q2
Brazil FPSO 3 second well connected Second well on FPSO Cidade de Paraty started
production in May
QCLNG commissioning of gas turbine generators Commissioning of the gas turbine generators
began in June
Q3
Egypt West Delta Deep Marine (WDDM) Phase 9a The first WDDM Phase 9a wells came onstream in July
Brazil FPSO 4 onstream FPSO Cidade de Ilhabela came onstream in November
Q4
QCLNG first LNG LNG was produced and the first cargo commenced
loading in December
UK West Franklin Phase 2 start-up First production from Phase 2 was in January 2015
Trinidad and Tobago Starfish field onstream Starfish came onstream in December
Norway Petrojarl Knarr FPSO onstream Petrojarl Knarr FPSO came onstream in March 2015
Brazil FPSO 5 onstream FPSO Cidade de Mangaratiba came onstream in October
Key
Delivered on time or ahead of schedule
Delivered but behind schedule
(a) For a reconciliation between Business Performance and Total Results, see note 1, page 98.
BG GROUP | ANNUAL REPORT AND ACCOUNTS 2014
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STRATEGIC REPORT | OPERATING REVIEW | UPSTREAM
21
FOR MORE INFORMATION VISIT: BG-GROUP.COM/DATABOOK
CASE STUDY:
QUEENSLAND, AUSTRALIA
1 DRILLING RIG
BG Group had drilled around 2 350 wells by the end of 2014 for the first phase of development of the QCLNG project.
2 KENYA WATER TREATMENT PLANT
QGC’s water treatment plant currently processes more than 50 megalitres of water per day (equivalent to 20 Olympic swimming pools), providing water for agriculture and other beneficial uses.
3 MAIN PIPELINE NETWORK
FOR THE QCLNG PROJECT
The 543 kilometre main pipeline network to transport gas to the QCLNG terminal on Curtis Island, Gladstone is made up of
46 200 individual pipe lengths and is the longest buried large-diameter pipeline in Australia. In December 2014, BG Group agreed the sale of QCLNG Pipeline Pty for approximately $5 billion, which is expected to complete in the first half of 2015.
4 QCLNG SITE, CURTIS ISLAND
QCLNG is the world’s first LNG project to be supplied by coal seam gas. The start of production from the plant’s first LNG train is the result of more than four years of development and construction on Curtis Island.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
AUSTRALIA
2014 net production 34 kboed (2013: 25 kboed). By the end of the second quarter, the central Exploration activity continued with
The Group is developing a two-train 8.5 mtpa processing plant (CPP) and six planned field production testing of pilot CSG wells in liquefaction plant on Curtis Island in Queensland. compression stations (FCSs) in the Ruby Jo the Bowen Basin, drilling in the Bowen
Exploration and development of onshore coal area were in operation. This is a major supply Basin deep gas sands and a four-well seam gas (CSG) acreage in the Surat Basin. source in the southern area of the Surat Cooper Basin programme targeting
CSG acreage in the central Bowen Basin, tight Basin for Train 1. Similar infrastructure in the tight gas sands and shale gas. gas sands potential in the southern reaches Bellevue development area, in the central BG Group has contracted third-party gas of the Bowen Basin and shale gas potential Surat Basin – comprising three FCSs, the CPP supplies to maximise volumes through in the Cooper Basin. and gas gathering lines – came into operation the LNG trains during the ramp-up phase. in the third quarter.
2014 Key events • Drilling and installation of upstream Outlook
QCLNG is the world’s first LNG project to infrastructure ahead of Train 2 start-up LNG supply from Train 1 will ramp up be supplied by CSG. The start of production continued to advance at both Jordan and during the first half of 2015, with Train 2 in December 2014 from Train 1 is the result Woleebee Creek in the south and north of expected onstream in the third quarter. of more than four years of development the Surat Basin, respectively. This includes two At plateau production, expected around and construction on Curtis Island. CPPs, eight FCSs and a water treatment plant. mid-2016, QCLNG will have an output
In the upstream, drilling activity continued With project construction for the liquefaction of around 8 mtpa. to ramp up ahead of first LNG. As at the year plant at its final stages in early 2014, the The Group will be conducting ongoing end, around 2 350 wells had been drilled since majority of the work in the year focused on exploration activities in the Surat CSG, inception, with approximately 1 600 wells commissioning activities which began in the Bowen tight gas sands and Cooper Basin available for production or de-watering. first quarter of 2014, with key milestones tight gas sands and shale.
The Group also ramped up its gas production: being: the hydro-testing of the first storage in the fourth quarter, production at 46 kboed tank; the commissioning of the gas turbine was 92% higher than the fourth quarter of generators and refrigeration turbines; and 2013, with first LNG produced in December. subsequent plant cool-down. In December, first LNG was produced and the Group began loading its first LNG cargo.
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STRATEGIC REPORT | OPERATING REVIEW | UPSTREAM > CONTINUED
22
BOLIVIA
2014 net production 48 kboed (2013: 36 kboed). 2014 Key events volumes from Margarita Phase IIb, which is
BG Group is operator and 100% holder of the In 2014, production continued to increase expected to further increase net production La Vertiente block (three fields), Tarija XX East following the new phases of development that capacity to around 47 kboed by 2016. (two fields), Los Suris (one field) and the came onstream at Margarita and Itaú in 2013. Following the contract for the Huacareta Huacareta block. These increased total production capacity at block becoming effective in January, BG Group
BG Group is a consortium member of Margarita from around 25 kboed to around initiated the environmental licensing process the Caipipendi (37.5% interest, containing 42 kboed and from around 3 kboed to in the second quarter, in preparation for the the Margarita field), Charagua (20% interest, approximately 10 kboed at Itaú, net to BG Group. exploration programme. in the process of being relinquished) and In December, BG Group and partners signed Tarija XX West (25% interest, containing an amendment to the delivery agreement with Outlook the Itaú field) blocks. Yacimientos Petroliferos Fiscales Bolivianos Huacareta seismic surveys are planned (YPFB) to allow for the export of additional for 2015.
BRAZIL
2014 net production 78 kboed (2013: 39 kboed). it the highest production capacity FPSO to be has suggested that the new fields be designated
BG Group holds significant acreage positions brought onstream in the Santos Basin. In Berbigão, Sururu and Atapú West. Ahead of with interests in three offshore blocks in the November, the second FPSO on Sapinhoá the submission of the development plans to Santos Basin with permanent production started up. The FPSO Cidade de Ilhabela has the ANP, the partners will be working on the facilities on the Lula, Iracema and Sapinhoá the capacity to process 150 kbopd of oil and deployment and allocation of the three initial discoveries. 212 mmscfd of gas. As at year end, the Cidade planned FPSOs as well as negotiating the
Operator of 10 offshore exploration blocks in de Mangaratiba was operating at over 65 kboed required unitisation agreements. the Barreirinhas Basin, offshore northern Brazil. from two wells and the Cidade de Ilhabela was Drilling performance for development operating at around 30 kboed from one well. wells continued to improve. The average 2014 Key events Successive wells, which have already been spud-to-target depth in 2014 was 52 days,
The first Lula FPSO operated close to its pre-drilled, will be hooked up during 2015. down from 56 in 2013.
100 kbopd capacity from just four oil-producing • Gross production from these five FPSOs • Work continued on the Cabiúnas pipeline, wells, one gas injector and two water alternating combined was more than 470 kboed at year end. which will connect blocks BM-S-9 and gas injectors. The fifth producer well was added • The sixth FPSO, Cidade de Itaguai, is well BM-S-11 to the Cabiúnas terminal. in December, taking production back up advanced and arrived in Brazil in January 2015 • In April, BG Group farmed down 25% of to capacity. for integration work. its interests in the BAR-M-215, 217, 252 and
Additional wells were hooked up to the second In December, the Declaration of Commerciality 254 blocks in the Barreirinhas Basin. and third FPSOs which came onstream in 2013. (DoC) was submitted for Iara following FPSO Cidade de São Paulo on Sapinhoá South additional appraisal work, including drill stem Outlook reached plateau in July and FPSO Cidade de tests (DSTs) and a six-month extended well Successive wells will be hooked up to the Paraty on Lula North-East reached plateau test. The DoCs for three separate oil and gas Cidade de Mangaratiba and Cidade de in September. Each FPSO has a capacity of accumulations in the Iara area were submitted Ilhabela FPSOs during 2015.
120 kbopd and only required four wells to reach to the Brazilian National Agency of Petroleum, • The operator expects the FPSO Cidade de plateau, fewer than originally expected. Natural Gas and Biofuels (ANP). These three Itaguai to be onstream at Iracema North
In October, first production from the Iracema accumulations extend outside the BM-S-11 Iara in the fourth quarter of 2015. discovery began with the start-up of the FPSO concession area and into the Entorno de Iara Monitoring closely the progress of subsequent Cidade de Mangaratiba. This FPSO can process Transfer of Rights area which is 100% operated FPSOs, particularly the domestic build FPSOs, 150 kbopd of oil and 283 mmscfd of gas making by Petrobras. As part of the DoCs, the consortium in light of the ongoing Petrobras investigation.
EGYPT
2014 net production 62 kboed (2013: 112 kboed). The proportion of gas volumes directed to Burg Offshore concession agreement. In
Operatorship of two gas-producing areas the domestic market averaged 776 mmsfcd November, the Group signed an agreement offshore the Nile Delta – Rosetta and West during 2014, notably above the contracted with GDF Suez allowing the tie-in of their Delta Deep Marine (WDDM) concessions. amount agreed by the government. As a result, West El Burullus South field to the WDDM
Operatorship of two other non-producing gas volumes available for the LNG plant were infrastructure, expected onstream in 2018. concessions offshore the Nile Delta – El Burg minimal – Egyptian LNG ran at an average Offshore and North Gamasa Offshore. of 4% capacity. Only four cargoes of LNG were Outlook
BG Group holds major shareholdings in the produced during the year, one of which was The remaining well in the WDDM Phase 9a Egyptian LNG project (Train 1 at 35.5% and allocated to BG Group’s LNG business. programme is expected to come onstream in Train 2 at 38%). In July, the first of the WDDM Phase 9a 2015. No further phases have yet been sanctioned.
BG Group is a supplier of gas to the Egyptian development wells came onstream and eight of With declining upstream production and minimal domestic market and Egyptian LNG. the nine planned wells are currently onstream. gas supplies to Egyptian LNG, the Group continues The nine-well development will only temporarily to expect very limited cargoes to be lifted 2014 Key events offset underlying gas production declines. from Egyptian LNG for the foreseeable future.
Production volumes in Egypt were significantly A number of options are under consideration to BG Group remains committed to the Egyptian lower in 2014 due to continued reservoir increase future gas supplies. In June, the Group LNG project and will continue to negotiate with decline and a sustained high proportion of gas signed a non-binding letter of intent with the Egyptian authorities and other stakeholders diversions to the domestic market, where the the Leviathan field partners to examine the to seek a longer-term solution. This will include Group is entitled to a lower share of production. possibility of supplying gas to the Egyptian the repayment of $0.9 billion owed by the
In January 2014, BG Group issued Force Majeure LNG facilities. In July, BG Group and partners Egyptian government ($0.7 billion overdue at notices under its LNG agreements in Egypt submitted a development plan for the Notus 2014 year end) and negotiation of an acceptable following the higher than expected gas high-pressure high-temperature and Harmattan domestic gas price. diversions to the domestic market. Deep discoveries in accordance with the El
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INDIA
2014 net production 18 kboed (2013: 20 kboed). phase of development at the PMT fields. Outlook
BG Group holds a 30% interest in, and is joint It consists of one wellhead platform (WHP) The Tapti field is currently expected to cease operator of, the Panna/Mukta oil and gas and intra-field pipelines, as well as six planned production by the second quarter of 2015. The fields and the Mid and South Tapti gas fields wells in the current drilling campaign and field will then move into the decommissioning (PMT fields). three future development wells. phase, with possible handover of certain Tapti
BG Group holds a 50% interest in, and operator BG Group and partners received approval facilities to ONGC, in accordance with the PSC. of, the deep-water block MB-DWN-2010/1. to exit from the block KG-DWN-2009/1 Increase in hydrocarbon recovery from in January 2015, subject to certain conditions. the Panna/Mukta fields is planned through 2014 Key events Following evaluation of the seismic data incremental development of existing
The drilling campaign at the Panna/Mukta acquired in block MB-DWN-2010/1, the partners fields via well intervention and infill drilling. fields continued. BG Group received have agreed to approach the government to The Mukta B WHP installation is expected government approvals for the Mukta B relinquish the block, due to technical reasons. in the second quarter of 2015.
KAZAKHSTAN
2014 net production 85 kboed (2013: 92 kboed). 2014 Key events transported more than 80 million tonnes
Joint operator of the Karachaganak oil and Record gross production levels were achieved of liquids through this important route. gas condensate field (BG Group 29.25%), at Karachaganak during 2014 (391 kboed). one of the largest condensate fields in However, due to the higher oil prices earlier Outlook the world. in the year, production sharing contract (PSC) To date, only 10% of hydrocarbons initially effects reduced BG Group’s net entitlement. in place have been produced from the
In May, Karachaganak celebrated 10 years Karachaganak field and significant of stable exports of liquid hydrocarbons to the development opportunities remain. Karachaganak-Atyrau and on to the Caspian In 2015, front end engineering design (FEED) Pipeline Consortium pipeline systems, will commence on a number of projects enabling the sale of the product into world to extend the liquids production plateau. markets. During 2004-2014, Karachaganak
NORWAY
2014 net production 1 kboed (2013: 2 kboed). 2014 Key events expanded scope of works to accommodate
Production during 2014 was from the The Knarr FPSO (63 kbopd gross capacity, the later development of the Knarr West Gaupe field (BG Group 60% and operator). BG Group 45% and operator) arrived in discovery, as well as higher costs in the
BG Group has 10 licences, seven as operator. Norway in September and was successfully sub-sea market. connected to the sub-sea infrastructure in Production from the Knarr field commenced December. The project cost increased to in March 2015. $1.2 billion (BG Group net), reflecting the
THAILAND
2014 net production 39 kboed (2013: 41 kboed). 2014 Key events Outlook
22.22% interest in the Bongkot field. The field Phase 4B of Bongkot South (GBS) came Phase 3M of GBN (four WHPs) is expected supplies approximately 20% of Thailand’s onstream in February 2014. This involved onstream in 2015 and Phase 3N is underway. gas demand and Bongkot is the biggest the installation and hook-up of four WHPs, GBS Phase 4C is underway and consists single supplier in the Gulf of Thailand. with gas from the project being exported via of three WHPs, with first gas also expected
Operator of Blocks 7, 8 and 9 (66.67% interest) a new-build spur line connected to existing in 2015. in the Thailand-Cambodia Overlapping infrastructure and condensate exported Programmes of well intervention, infill Claims Area. to the FPSO at Bongkot North (GBN). drilling and booster compression are being
BG Group holds an overriding royalty Phase 3L of GBN, consisting of two remote implemented to improve hydrocarbon recovery. agreement over Block 9a. WHPs and 17 wells, came onstream in June.
These phases are being developed to extend plateau production from the Bongkot field.
TRINIDAD AND TOBAGO
2014 net production 65 kboed (2013: 70 kboed). 2014 Key events in both blocks, and successfully bid for the
Three concessions with fields currently producing First gas was introduced to the NCMA Atlantic Area Blocks 3 and 7, taking 35% equity
– Central Block, East Coast Marine Area (ECMA) Phase 4a compression project in June. in both blocks. and North Coast Marine Area (NCMA). • In December, first gas was delivered from the
Exploration activities in Blocks 5(a), 5(c), 5(d), 6(b) Starfish field in ECMA. Gas from the Starfish Outlook and E, and Atlantic Area Blocks 3, 5, 6 and 7. field is exported via the Dolphin platform and Completion of the Starfish project is planned
BG Group holds major shareholdings in all will be used to meet contractual commitments to bring online two additional wells in the four trains of the Atlantic LNG project. to both the domestic market and Atlantic LNG. second quarter of 2015.
During 2014, BG Group expanded its acreage Drilling of the Bounty appraisal well on position in Trinidad and Tobago – BG Group Block 5(c) is planned to commence in the agreed to acquire an additional 25% interest second quarter of 2015, after which drilling in Block 5(c), taking its interest in the block to will commence on the Lobster exploration 100%; the Group farmed in to the Deepwater well on Block 5(d).
Atlantic Area Blocks 5 and 6, taking 35% equity
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TUNISIA
2014 net production 32 kboed (2013: 38 kboed). 2014 Key events The Hasdrubal water handling project
BG Group holds the Miskar and Hasdrubal Well interventions were undertaken on was commissioned in June. concessions, in the Gulf of Gabès. Operator Miskar to unlock additional reserves and The Amilcar exploration permit ended of the Miskar (BG Group 100%) and Hasdrubal enhance production. A further drilling in December.
fields (BG Group 50%). campaign was sanctioned at Miskar.
BG Group is the largest gas producer in Major shutdowns were completed ahead Outlook
Tunisia, supplying more than 60% of of schedule and on budget at both • Further drilling and well stimulation domestic gas production. Hasdrubal and Miskar. campaigns are planned at Miskar.
UK
2014 net production 105 kboed (2013: 100 kboed). 2014 Key events three wells and installing two new platforms
BG Group holds extensive interests focused Following the start-up of the Jasmine field in that have been tied-back to existing facilities. in the UK’s central North Sea, including November 2013, production continued to ramp The field is expected to deliver production a number of operated production hubs up. However, the performance from Jasmine of 6 kboed net.
(Armada, Everest and Lomond), exploration has been lower than expected, reaching • In September, an asset integrity campaign and appraisal interests, and equity in 30 kboed, net to BG Group, at peak. to improve the performance of the Everest pipeline and processing facilities. • BG Group sold its 62.78% equity interest in the and Lomond assets started. The shutdowns
BG Group participates in ventures operated CATS gas pipeline and associated infrastructure. have continued into the first quarter of 2015, by others including Buzzard, Elgin/Franklin, The sale does not impact BG Group’s rights with production expected to recommence J-Block and Jasmine. to capacity in CATS. following the completion of repairs on
The Group also completed the sale of its the CATS riser tower. 44% equity interest in the Blake field in the fourth quarter. Outlook
First production from Phase 2 of the West Major fiotel campaigns continue into 2015 Franklin field development was achieved in to undertake further asset integrity and January 2015. The project involved drilling reliability work on Everest and Lomond.
USA
2014 net production 39 kboed (2013: 58 kboed). 2014 Key events Outlook
BG Group develops shale gas in east Texas/ Production declined during 2014 as a result With the outlook for continued low US gas north Louisiana (Haynesville and Bossier) and of a reduced level of drilling activity due prices, a low level of drilling activity is likely Pennsylvania/West Virginia (Marcellus). to the continued low gas prices. At year to continue into 2015. end 2014, three rigs were operating. With a short lead time to re-establish rig count, BG Group can increase production, should US gas prices improve the economic ranking of these programmes.
DISCOVERIES AND EXPLORATION ACREAGE/NEW DEVELOPMENTS ARUBA
BG Group holds a 30% interest in an 2014 Key events Outlook offshore block. In June, BG Group agreed to acquire a 30% A programme of seabed coring is scheduled interest in an exploration block, offshore for 2015.
Aruba. The block covers 14 356 square kilometres, with identified prospectivity in water depths between 400 and 1 800 metres. A 3D seismic programme was completed in 2014.
CANADA
BG Group is assessing the Prince Rupert 2014 Key events Outlook
LNG project that would link gas resources in • In March, BG Group received the licence it • BG Group continues to investigate the best north-eastern British Columbia to a proposed requires from the National Energy Board to way to advance the Prince Rupert LNG liquefaction site near Prince Rupert, with allow exports of up to 25 mtpa of LNG for project. However, given current uncertainty plans for LNG export to Asian markets. 25 years, from the date of first export. about the size and number of North American
In November, BG Group’s pipeline partner projects, BG Group is taking a prudent received its Environmental Assessment approach to development in Canada by Certificate for the proposed Westcoast moderating future expenditure. Connector Gas Transmission Project from the government of British Columbia.
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COLOMBIA
BG Group holds a 30% interest in the 2014 Key events agreement and is located approximately Guajira Offshore 3 Block. In January, BG Group signed an agreement 70 kilometres offshore in water depths to acquire a 30% equity interest in Guajira of 1 500 to 4 000 metres. A 3D seismic Offshore 3 Block, offshore Colombia. The programme was completed in 2014. block is held under a technical evaluation
HONDURAS
BG Group is the sole licence holder of an 2014 Key events Outlook offshore block covering approximately BG Group conducted a gradiometry survey A seismic campaign is planned for 2015.
35 000 square kilometres. during the first half of 2014.
KENYA
BG Group is the operator of two offshore 2014 Key events Outlook blocks L10A (BG Group 50%) and L10B In March, the Sunbird-1 exploration well BG Group continues to mature its prospect (BG Group 75%). intersected a gross hydrocarbon column of inventory in preparation for further 44 metres, at 1 584 metres sub-sea, offshore exploration drilling.
Kenya. Gas and oil samples were recovered to surface but the discovery was not considered commercial.
MYANMAR
BG Group is the operator of offshore blocks 2014 Key events Outlook
A4 (BG Group 45%) and AD2 (BG Group 55%). • In March, BG Group was awarded offshore • Subject to signing the PSCs, BG Group and
BG Group holds 45% equity in offshore exploration acreage in the Rakhine Basin as its partners have committed to a 3D seismic blocks A7 and AD5. part of the government’s 2013 bid round. The acquisition programme in each block, which Group will operate two blocks, A4 and AD2, is expected to begin in 2015, following an and secured non-operated acreage in blocks environmental and social impact assessment.
A7 and AD5. Awards are subject to signature of the respective PSCs.
TANZANIA
BG Group is the operator of offshore Kamba and successfully appraised the Fulusi the pre-FEED phase. The partners continue Blocks 1 and 4, in which it has a 60% interest. extension of the Pweza reservoir. The Kamba-1 to work with the Tanzanian government
To date, 16 consecutive successful exploration well is the eleventh discovery and the sixteenth on the preparatory work needed to progress and appraisal wells drilled. consecutive successful well for BG Group the acquisition of a site for the potential in Tanzania. LNG project.
2014 Key events • Current estimates of total gross recoverable • In October, BG Group informed the
A DST was undertaken at the Mzia discovery resources in current discoveries across the government of Tanzania of its intent in Block 1, which delivered sustained gas Group’s interests are around 16 tcf, with to withdraw from Block 3. production at a maximum flow rate of further exploration upside.
Outlook
101 mmscfd. The test results provide further In December, further 3D seismic data was support for a hub development to supply acquired in Block 1. • Development planning of the Block 1 and Block 4 upstream projects, and the LNG plant a potential onshore LNG project. • In April, BG Group, its Block 1 and 4 partners, projects will continue during 2015.
The Taachui-1 well in Block 1 discovered gas and the partners in Block 2 signed a heads of in May, which was followed by a DST that agreement setting out how the companies will Work is underway in preparation for the flowed at a stabilised rate of 14 mmscfd. collaborate on the development of a potential next exploration drilling campaign in
In October, the Kamba-1 exploration well joint LNG project. Under the agreement, Blocks 1 and 4, likely to start in 2016. in Block 4 resulted in a gas discovery at BG Group will be the lead developer during
URUGUAY
BG Group is operator of, and has 100% interest 2014 Key events Outlook in, Blocks 8, 9 and 13, offshore Uruguay. BG Group completed the second phase of its The electromagnetic survey is expected seismic work programme in 2014, acquiring to complete in 2015 in order to evaluate the over 13 000 square kilometres in total. licence areas to mature drillable targets.
BG Group completed a seabed coring and heat flow survey in 2014. The Group commenced a 3D controlled source electromagnetic survey in December.
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FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION – GAS AND OIL (UNAUDITED)
From the year ended 31 December 2013 She is a past member of the Society of DISCOVERED RESOURCES onwards BG Group has adopted the reserves Petroleum Engineers Oil and Gas Reserves Discovered resources are defined by BG Group definitions and guidelines consistent with Committee, a member of the SPE Joint as the best estimate of discovered recoverable the internationally recognised Petroleum Committee on Reserves Evaluation Training, hydrocarbons where commercial and/or Resources Management System published a member of the SPE London Board, a member technical maturity is such that the initiation by the Society of Petroleum Engineers, of the United Nations Economic Commission of development is subject to certain conditions American Association of Petroleum Geologists, for Europe Expert Group on Resource Classification and therefore sanction is not expected World Petroleum Council and the Society and a member of the SPE Carll, Lucas & Uren within the next few years. of Petroleum Evaluation Engineers, known Award Committee.
RISKED EXPLORATION as the SPE-PRMS, in accordance with
Total additions and revisions to proved Risked exploration resources are defined by recommendations issued by the European reserves during the year were 295 mmboe. BG Group as the best estimate (mean value)
Securities and Markets Authority (ESMA).
This comprised technical revisions due to of recoverable hydrocarbons from undiscovered
Prior to this, BG Group had voluntarily used new data and field performance updates accumulations multiplied by the chance the SEC definition of proved reserves and
(124 mmboe increase), extensions, discoveries of success. of probable reserves (from 2009), to report and reclassifications (180 mmboe increase), proved gas and oil reserves and disclose TOTAL RESOURCES acquisitions and disposals (8 mmboe decrease) certain unaudited supplementary information. Total resources are defined by BG Group as the and the net effect of price movements aggregate of proved and probable reserves In accordance with the SPE-PRMS guidelines, (1 mmboe decrease). Production in the plus discovered resources and risked exploration. BG Group uses gas and crude oil price forecasts period was 221 mmboe.
Total resources may also be referred to as that are based on its reference conditions to Gas and oil reserves cannot be measured total reserves and resources. determine reserves estimates. Therefore reserves exactly since estimation of reserves involves (proved and probable) as at 31 December 2014 subjective judgement. Therefore, all estimates are measured in accordance with SPE-PRMS are subject to revision. Changes in gas and oil definitions and guidelines. prices in fields subject to Production Sharing Information in this section is grouped on Contracts (PSCs) may result in changes to a geographical basis as shown below: entitlements and therefore proved reserves.
Australia; PROVED RESERVES
Proved reserves are those quantities of
Africa – Algeria, Egypt, Kenya, Madagascar, petroleum, which, by analysis of geoscience Tanzania and Tunisia; and engineering data, can be estimated
Asia – China, India, Kazakhstan, Myanmar with reasonable certainty to be commercially and Thailand; recoverable, from a given date forward, from known reservoirs and under defined North America and the Caribbean – Aruba, economic conditions, operating methods Honduras, Trinidad and Tobago and the USA; and government regulations.
South America – Bolivia, Brazil, Colombia Proved developed reserves are those reserves and Uruguay; and that can be expected to be recovered through
Europe – Norway and the UK. existing wells and with existing equipment and operating methods. Proved undeveloped The Corporate Reserves Group (CRG) is a reserves comprise total proved reserves less central multidisciplinary group of reserves total proved developed reserves. experts with an average of 20 years’ experience
PROBABLE RESERVES in the oil and gas industry which provides
Probable reserves are those additional an independent review of all reserves and reserves which analysis of geoscience and discovered resources bookings and revisions engineering data indicate are less likely to proposed by assets to the Reserves Committee be recovered than proved reserves but more which in turn reports to the Audit Committee. certain to be recovered than possible reserves. The Head of the CRG, Dr. Carolina Coll has It is equally likely that actual remaining more than 25 years of diversified experience quantities recovered will be greater than or in the oil and gas industry. She has a degree in less than the sum of the estimated proved physics and a PhD in petroleum engineering. plus probable reserves.
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A) RESERVES
All information for periods up to 31 December 2012 is presented under SEC methodology. Information for 31 December 2013 is presented under both SEC and SPE-PRMS methodology. Information from 31 December 2013 is presented under SPE-PRMS methodology.
ESTIMATED NET PROVED RESERVES OF NATURAL GAS
North America
and the South
Australia Africa Asia Caribbean America Europe Total
bcf bcf bcf bcf bcf bcf bcf
As at 31 December 2011 (SEC): 2 717 2 403 2 032 2 623 2 100 979 12 854
Movement during the year (SEC):
Revisions of previous estimates(a) –(250) 87(339) 8(50)(544)
Extensions, discoveries and reclassifications 805 – 16 79 57 1 958
Production(55)(342)(185)(331)(60)(90)(1 063)
Disposals of reserves-in-place – –(22) – – –(22)
750(592)(104)(591) 5(139)(671)
As at 31 December 2012 (SEC): 3 467 1 811 1 928 2 032 2 105 840 12 183
Movement during the year (SEC):
Revisions of previous estimates(a) 544(277) 9 129 169(35) 539
Extensions, discoveries and reclassifications –(45) 27(71) –(13)(102)
Production(55)(297)(185)(275)(72)(83)(967)
Disposals of reserves-in-place(791) – –(65) – –(856)
(302)(619)(149)(282) 97(131)(1 386)
As at 31 December 2013 (SEC): 3 165 1 192 1 779 1 750 2 202 709 10 797
Revisions of previous estimates(b) 5 11 51 81 6(1) 153
Extensions, discoveries and reclassifications 1 091 – – – – – 1 091
As at 31 December 2013 (SPE-PRMS): 4 261 1 203 1 830 1 831 2 208 708 12 041
Movement during the year (SPE-PRMS):
Revisions of previous estimates(a)(1)(172) 99(124) 37(18)(179)
Extensions, discoveries and reclassifications 479(25) 7(5) 74 – 530
Production(74)(183)(172)(224)(100)(88)(841)
Disposals of reserves-in-place – – – – –(1)(1)
404(380)(66)(353) 11(107)(491)
As at 31 December 2014 (SPE-PRMS) 4 665 823 1 764 1 478 2 219 601 11 550(c)
(a) Includes effect of oil and gas price changes on PSCs.
(b) Includes the effect of changing from SEC price assumptions to SPE-PRMS reference prices, including impact on PSCs. (c) Estimates of proved natural gas reserves at 31 December 2014 includes fuel gas of 1 289 bcf (2013: 1 031 bcf).
Note: Conversion factor of 6 bcf of gas to 1 mmboe.
ESTIMATED NET PROVED DEVELOPED RESERVES OF NATURAL GAS
North America
and the South
Australia Africa Asia Caribbean America Europe Total
bcf bcf bcf bcf bcf bcf bcf
As at 31 December 2011 (SEC) 575 1 254 1 851 1 349 392 728 6 149
As at 31 December 2012 (SEC) 503 1 181 1 858 1 387 709 684 6 322
As at 31 December 2013 (SPE-PRMS) 509 758 1 791 993 850 573 5 474
As at 31 December 2014 (SPE-PRMS) 1 539 476 1 719 724 849 503 5 810
ESTIMATED NET PROBABLE RESERVES OF NATURAL GAS
North America
and the South
Australia Africa Asia Caribbean America Europe Total
bcf bcf bcf bcf bcf bcf bcf
As at 31 December 2011 (SEC) 6 565 1 425 920 1 342 1 157 355 11 764
As at 31 December 2012 (SEC) 5 788 1 170 1 137 1 416 1 550 452 11 513
As at 31 December 2013 (SPE-PRMS) 2 930 3 894 636 1 350 1 435 394 10 639
As at 31 December 2014 (SPE-PRMS)(a) 2 145 3 412 759 1 385 1 142 411 9 254
(a) Estimates of probable natural gas reserves at 31 December 2014 includes fuel gas of 689 bcf (2013: 607 bcf).
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A) RESERVES CONTINUED
ESTIMATED NET PROVED RESERVES OF OIL
‘Oil’ includes crude oil, condensate and natural gas liquids.
North America
and the South
Australia Africa Asia Caribbean America Europe Total
mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl
As at 31 December 2011 (SEC): – 24.7 259.8 5.1 630.3 185.5 1 105.4
Movement during the year (SEC):
Revisions of previous estimates(a) –(1.2) 17.1(0.6) 100.3 4.8 120.4
Extensions, discoveries and reclassifications – – 0.2 – 228.1 8.9 237.2
Production –(4.5)(27.5)(0.5)(9.5)(21.3)(63.3)
Disposals of reserves-in-place(b) – – 0.8 – – – 0.8
–(5.7)(9.4)(1.1) 318.9(7.6) 295.1
As at 31 December 2012 (SEC): – 19.0 250.4 4.0 949.2 177.9 1 400.5
Movement during the year (SEC):
Revisions of previous estimates(a) – 3.7 2.6 0.3 145.8 9.3 161.7
Extensions, discoveries and reclassifications – 0.1 0.4 – 33.9(2.9) 31.5
Production –(5.1)(25.4)(0.7)(15.3)(23.2)(69.7)
Disposals of reserves-in-place – – –(0.6) – –(0.6)
–(1.3)(22.4)(1.0) 164.4(16.8) 122.9
As at 31 December 2013 (SEC) – 17.7 228.0 3.0 1 113.6 161.1 1 523.4
Revisions of previous estimates(c) – – 9.2 0.1 1.4(2.1) 8.6
As at 31 December 2013 (SPE-PRMS) – 17.7 237.2 3.1 1 115.0 159.0 1 532.0
Movement during the year (SPE-PRMS):
Revisions of previous estimates(a) – 4.8 16.0 0.1 126.3 6.2 153.4
Extensions, discoveries and reclassifications –(0.2) 5.4 – 85.7 – 90.9
Production –(3.7)(23.4)(0.6)(29.1)(24.1)(80.9)
Disposals of reserves-in-place – – – – –(7.5)(7.5)
– 0.9(2.0)(0.5) 182.9(25.4) 155.9
As at 31 December 2014 (SPE-PRMS) – 18.6 235.2 2.6 1 297.9 133.6 1 687.9
(a) Includes effect of oil and gas price changes on PSCs.
(b) Karachaganak Settlement Agreement (disposal) resulted in a minor addition to liquids.
(c) Includes the effect of changing from SEC price assumptions to SPE-PRMS reference prices, including impact on PSCs.
ESTIMATED NET PROVED DEVELOPED RESERVES OF OIL
North America
and the South
Australia Africa Asia Caribbean America Europe Total
mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl
As at 31 December 2011 (SEC) – 21.0 238.1 1.9 43.8 136.7 441.5
As at 31 December 2012 (SEC) – 18.8 230.5 3.6 78.5 126.4 457.8
As at 31 December 2013 (SPE-PRMS) – 14.0 221.4 2.8 120.4 119.2 477.8
As at 31 December 2014 (SPE-PRMS) – 15.5 221.1 1.9 196.1 101.9 536.5
ESTIMATED NET PROBABLE RESERVES OF OIL
North America
and the South
Australia Africa Asia Caribbean America Europe Total
mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl mmbbl
As at 31 December 2011 (SEC) – 9.0 137.2 2.3 1 737.4 92.4 1 978.3
As at 31 December 2012 (SEC) – 15.6 77.6 2.1 1 652.5 91.9 1 839.7
As at 31 December 2013 (SPE-PRMS) – 10.6 121.2 1.9 1 479.0 66.4 1 679.1
As at 31 December 2014 (SPE-PRMS) – 7.6 149.4 1.5 1 161.3 50.2 1 370.0
BG GROUP | ANNUAL REPORT AND ACCOUNTS 2014
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