Okay. Ladies and gentlemen it's a real pleasure to welcome you all here today this afternoon. Jessica and I have been really looking forward to this afternoon to present our Fourth Quarter Results and indeed the Full Year Results of 2018. Before we get to it though let's take another quick look at our disclaimer with which I'm sure you are intimately familiar. The reason why Jessica and I have been looking forward to today is that we can now, with the full year results, declare that 2018 was another year of great delivery against our strategy. And as you know our strategy is to deliver a world-class investment case, to thrive through the energy transition, and to maintain a very strong societal license to operate. And where we have made some promises that aligned with that strategy, we have delivered in 2018. And I believe we have established a track record of delivery now. In 2018, we had good performance from our businesses and we continued to transform Shell into a simpler company that can deliver higher returns. Our cash delivery for the full year was strong with cash flow from operations excluding working capital almost $50 billion. We delivered almost $31 billion in organic free cash flow. We paid an all-cash dividend, covered our interest expense reduced gearing, and we have bought back shares. We completed our $30 billion divestment program which has also reshaped our company. And then we invested some $25 billion in a very disciplined manner. So, we have shown that we are a company that delivers against the commitments that we make. And with our recent commitment to set short-term targets to reduce the net carbon footprint of the energy products that we sell in a world that is going through an energy transition,…

Thanks, Ben, and good afternoon, everyone. Thank you for joining us today in this session. Let me start with the Q4 financial highlights. For Shell to deliver a world-class investment case, we need to generate strong and growing cash flow and returns and be disciplined with our capital and cash allocation. Discipline means reducing debt, effective capital stewardship, and growing shareholder distributions. In Q4 2018, we delivered against each of these priorities. We had another strong quarter. Cash flow from operations excluding working capital movements was $12.9 billion. This is at an average Brent price of $69 per barrel. Organic free cash flow for the quarter was $14.3 billion. Organic free cash flow covered the full cash dividend and interest expense, reduced gearing and funded our buyback program for all of 2018. At the end of Q4 2018, earnings on a CCS basis excluding identified items amounted to more than $5.7 billion. ROACE reached 7.6%, two percentage points higher than in the same quarter last year. We are demonstrating progress towards 10% ROACE by the end of 2020. As Ben mentioned earlier, our gearing continues to decrease and is now 20.3%. Divestment proceeds, along with growing CFFO, have played a key role in bringing this down. Net debt decreased almost $26 billion since 2016, and around $9 billion since the last quarter. The net debt reduction in Q4 is supported by a large release of working capital linked to the drop in oil prices, as well as reduced inventory levels. The impact on working capital from inventory movements alone, with the combination of lower prices and inventory levels, contributed to a release of $7 billion. While this may partly reverse based on recent positive oil price movements, the underlying trend on gearing is moving in the right direction and we…

Thanks, Jessica. So, as I said at the start, we are pleased to say that 2018 has been a great year, a year of delivery on a number of fronts. Our relentless focus on value, on operational excellence, on project delivery, competitiveness meant that we were able to deliver strong results and strong cash from an upgraded portfolio. And our focus for 2019 remains completely unchanged. We will remain focused on delivery with a disciplined approach to capital investment and a focus on growing both our cash flow and our returns. Now with that let's have some Q&A. We are fortunate to have Maarten with us. As many of you know Maarten runs our Integrated Gas and New Energies business. A very important quarter for that business so we thought it would be good for him to join us. We'll take questions going from left to right. Please one or two each, so we can get everybody to come in. And as I said from left or right, so we'll start with you Chris.

Thank you very much. Chris Kuplent from Bank of America Merrill Lynch. I'll just kick off with one question. As you laid out and I think the slide is in the appendix. How close you are to meeting your 2020 targets? It does look very self-explanatory. I just wanted to ask whoever feels strongly how the mood is like, whether you feel this is job done, this was an important phase post-BG or whether this is an event that happened four years ago that is likely to deliver continued effects rather than just how you meet the 2020 guidance. And I'm not trying to get a sneaky preview of your Capital Markets Day in June, but just wanted to sort of understand what the mood is like with these results and how you think about 2020 and beyond?

Well, my sense is that the mood is very positive and very strong. I think with results like this, you can imagine there's a lot of pride and self-belief in the company. That's good to have. There have been moments when we were scratching our heads, if you look back a few decades. But yes, at this point in time I think there is a lot of self-belief and confidence. But we're never done on these things. Maybe great to say "Well, we've put an outlook out there, which now looks to be well within reach." But as you keep on reminding us, there's also a decade coming after that and we will have to convince you that the outlook for this company remains extremely strong into 2020s as well. And I have full confidence that we can do that, but I'm not going to tell you what I'm going to tell you in June. Lydia, you are next.

Thank you. A couple of questions if I could. On the cost base, I know you talked about sort of being happy with that. But if I make an observation the costs did go up both year-on-year for 2018 versus 2017 and quarter-on-quarter. So can you talk about is that something that you're happy with? And then link that a little bit to some of the digitalization process on whether the CapEx number really is -- whether you're -- what the sustaining CapEx number is and what that might look like. And then sorry just a very quick follow-up one on the reserves replacement number. If I look at adding back the Groningen and the divestments, is it right that it is actually over 100% for this year so 112%?

Jessica, do you want to have a first go at it?

Good. I'll start from the top. So, on the cost number indeed up slightly from last year quarter-on-quarter ending the year at about $39 billion. I'd say it's a bit of a mix story. Overall, I'm very pleased with the performance of the company in terms of how we're reshaping the company becoming a simpler company and that coming through in the business lines as well as kind of the functions. I mentioned CP in finance we're taking hundreds of millions of dollars out of our processes over the next couple of years. So I think a lot of really good progress being made. There's also things like FX which had a negative effect year-on-year and that's probably close to about $0.5 billion driving that difference. So I think we're making real progress in terms of changing the way we're running the company. We're making a simpler company and our underlying cost base is being reduced. But of course, I have further ambition. And I do think there's more for us to see coming from the digitalization agenda. I think we're at the very beginning of that journey. We're seeing a lot of positive signs again in the business whether it's how we do predictive maintenance in our Upstream, which is taking costs out of inventory, increasing uptime, to making robotic processes in finance for things like accounts payable. But again, it's very much at the beginning stages. And I think it can have a material effect on our cost base and that's certainly what we're pushing for, for the next couple of years. You had a question on sustaining CapEx. So again, we're committed to our CapEx range of $25 billion to $30 billion to be clear and that's a capital investment number and that includes inorganic as well. So just – so everyone's clear on those numbers. And sustaining CapEx is a lower number than that and depends on how you define that. But somewhere between kind of the $15 billion to $18 billion range is what we talk about in terms of sustaining numbers for the company. In terms of RRR I – if I'm doing the math that you're doing, I think you're right. We can check that, we've understood your math and Maarten confirms from his perspective that your math is correct. So yeah.

Okay. Thanks. We go to you and then we have a question online first.

Thanks. Gordon at HSBC. You've seen a nice welcome improvement in returns on capital employed. Obviously, they've come off a very low base. Can you tell us given what you're showing us on projects, do you think your returns target is conservative? And how far do you think that can go given what we're seeing on digitization what we're seeing on individual project economics? And a small one cash CapEx, the promotion of cash CapEx in the $25 billion to $30 billion target for this year? Thanks.

Yeah. I think the returns of course are partly a function of history, the capital employed. And we will take some time to work off a very capital-intensive period, which we had during the high oil price world, but also of course the capital that we had to put in the balance sheet after the BG acquisition. That will work its way through. We'll continue to improve. And of course, it's a function of oil prices as well and gas prices. So I think at the reference conditions that we have said $60 real term in 2020 I think 10% is eminently doable, that can we have high returns or will we get to high returns as we will continue to invest in projects that are fundamentally and intrinsically more returning than the projects that we tended to do in the last 20 years? Yes we should yes. But then of course that also takes into account certain assumptions on oil price. I think yes, we will see that digitalization as Jessica already started saying, will have something to do with that. It will help us making our capital projects and has helped us making our capital projects more effective. Our cost competitiveness has gone up significantly, because of the benefits that modern technology brings. And it will also help us in terms of downtime. It will help us optimizing squeezing a little bit more out of our assets and also in the way we interact with customers. So, yes, I do believe that digitalization will bring significant benefits. The two main areas where we see the benefits are in asset management, in general, so, things like predictive maintenance on reducing downtime, but also in the subsurface domain. We see a lot of benefits also with AI. We are -- now drilled a number of wells completely on AI. You can imagine the cost improvements that come from it, but also what is a tremendous improvement is the consistency with which we can drill long laterals, which produce productivity of wells, all the sort of benefits that you -- relatively smallish contributions in a one-by one sense. But collectively, they can make up a very significant amount of value. Cash CapEx, the correlation between capital investment and cash CapEx, Jessica?

Roughly $1 billion to $2 billion is what's coming through in terms of capital -- leases being capitalized, yes.

Okay. Let's do a question online.

Thank you. Roger Read from Wells Fargo, please go ahead.

Yes, thank you. Good afternoon. Queue [ph] in the presentation so far. Just a couple of questions. I guess one you laid out on slide 23 the plans with cash allocation. With the gearing now reduced essentially to 20% expectations of about $5 billion of asset sales in the coming years. How should we think about that cash allocation going forward? Is it a goal to reduce gearing further? Or should we think about that into other sources? And then as you think about your Permian position, you talked about it a little bit earlier, how do you like the way it set up today versus maybe what would be a more optimal position in the Permian longer term?

Well, let me take that second question first and then Jessica will take the first one. I actually happened to again tour our Permian operations in December and came away even more impressed than before. It's a very strong performance. It clearly shows that in the Permian we are in the top quartile or the top quintile of the top 20 performers. So, I believe we have earned our right in -- as a responsible and good efficient competitive operator in the Permian. And as I said before we are interested to take a more balanced view on -- in our Upstream portfolio and would be interested to add to the positions that we have. At the same time though, for the avoidance of doubt, I also want to say that we totally are committed to our financial framework and to our capital discipline, which means that we will be investing within the $25 billion to $30 billion range. And that includes, for the avoidance of doubt, as Jessica already said, also inorganic spend. So, we will have to juggle a number of balls, but I'm very confident that we have a good position and a good capability in the Permian. And if opportunity presents itself to add to it we will take a good look at that. Jessica?

In terms of the gearing outlook and the priorities for cash, clearly we're very pleased to be at the 20.3% gearing level for the quarter. That has been an important priority for us to strengthen the balance sheet and ensure we have a balance sheet that's resilient for us through the cycle. I do think it's important to highlight though it was a relatively exceptional quarter in terms of the amount of working capital that was released that increased our cash balances. That could reverse to some extent in the next quarter, so I think being aware of that, just the inventory impact alone was $7 billion and that's a combination of both price and volumes. Volumes are relatively low in the fourth quarter, so those volumes may come up a bit. And of course, as prices go up a bit that will also have an impact in terms of our working capital balances, our cash balances and therefore our net debt balances. So, on the one hand, very pleased with where we are. We're not declaring victory on the gearing number yet, and that's why I referred in my speech about continuing the trajectory to 20%, because we want that to be sustainably at 20%. It's not just, we touched it one quarter and then we move on. We're happy with the 20%. We could see it going down below the 20%. I don't think that's urgent. But through time, I think that's a good place for us to be given our -- the company and the nature of a volatile environment that we work in and the size of our capital program. So I think something between 15% and 20% is a good place to ultimately land. But once we get to 20%, it's making sure we get the right balance between capital investment, because we want to grow the company, we want to grow cash flow, and of course we want to increase shareholder distributions. And this is where we're trying to, as Ben said, juggle many balls and we believe we have the cash flow to achieve all of those things. So with $50 billion in CFFO, excluding working capital for the quarter -- or for the year, I'll wait for the quarter, not quite yet. For the year, we have the cash to enable us to meet all of those objectives, to continue to pay down the debt, to continue to invest in the company for growth and to increase shareholder distributions.

Okay thank you. Oswald?

Yes. Thank you very much, Ben. Perhaps, first question, kind of related to what you've just been speaking about, is more about the dividend and the buyback. I think you've said to us, you do have a longer-term ambition to bring the dividend back to the old Shell levels of $12 billion or so. Is that still the case? And obviously to get there, you wouldn't -- you get there with another $20 billion of buybacks. You probably need another $35 billion or so in order to get the dividend back down to that level, in order to start to grow the dividend per share. So I know it's longer term, I know it might be stealing some thunder from June. But I just want to get a sense, is that still how you're thinking about the dividend and competitively being able to grow the dividend per share, was the first question? And since Maarten's on the stage, I guess, it's a year and a bit since you put out some punchy numbers on 8% to 12% returns in New Energies. A year and a bit into the program, into the spending, is that still a realistic set of returns to come from that business? Thank you.

Yes, Oswald. Indeed we -- in the end, it's about dividend per share growth. Yes, that's what we will have to deliver as well. If you have a $16 billion dividend bill and a -- by the way, dividend yields of well over 6% at this point in time, of course, dividend per share growth is not exactly sort of a top-of-mind priority. I think, in the end, sure, we need to bring dividend build down. We're not going to do that by cutting a dividend per share, we're going to do it by just buying back what we issued. Now we made a very clear commitment, we would offset the scrip that we issued and we are well on our way to doing that. And we will make a major step, taking back some of the shares that we issued as part of the BG deal. If I don't get ahead of myself -- and a couple of things, actually, for a better cover in June this year. But, yes, in the end if I lift a tip of the veil, of course, we will have to manage this prudently. We have to make sure that as we go forward, we have a repertoire of shareholder distributions that just make sense. In the end individual shareholders are interested in a dividend that is sustainable and growing per share. And that is very clear in our mind is what we have to deliver. How we will go about that we will tell you in a bit more detail in June. Maarten?

Yes, thanks for giving me some work Oswald, that's appreciated. Yes the 8% to 12% range, we still believe is the right range for us to target and to be in. Its early days, most of our investments in New Energies are less than one year old and are quite diverse in the customer end, in the generation end and some of the technology end. So some of it will take a few years to actually prove itself because these things have long time lines. Some of these early chains are operating already. I think the hypothesis is that, at the generation end of the business, it's likely to sit at the lower end of the 8% to 12% range. And then at the customer end because its lower capital and we are able to sell own Shell service and other products that we are able to sit at the higher end of that range. And so across the totality of our investment, looking for double-digit returns on this business. At the generation end it will be leveraged in many cases. And so we will be seeking to put project level debt into these vehicles in order to get the returns to the right level. We see that being possible; number of investments are playing there. The real challenge is -- for us is to scale that up, so it becomes a meaningful business and still has these returns because at the lower end return and it's easy to scale up. But that's not where we want to put our money.

Okay thank you. Christyan?

Thanks for taking my questions. Christyan Malek from JPMorgan. First of all I'm having trouble reconciling an M&A strategy potentially in the U.S. with your capital or cash returns. And the question is, if you do M&A would you fund it through debt or equity given on the same vein you're actually buying it back? The second question is regarding your reserve replacements. And I know we can sort of argue the optics around 100%, but what I'm trying to understand is how do you plan to arrest the continual falling reserve life? And why is it on a like-for-like basis it is on the lowest amongst the super majors? I think you can sort of argue it both ways. But what do you -- how are you planning to solve for that? And third, apologies for third question. Your cash breakeven this year is $60. That's what the oil price is. Are you comfortable with that in terms of managing your dividend cover in what is an increasingly volatile oil market? Thank you.

Okay. I'll take the reserves life question because that seems to be a question that keeps on coming back. And then Jessica if you will focus on the other two. So the way we look at reserves life or at the sustainability of the business because that's what this is all about, is to look specifically strategic theme by strategic theme, how we see things evolve over the next 10 years plus. So I believe it is much more sensible to just try to forecast how your current assets will play out, how your production will play out, what sort of declines you're going to see? And therefore how much you need to develop to replace your declines and keep that business healthy, not just from a free cash flow perspective that is easy enough, but also from a top line so a CFFO perspective. For each of the businesses, we have very clear views on how to do that. And we have very strong funnels that we believe are adequate to see us all the way through into the second half of next decade. And then of course, we are working on strengthening the funnels to see us through into the '30s. We think that is the only sensible approach that I know to manage the company going forward. Now, I know that I'm in a privileged position of actually knowing the company inside out. Some of the things that you will have to have proxies for like reserves life and everything else. But then I also need to again tell you that there are accounting effects in reserve lives that are distorting these things. So for instance, we have issues with proven undeveloped reserves. If you look at our Energy Canada project for instance, we have booked zero…

So perhaps building on what Ben just said. We are very comfortable with our development funnel for our Upstream business, but also the funnel of opportunities we have to grow our Downstream business and our Integrated Gas business. And again, we're focusing on growing value for the company, growing cash flow for the company. And we don't feel any anxiety around our reserves levels. And importantly, we don't have an M&A strategy per se. We don't need to buy assets or buy companies to continue to grow the cash flow of the company. So we don't have an M&A strategy per se. That being said, we're always looking for opportunities around the world in terms of is there a value-accretive deal to be done to accelerate our strategy and to grow value for the company? And we're looking at opportunities around the globe. Whatever we do, it will need to be within the context of our financial framework and ensuring that through 2020, we're able to meet our obligations around getting gearing sustainably at 20% or below delivering on the share buyback program of $25 billion. So that's our financial framework. That's our commitment. And whatever we do in that space will ultimately allow us to deliver on those commitments through time. Very comfortable with our dividend coverage and where we stand as a company in terms of the cash that we're generating. Again reflects the very strong project delivery we've had the quality of the projects we've brought on stream all of that coming through. It's coming through again in our Integrated Gas business, our Downstream business, as well as our Upstream business. So I think the quality of our cash is quite strong. We've made good progress on our operational expense agenda. So, overall in terms of the direction of travel from a returns perspective and a cash-generation perspective, I feel very good about. And I think that the dividend question's no longer really a question. But we're not going to continue, of course, to improve our cash flow and grow our cash flow over the next couple of years again to meet those further -- the next generation of commitments that we have.

Irene?

Thank you. Irene Himona, Société Générale. In your very large Asian-oriented LNG business but also perhaps in the Downstream, are you seeing any signs at all about the Chinese economic slowdown, which has so scared global stock markets? A second question on Brazil. It's a top three country. It will be a very big contributor to the $5 billion free cash flow you expect. You're not the operator. Can you perhaps update us on what appear to be issues in the domestic industry, delaying some of the replicant FPSOs? How is that looking? And a final question, on share buybacks if I may. I think Jessica your exact expression was that you believe in your ability to do the $25 billion subject to debt reduction and the macro. I realize it's a commitment to shareholders. I realize debt reduction is a priority. So can you give us a rough sense, of course, it's not an arithmetic formula but a rough sense of what the macro would have to be over a period of time to perhaps reduce or even suspend that buyback? Thank you.

Okay. Jessica will take the share buyback question and I think Maarten is best placed to talk to China. I think on Brazil, Irene, of course you're right we are not the operator, so I prefer not to make any statements on behalf of Petrobras. Brazil is indeed a very important country for us. It is depending on whatever measure you take in the top three of countries in terms of value and cash flow et cetera. We continue to see growth there. Still extremely happy with our Brazil position, but it hasn't been without its issues. But in the main it has delivered with the expectations that we had at the time we did the acquisition. We will have to stay very close to what is happening there. I think the outlook for Brazil remains very strong not only for the positions that we have, but also for the new positions that we have acquired. And having briefly met new President and Finance Minister, I believe their agenda is very supportive for the industry as well and I hope to hear a little bit more when I meet them in two months' time. But I believe our plans for Brazil are still the right ones. And we would probably have appetite for taking on a bit more Brazil risk if the opportunity would present itself. Maarten you want to talk about China first?

Yeah. Trade wars and Chinese economic growth to the extent that it drives global GDP it obviously has an impact on let's say some of the important profit drivers for all of the company, because it drives oil price, trends, et cetera. But when it comes to gas demand in China, actually the drivers are a bit different or at least the main driver isn't actually economic growth. We've seen 2018, which was indeed mix in terms of economic growth in China, the gas markets still grow by 16% 1-6%. And because domestic production isn't going so well, the energy imports into China grew by 40%. So, if that's a disappointing year in China then I'll -- then long made last in terms of the gas market. And it is because very much policy-driven. It's around air quality. It's around displacing coal. And we see the growth of gas in China very much into industry and into heating not so much into the power sector. So, we believe it is quite a resilient demand for gas and still we are well below the 10% penetration of gas in the energy mix in China. So, we believe there's still a lot of replacement of coal displacement scope to go. And elsewhere in Asia we see a similar trend in India. Its earlier days and policies are not yet as well matured and implemented as we see them in China, but it's starting. So, in India, we saw 4% gas market growth and leading to 10% LNG import growth. So, I do think these markets have -- still have a lot of resilient growth ahead of them that is to a large actually decoupled from their exact economic performance because of the displacement.

And then on the share buybacks when we made the commitment and consistent with how we framed it since, it is, of course, subject to macro environment and the price environment and our ability to continue to deleverage the company. We've I think been very prudent, if that's quite the right word, but measured in each step that we've taken as we've gone through the last couple of years and meeting each of the commitments because we want to do this in a sustainable way. We've already delivered $4.5 billion in share buybacks over the last four, five months. We started that program before the ramp-up to prices above $80 and, of course, in the fourth quarter, prices declined materially. Those decisions have proved robust as prices were lower went up and then went down. And that's how we're trying to design our company, reshape the company for it to be resilient through these swings that happen within the quarter so that we can ultimately achieve the $25 billion by the end of 2020. You've seen us do that in the $60 to $70 price range. That's the numbers we've been exposed to over the last, as I said, four, five months. And we're doing all we can to ensure we generate enough cash flow to give us the flexibility, as I said, to continue to deleverage the company and meet the commitments. I think it would have to be a pretty dramatic sustained change in the environment for us to start speaking differently, but it is a volatile environment and so we just want to be clear that we are trying to manage all three of these things, as I said, grow the company, deleverage, and increase shareholder distributions. And we've been able to manage and achieve that over the last 12 months and we want to continue on that path for the next couple of years.

Thanks. It's Jason Gammel with Jefferies. First question on the capital program for 2019. You've kept the range of guidance at the full $25 billion to $30 billion range. Can you talk about when you think you might be able to narrow the range on your guidance and the key variables that are preventing you from narrowing it right now? Is it just oil price? Are there inorganic opportunities you're evaluating currently, et cetera? Second question very specifically on LNG Canada. Thus far you have only sanctioned essentially the Downstream component of the project. And when it's fully operational, it will be a 2 BCF a day consumer of gas. When do you think you need to make the decision on whether to proceed with your own equity gas and when you need to start drilling versus just buying the gas off the grid?

Good. We'll quickly talk about the $25 billion to $30 billion. Indeed that's the guidance for next year, seems to work. It – but without joking, it – we're very serious about that range as well. So the $30 billion is a hard ceiling. I've said that a number of years and $25 billion if you have seen is flexible and as a matter of fact we have more often at just below the $25 billion than above the $25 billion. And that's still pretty much the way we want to manage it. You can say, well, why can't you narrow it down to $1 billion? Well, why should I? It is hard to manage a capital program with lumpiness in it as sometimes happens. We talk about here capital investment. So it also includes leases that you bring on. It includes transactions that you may do. It sometimes depends will something happen in December or in January, it's – there's enough agonizing, I have to do to run the company well, so I can do it without that type of agonizing. But I'm very clear it's not more than $30 billion. And of course, you can imagine that, if we have an affordability challenge with low oil and gas price environment, yeah of course we'll be at the bottom of the range. And if we have no affordability issues, we know we can go all the way up to $30 billion. But how exactly, it will play out is something that I don't want to necessarily sort of box myself in and right at the beginning of the year. We will just do what is right by the company doing as Jessica says, a number of things at the same time growing the company deleveraging the company's balance sheet and improving shareholder returns. And having a little bit of room to maneuver in the capital is actually quite helpful. Yeah. You want to talk about LNG Canada?

Yes. The short answer is not yet. But important to say is we only have 40% of the LNG Canada, of course. We don't quite need to get up to 2 Bcf. But we do need to produce more gas. We have a fair amount of gas on-stream as we speak actually in Canada that we sell into largely the local market attracting fairly poor netbacks. So to some extent LNG Canada will finally give an outlet to that gas that is much more advantaged than the AECO price. So to some extent, it is just placing current production or current wells or current sustaining programs into a better value chain. We will need to invest in some more gas gathering and compression facilities to get all the way up to the volumes we need to fill the trains and we will probably make a decision in about two years from now. It also depends a little bit on how we see the market, because if we see AECO be as weak as it's been then we'll probably look to procure more of the gas and not drill as much as and not drill all of it ourselves, which is one of the interesting elements of LNG Canada that we can actually kind of play the Canadian upstream market and decide just how much do we want to drill, how much we are very happy for other people to drill and sell it to us at what is currently a very depressed local gas price. So that will all go into – we will manage it carefully and we will want to keep some optionality to optimize, let's say the last 20%, 25% of our gas needs.

Okay. Thomas?

Thank you. Thomas Adolff from Credit Suisse. I've got two questions. The first one for Ben, I think you've been now CEO of the company for five years and maybe we can call it half time. If we call it half time and look back to 2014 and the ideas you've had for the company has things gone according to plan? And what are the key lessons from the past five years? And the second question is for Maarten. I think your estimate is that global LNG markets will double by 2035. So when we think about Shell and LNG, should we think about Shell maintaining the current size we're growing in line with the market or the reality is somewhere in between? Thank you.

Why don't you go first Maarten?

First, I'll say we don't obviously have a market share target in LNG. That will be wrong thing to have. But we do think that our current scale in absolute terms, but also in relative terms brings in advantages that give us returns on our business that others will struggle to copy. So essentially, I think it's reasonable to say that as the LNG market continues to grow, we will want to grow with that market. So I would not want to sacrifice our current position of strong leadership in that market whether that means what exactly percentage at the moment we're somewhere between 20% and 25% of the market in terms of delivered LNG. Where in that range we would sit depends a bit -- is a bit opportunistic. But more importantly, how we get there will really depend on the build and buy decisions that we take every time we come across an opportunity. So in the case of Canada, we clearly decided to build to put our capital down ourselves and to go full value chain. But in quite a lot of other instances, we're quite happy for other people to put their capital on the ground and be the off-taker of the LNG because we have advantaged market access over almost anybody else. And as long as we continue to pull these two levers I think there's quite an affordable pathway to having an Integrated Gas business that is a lot bigger than what we have today as long as the markets continues to grow in line with that vision. So yes, comparably we want to be in that situation by 2035. Exactly where we sit in the range we will find out. But that's the intent. The most important thing we do in that is actually creating market and signing up customers and getting privileged access to markets. That is actually probably the most differentiated element in our strategy. Obviously, our technology and our operating capability and our optimizing capability are all important, but I think defining will be the market access.

Yes. And you're right. It's five years. And let me not comment on why that's a half term moment or not, but let me say that I'm far from ready to start thinking about my legacy. It -- there's a lot more things to do. But, if I look back at the beginning of 2014, the things that I thought were important at that time, which was not sort of coming from an inspection on the 1st of January, but was a long-held belief in my then what was it, almost 30 years in the company was, we needed to have a stronger performance focus with more people feeling really, deeply and personally connected to bottom lines, rather than just delivering engineering outcomes or KPIs people needed to feel that this was a game that we needed to win financially rather than just delivering excellence. I think we have come some way and we have had some really notable successes. And in areas where we haven't been able to succeed we have taken some pretty rigorous portfolio action as well. So everybody gets it at this point in time and most people are able to live up to the challenge. I thought what was important was that we had much more strategic clarity about the direction of the company than we have had before. So putting in place a strategy that is clearly purpose driven but on the basis of eight and now seven strategic themes was very clear what we needed to deliver, not only in terms of financial outcomes, but also, how we were going to deliver? What the role of the strategic theme was in the overall financial framework? That requires a lot of clarity as well. So who can grow, who needs to deliver the cash,…

Ben it's an interesting year and you've got much better visibility on the opportunities that may be coming through than we do. But I think what's potentially on offer this year, Qatar gas for LNG; Brazil sizable acreage on offer; Permian U.S. onshore you're associated with a number of things. And I think you're clear in terms of your comments around your own interest in having greater optionality whatever in that area. And then obviously New Energies is also a priority and something that has -- or that you're intent on growing and expanding in. Life doesn't work, unfortunately the way that everything pans out nice and evenly. And this year it's that and next year it's the other. This year seems like it might be quite a lot. So the question really is, when you look at your portfolio your opportunity set your growth avenues and all of those areas that are kind of key to Shell's core future. How should we think about your prioritizing? I'm only saying, that there's almost going to be too much on offer within the frame as you're trying to -- as you have structured and as you can continue to, but there will be hard choices?

Yes. Well it's the same every year, yes. And so what we do at the beginning of the year when we look at the capital program we say; listen, let's just give ourselves a little bit of room, so that we can understand when opportunities do come up whether we want to do them yes or no. It's pointless to begin the year with a plan where we are trying to figure out how on Earth we get below $30 billion. Of course, we will manage it because we by now have the disciplined processes and everything else to do what it takes to get within the ranges we need to be at. But it's a whole lot easier, if you just say, well, there's a few things we can do during the year. Let's see how they play out. Let's see where they actually do play out. Let's take a really good look at it and let's make some choices. And indeed there will be a few that we will have to regret. And I actually quite like that because that means that the people will have to fight for the money, to have really understand that it's not just a good-enough opportunity. I can meet a hurdle. They have to compete with the other three, four or five good ideas that our colleagues have. And there will be a few things that will be agonizingly difficult to get right. Do we go for this not knowing what the other one could also be there? But hey, that has been our life for quite a few years. So I'm quite used to it. Perhaps it's a little bit more visible because of the examples that you mentioned, which are somehow very well advertised. But it's the way we do the capital investment committee in Shell. So I would say, welcome to our world. Yes.

And one short one for you to follow-up, sorry. Whale any indication of the size of the project that you're thinking about at this time that you may FID in 2020?

It's a world-scale one. That's all I can say about it. So it is a full-blown. But it's -- how exactly that looks like, let's just wait for the final bit of appraisal. We will be ready to talk about it in the course of this year. Yes. Okay.

Hi. It's Biraj Borkhataria, RBC. Just one question on the Downstream. 2020 should be a very good year for refining and trading as a combined entity. How should we think about 2019? Are you going to be pulling forward any maintenance so you can go up and running full speed in 2020? And then just a very quick clarification on the free cash flow targets. Downstream's mid-cycle in your numbers, I'm assuming that doesn't include any benefit for IMO in the target you put out just to clarify that. Thank you.

If you could talk about that Jessica. I think in general it is -- we do of course have some flexibility. Sometimes we are forced to create some flexibility when it comes to maintenance when things go wrong. But in general, when we talk about maintenance and here you talk about planned maintenance, of course, we tend to follow what is an optimal strategy. So we look into the future as much as we can to understand when is the optimal time to do work. At most of the time it is to extend maintenance cycles as much as we can inspection cycles as much as we can and then to re-optimize the scope within a given number of days, minimize the number of days so that we can benchmark them to be world-class against our competitors. So at this stage of the game typically, when you think about starting maintenance programs about 24 months in advance you don't really sort of 10 months in advance, right, why don't we do it next month? You simply do not have the flexibility if you want to do a professional job. So I think we are set for our schedule in 2019 and most of 2020 as well.

With respect to IMO lot of preparations happening in the company, primarily preparations to ensure optionality because it's not clear exactly how the market's going to unfold in terms of what customers will ultimately choose. Will it be a different fuel scrubbers, et cetera? So embedding optionality in terms of how we can supply customers around the world. We've been I think relatively measured and thinking around and planning on the upside associated with IMO. So it is part of the thinking in terms of what will happen with our cash flow. But I'd say, we're on the prudent side because we simply don't know how things will unfold. So we've got it in our expenses and in our capital, but have been relatively light in terms of what we're thinking in terms of increased revenue.

You and then Jon and then Martijn. And then go to the online questions.

Colin Smith from Panmure Gordon. Just coming back to dividend again. In the past few years you've preannounced the first quarter dividend with the fourth quarter results and you haven't done that this year. And I just wondered if that opened up the route to increase the dividend for 2019 was the first question. And then one for Maarten. Wondered if you'd just like to give or if you can or would be willing to give a little bit more visibility on when we can expect first LNG from Prelude? Thank you.

Okay.

So no signaling meant by the absence of that disclosure. So there's no in particular in terms of what we're trying to signal with respect the dividends. We remain committed in terms of our current dividend levels and first priority right now is on the share buyback program.

Yes. So Prelude as you know we opened the wells at Christmas. No particular intended timing there, but it just happened to be over Christmas. Upstream is performing very well. In the midstream we are basically switching on unit-by-unit and getting into the cold end, making sure that safety and quality come first and always with an eye on making sure that actually there we take care of a strong ramp-up rather than hit a particular date. So it will produce its first cargo when it produces its first cargo. And it's always risky to put time pressures on teams that go through such delicate startup and commissioning processes. But the team is fully on the ball. It's highly optimistic and we will let you know when the first cargo sails.

Jon?

Yeah, it's Jon Rigby from UBS. Can I just have a look or get you to look at the strategic themes table and the cash flow evolution? And I think you signaled that in overall aggregate terms you're pretty close to bottom end of that $25 billion to $30 billion free cash flow. But if we sort of disaggregate it the -- looks like the Upstream and the shales are still -- looks like they've got work to do especially if you correct for oil price as well. So I just wondered whether you were able to give some insights on what has to happen over I guess the next 24 months to hit those 2020 targets? Is it old portfolio or is there something else that has to happen? And flipping around the other way Maarten's here. So it's also evident that Integrated Gas is ahead of your 2020 target. Is that something that is just unusual to the 2018 market and may reverse there's a bit of supernormal profitability in there? I'm clear, obviously, you've spoken about Prelude coming on this year, so that would on the face of it improve your performance further into 2020. So I wonder whether you could talk a little bit about your segment's performance in the context of that target. Thank you.

Yeah. I think, Jon, you're right. There is some more work. I already said there's $5 billion of cash flow yet to come from projects that are going to ramp up further and still start up. So, the big one that still has to start up is Appomattox that will start up somewhere this year. But then there's quite a few projects in Upstream that still need to ramp up. So we have still ramp-up facilities that have started up in Brazil. We have two more FPSOs to come onstream in Brazil. We have the Permian, of course, which is not necessarily one single project, but we are still in a very significant ramp-up phase there as well with new production coming on-stream in 2019 and then again in 2020. So, yes, there is more work to do, but as I said earlier on as well, it's heavily derisked because it's either already there and just needs to get to max gap or it is about to come on-stream and we are in the final phases of delivering it. Integrated Gas, you want to talk more a bit about that?

Thanks Jon. And it's good, of course, to be there although we're there at $71 per barrel not at mid-$60s. So, corrected for price we're in -- we're not above the range we're in. Of course with Prelude coming on and with Elba coming on later this year which, of course, not on our projects list because its Kinder Morgan investment, but it will be 100% Shell offtake. We will have some extra cash potential -- cash flow coming in from these assets. There's also a few that are -- that we sold of course. So, Thailand was still partly of this year and we had New Zealand until December. So, there'll be some offsets, but of course, they're smaller than Prelude and Elba. So, I think we feel pretty good about our ability for Integrated Gas to be well into that range. Even if you take out, there's been some dislocations in the global LNG market in 2018 that we were very well prepared and positioned for and that we managed to exploit. In the next 10 years, we'll have multiple of these events and we will be again well-positioned for them. But how much of them getting into the single year is never knowable. So, there'll be some trading margin that is -- depends a bit on how the market behaves where the Polar Vortex in the U.S., whether it stays in the Midwest or goes to the coast. But I don't think -- but that's not a driver of our -- us being in or out of that range, that's more cream on top than anything else. So, we think we're well into that range in the coming two years.

Okay. We'll take Martijn and then we take the question online.

Yes. Hello, it's Martijn Rats from Morgan Stanley. I wanted to ask if you could talk a little bit about the announcement from early December on carbon. I guess I have to say I don't feel I like fully understand it. The metric of net carbon footprint the way that you sort of talk about that it is an intensity measure not a sort of total tons of CO2 equivalent number, right? And also within the constraints that you sort of now sort of agree to how do you expect it to sort of impact the business in terms of the choices that are now more likely or the choices that are now less likely? Is this a constraint to any growth in area -- in any area or not at all? I mean it's a tricky topic. And in late 2017, you talked about it as an ambition which is a little bit more loosely defined. Now you're talking about it as an actual target. So, I'm just trying to figure out how much more important it has become in terms of actual driving business decisions.

Okay. Thanks Martijn. That's a really good question. Let me explain first again what the net carbon footprint is, why we have it, and then what the difference is from having an ambition to now having a target. So, what we've always said we want to be a responsible company that remains relevant through the energy transition. If you look at what the world will need to do in order to meet Paris, it will have to decarbonize the energy system. So, in other words energy being consumed will have to have a lower carbon content. The world on its way to less than two degrees C will have to reduce the carbon intensity of the energy it consumes -- forgive me some using some engineering units here to around 40 grams of CO2 per megajoule of energy consumed. We at Shell, at the moment with our portfolio roughly at 80. Of course, we have predominantly hydrocarbons in our portfolio. The world itself is – will be close to 72, but that's because the world in total has lots of hydro and nuclear and biomass et cetera, which we don't have in our portfolio. So we've said, if we want to be relevant and if we want to be with society on a path of less than two degrees CO 1.5, we have to be at 40 by 2050 as well. So effectively it means that we have to have the intensity carbon intensity of the energy products not the assets the energy products that we put into society. Why do we talk about products? Well, because that's the real impact, we have on society. We have on society impact because we provide energy products that people use and that in their use produce greenhouse gases. I think it's insufficient…

Jason Kenny from Santander. Please go ahead.

Good morning and thanks for the insight today. A couple of details if I may. So I'm looking at South America Upstream. Cash generative, but still loss-making in the quarter. And I'm wondering when it might actually make positive earnings? And then on Asia in the Upstream looks like it's strong year-on-year. And I appreciate you've got Kazakhstan's support. But can you talk to potential Oman pricing support if possible and the sustainability of Asia Upstream earnings as well going into 2019? But then thirdly, if I may, just on oil projects. I'm just trying to dig in to the potential contribution of Refining & Trading going forward. I mean, if I look over the last three or five years, you're averaging somewhere between $300 million and $600 million a quarter. And obviously $800 million plus in the fourth quarter was probably quite unusual. What is it that you're assuming from Refining & Trading in your 2020 cash flow target from Refining & Trading? Thanks.

Sounds like a question for you Jessica.

Good. I was thinking the Oman, but I didn't quite understand it. And perhaps Martijn can help me on the Oman one. In terms of South America indeed we're always looking for each part of our business to be generating positive earnings. Part of the impact that you see in the numbers is the acquisition of the BG portfolio and the impact on the balance sheet associated with that. We, of course, still have more three FPSOs that are going to come onstream in the next one to two years. So there's assets under construction, which is also weighing on the earnings. I would hope that as that works through the portfolio and the production ramps up, that we can then turn that to a positive earnings environment if the macro supports. In terms of Refining & Trading contribution, I think, probably looking at an annual level over the last three, four years, you get a sense of what the contribution is. I think in terms of order of magnitude, we're not looking for a huge switch between what's being generated from the Marketing business and the Refining & Trading business over the next couple of years. So I think there's not a shift in the portfolio or expectations between those different -- those two parts of our Downstream business. So if you look at the last couple of years and you get a sense of the relationship of those you, I think, have a good insight in terms of what we're expecting for 2020. And apologies, it was difficult for me to understand the Asia Upstream. There was mention of Kazakhstan and Oman, but I couldn't quite -- could you repeat that, please? I'm sorry. I didn't quite understand the question.

Yes. The Asia Upstream looked quite strong year-on-year. And I know you've got a Kazakhstan support in there. But I was thinking, because Asia includes the Middle East as well. So I'm also assuming there's some Omani possible pricing support that we can't really get the detail on in that number. And if it is something like that and is it strong in that quarter, is it sustainably strong as we go forward for Asian Upstream earnings?

I'm not aware of any significant...

No there's no unusual pricing support in Oman. So the business has run well. BDO has had a very strong year in terms of its oil production. But it captures the normal price advantage and structure -- physical structures that it attracts every year. So there's not been unusual in the earnings there.

No. I suggest that our Investor Relations team follows up with you, and just to make sure that we get the details right on the numbers that you are looking at, and give you any further insight or color on areas that you may have concerns or questions about. Okay. Let's see who has the final question.

Sorry it's Lucas...

Alastair. Yes?

It's very quick, it's very easy actually, because I think Jessica will just tell me wait till March. But you've got a slide in the back which talks about IFRS 16 and 35 percentage point up in gearing. When we get to margin, you talk things through with us. My assumption is that, that's not the metrics you're going to start talking about reducing to 20%, ergo, the headline, gearing to date number today is 20%. Looks as though accounting will change it to 25%.

But the substance hasn't changed.

Yes.

Indeed.

That was it.

Indeed.

Alastair?

I just had a question back on the Permian acquisitions. Are you confident that if you did make an acquisition, you could keep the cost of supply around $40, i.e., what you would be embedding in terms of acquisition costs? And secondly, how do you think about the vertical integration issue, marrying up with your Downstream portfolio?

First of all, I noted there are all sorts of speculations in the market. Let me just not add or subtract from them. It's sort of -- there is nothing that I have to announce or to fuel or pour cold water on, other than to say, we are extremely committed to our capital discipline. And that includes inorganic investment. I think, yes, absolutely, we have to look at vertical integration in the Permian. That is not just necessarily looking at what can we do with refining capacity and petrochemicals, et cetera. That's sort of the large-scale integrated plays that we are also looking at, by the way, in general in the U.S. Gulf Coast. But it's effectively making sure that we have a strategy that actually looks beyond the reservoir that really understands what are the constraints, where we have our trading abd midstream capability working as an integration player through the company, so that we take positions that really maximize return back to the wellhead. And there is a tremendous amount of value in that. If you look at the dislocations that's currently happen in gas prices which are of course massive, but also in NGLs. But even in oil, there is a tremendous amount of value optimization that can be done by companies that are competent, integrated players have a trading and optimization capability and visibility into how the hubs play out, can take positions around it that nobody else has. And the Permian is, I think the sort of almost archetypal play for these type of integration challenges. So yes, absolutely. We have that as a key priority. Certainly already over 2018 and 2019 we will continue to focus on that because ultimately if you don't get it right, there's just too much value that leaks away to probably somebody, but not to us. Yes.

So I think that probably brings us at the end of the questions. I'm sorry that in sweeping the room, I may have overlooked one or two of you. But don't worry, we are not immediately running away after this. So let me say, thank you for all the questions and thank you for coming today and also for you online for joining us. As already hinted at we have quite a few events coming up in the next few weeks and months. So first of all we have the annual LNG outlook that is scheduled for February 25 and Maarten will be hosting that. And then as already mentioned and drilled by a few of you also, we have something to say about IFRS 16 and what it all means. Our group controller will talk you through it on March 28. Then in May, we will of course have our first quarter results. We of course also very much look forward to our AGM in May. And then I also very much together with the entire Executive Committee really look forward to seeing you again in June, when we give you the strategy update that we'll talk in a bit more detail, obviously the next few years playing out. So I hope to see you all then. Thank you very much for coming.