Shell PLC — Annual Report 2010

Dec 31, 2010

ANNUAL REVIEW

ROYAL DUTCH SHELL PLC ANNUAL REVIEW AND SUMMARY FINANCIAL STATEMENTS 2010

OUR BUSINESSES

Upstream refers to the ways we find and extract crude oil, natural gas and bitumen, while Downstream refers to the ways we transform them into products for sale to retail and commercial customers.

UPSTREAM

• A Exploring for oil and gas
• B Developing fields
• C Producing oil and gas
• D Mining oil sands
• E Extracting bitumen
• El Liquefying gas by cooling (LNG)
• G Regasifying LNG
• El Converting gas to liquid products (GTL)
• I Generating wind energy

DOWNSTREAM

• Refining oil into fuels and lubricants
• K Producing petrochemicals
  L Developing biofuels
• M Trading
• N Supply and distribution
• D Retail sales
• P Business-to-business sales

REVIEW OF THE YEAR 2010

ENERGY FOR A CHANGING WORLD

GLOBAL ENERGY DEMAND IS RISING AND SO ARE CONSUMER EXPECTATIONS - MORE PEOPLE WANT ENERGY FROM CLEANER SOURCES. AT SHELL WE WORK WITH OTHERS TO UNLOCK NEW ENERGY SOURCES AND SQUEEZE MORE FROM WHAT WE HAVE. WE ARE FINDING WAYS TO LOWER OUR EMISSIONS AND HELPING CUSTOMERS TO DO THE SAME WITH THEIRS. IN BUILDING A BETTER ENERGY FUTURE WE ALL HAVE A PART TO PLAY. SHELL IS DOING ITS PART.

OUR PERFORMANCE IN 2010

INCOME FOR THE PERIOD

BASIC EARNINGS PER SHARE

DIVIDENDS DECLARED PER SHARE

2010	\$1.68
	68

CONTENTS

• $\overline{2}$ CHAIRMAN'S MESSAGE
• $\boldsymbol{\Lambda}$ CHIEF EXECUTIVE OFFICER'S REVIEW
• $\overline{6}$ SUMMARY BUSINESS REVIEW
• $20^-1$ SUMMARY REPORT OF THE DIRECTORS
• $22₂$ SUMMARY DIRECTORS' REMUNERATION REPORT
• $26^°$ SUMMARY OF CORPORATE GOVERNANCE
• SUMMARY CONSOLIDATED FINANCIAL STATEMENTS 30

$\blacktriangleright$ shell.com

ADDITIONAL SHARFHOLDER INFORMATION $34$

ABOUT THIS REVIEW

The Annual Review and Summary Financial Statements is an abridged version of the Annual Report and Form 20-F of Royal Dutch Shell plc. It does not contain the full content of that report. For further information consult the full, unabridged document, which can be freely obtained at www.shell.com/annualreport or from the addresses given on the back cover of this publication.

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CHAIRMAN'S MESSAGE

"OUR TECHNOLOGICAL AND COMMERCIAL INNOVATIONS ARE HELPING CREATE A LOW-CARBON ENERGY SYSTEM THAT IS NOT ONLY SECURE AND AFFORDABLE BUT ALSO SUSTAINARIF "

Macroeconomic conditions in 2010 were considerably better than they were in 2009. The price of crude oil rose. So too did the price of traded natural gas, despite being weighed down by the abundant supplies from North America. Oil-product and chemical margins also strengthened. Conditions remained challenging for refining, though.

ON THE UPSWING

The resumption of economic growth - particularly in Asia - has set energy demand on its upward course again. The increasing populations of developing countries will impart further momentum to the trend. To meet that surging demand, energy of all sorts will be needed - not just oil and gas but also nuclear and renewables.

The sheer scale of the energy demand build-up, however, limits the speed with which alternative sources can capture market share. Even if renewable energy sources develop faster than any energy source ever did, we believe that they could provide no more than 30% of global energy by 2050. Fossil fuels and uranium will continue to supply the bulk of the world's energy for the foreseeable future, and the energy industry has to do what it can to ameliorate their known environmental impacts.

More recently, events in north Africa showed how quickly momentum for political change can develop. It is still too early to tell whether they have lasting implications for the global supply of energy. We continue to monitor developments in the region closely.

TECHNOLOGY AND INNOVATION

Fortunately, human creativity has proved to

be remarkably adept at reconciling the often conflicting constraints that economic growth, political authority, individual well-being and environmental protection impose. Still, those who ultimately balance the pull and push of these constraints occasionally get it wrong - sometimes tragically so, as happened with the Deepwater Horizon.

The incident provided the basis for a thorough review of our global safety standards and procedures. Our review confirmed that they are among the most stringent in the world.

With this important lesson in mind, we will continue to apply our creativity to develop technologies for discovering new energy resources and making previously uneconomic ones viable. We think it makes a lot of sense to focus our innovation on natural gas, the cleanest-burning fossil fuel.

We are also directing part of our R&D effort to produce transport fuels from biomass. By taking inedible plant matter as feedstock, we can ensure that these advanced biofuels do not compete for resources with food crops. Until they are ready for commercialisation, we will continue working with industrial bodies, governments and other organisations to establish sustainability standards for conventional biofuels.

We are participating in projects to demonstrate techniques for capturing carbon dioxide at its source and storing it permanently underground. Such carbon capture and storage will be a necessary adjunct to fossil-fuel power plants and other large CO₂-emitting installations by 2050, according to the International Energy

Agency. And we are constantly thinking of ways to improve the efficiency with which we - and our customers - use energy and raw materials.

We laid out a strategy in 2010 that helps us manage the way we allocate R&D resources. It distinguishes between "core", "first" and "emerging" technologies on the basis of whether they can be immediately applied in our existing activities, whether they open new business opportunities in the medium term or whether they have the potential to change the very nature of the energy industry in the long term.

But our innovations go beyond the purely technological. To supply energy to Asia's fast-growing markets, we have teamed up with Chinese national oil companies to develop energy resources not only inside but also outside China - in Australia, Qatar and Syria. We also intend to move into the sugar industry through a joint venture with Cosan in Brazil. The proposed joint venture will produce and sell ethanol biofuel, sugar and power from sugar cane.

CREATING THE FUTURE TOGETHER

Our technological and commercial innovations are helping create a low-carbon energy system that is not only secure and affordable but also sustainable - in the widest sense of the word. For the sake of our industry, we will keep working with regulators and international organisations to improve its safety and environmental regimes. Both resource holders and resource consumers stand to gain from these efforts. And so too will our shareholders.

Jorma Ollila Chairman

CHIFF EXECUTIVE OFFICER'S REVIEW

"OUR SUCCESSFUL PROIECTS AND FUTURE GROWTH OPPORTUNITIES HELP US INCREASE OUR POTENTIAL VALUE TO PARTNERS, CUSTOMERS AND SHARFHOIDERS AIIKE "

2010 was a good year for Shell. In the wake of a global economic crisis we improved our operating performance and competitive position thanks to the dedication and creativity of our employees around the world. We made progress in focusing our portfolio of assets on our strengths in both Upstream and Downstream. And we were busy generating new opportunities for further growth over the period 2014-2020.

We are delivering on our strategy, which is based on performance now, growth from new projects and creating options for the future.

FINANCIAL AND OPERATIONAL RESULTS

Our earnings for the year were \$20.5 billion, up 61% from 2009. On the basis of estimated current cost of supplies, our earnings per share increased by 90%. And cash flow from operating activities, excluding net working capital movements, was 40% higher.

Oil and gas production volumes increased by 5%, and sales volumes of liquefied natural gas (LNG) rose by 25%. Sales volumes of oil products and chemical products also grew - by 5% and 13% respectively.

Our declared dividends for the year underscored our commitment to shareholder returns. They totalled \$10.2 billion - the largest in our sector.

SAFETY AND THE ENVIRONMENT

We drove down our occupational injury rate again for the sixth straight year. Regrettably, we still had 12 work-related fatalities in 2010. Seven of them were

related to road accidents, and two were related to security incidents. So we must continue to implement rigorous safety practices, particularly those related to driving. As we develop new projects in countries where there are security risks, we need to continue to carefully assess the threat and implement controls to safeguard people. And, as events in north Africa have made clear, we have to keep our contingency plans ready for activation on short notice.

Since April 2010, public discussions about safety in the oil industry have been dominated by the Deepwater Horizon incident in the Gulf of Mexico. This tragic incident reflects poorly on our industry. It will take a lot of effort to re-establish trust in our industry.

We agree with the majority of the findings of the US National Commission report on the incident. In fact, our safety procedures already conform to many of the recommendations in the report. Drilling responsibilities at our rigs are clear, and we assure both ourselves and regulators that all necessary safety measures have been put in place.

Our good safety record shows that we have the capability to access oil and gas safely and responsibly in hard-to-reach places, such as under deep or Arctic waters, and in remote or geologically challenging onshore locations.

Continued efforts to improve our environmental performance met with some success in 2010. The number of operational oil spills was down significantly from 2009. And we made

progress in our ongoing emission-reduction plans in Nigeria, where we began working on further projects worth more than \$2 billion to capture more of the gas associated with oil production.

REACHING TARGETS

In 2010, we reduced our costs by \$2 billion, or around 5%, and both acquired and divested assets of \$7 billion. These actions helped improve returns and capital efficiencies. They also reflect the priority we give to continual improvement along all fronts within our organisation. I am indebted to the more than 93,000 Shell employees who bring about these improvements, sometimes under trying circumstances.

We brought six key projects on-stream in 2010, and several more are nearly there. Thanks largely to them, we are on track to reach the 2012 performance targets we set back in 2009: 11% more production and at least 80% more cash flow at an oil price greater than \$80 per barrel. In Nigeria the Gbaran-Ubie project is now producing both oil and gas from a collection of fields. Production also started at our Perdido offshore platform, which taps fields in the Gulf of Mexico in recordsetting water depths. We also saw the first output increases from the expansion of the Athabasca Oil Sands project in Canada. And in Qatar we completed major construction at our Pearl gas-to-liquids (GTL) plant and began producing LNG at the Qatargas 4 plant in January 2011.

In Downstream in 2010, our Shell Eastern Petrochemicals Complex (SEPC) in Singapore began to operate as a fully integrated refinery and petrochemical hub. The SEPC is the largest petrochemical

project ever undertaken by Shell. It enables us to maintain a leading position in the expanding Asian market.

We also made good progress in the restructuring of our Downstream businesses in 2010. We sold refining and marketing assets in several countries - Finland, Sweden, Greece and New Zealand, to name a few. In certain cases, service stations will remain Shell-branded through licensing agreements with the new owners. Such divestments allow us to concentrate our commercial strengths in large markets or markets with growth potential.

OPTIONS FOR THE LONGER TERM

In 2010, we assembled ample opportunities for growth beyond 2012.

We took the Final Investment Decision on two new oil and gas projects in deep water - one in the Gulf of Mexico and the other offshore Brazil. In Australia the Gorgon joint venture is constructing facilities for one of the world's largest natural gas projects, and we are nearing a Final Investment Decision on whether to develop the Prelude and Concerto offshore gas fields on the basis of a floating LNG plant.

We signed contracts with our partners to develop the Majnoon and West Qurna fields in Irag. And we agreed to join Qatar Petroleum in a study of the feasibility of building a major petrochemical complex at the same industrial site where the Qatargas 4 and Pearl GTL plants are located.

We added to our shale-gas holdings in 2010. These consist of gas-bearing shale formations that must be fractured in order for the gas to flow freely to the wells. We acquired acreage in the Eagle Ford formation of south Texas and the Marcellus formation of north-eastern USA. These acquisitions bring our total North American holdings in such formations to some 3.6 million acres.

We also signed a contract in 2010 to explore, appraise and develop more gas resources in the Sichuan and Ordos Basins

in China. The area over which we are now conducting onshore gas operations in China totals some 12,000 square kilometres (about 3 million acres) - roughly one-third the size of the Netherlands. We additionally partnered with PetroChina to buy Arrow Energy, which has coalbed methane resources in Australia

Our exploration programme made nine notable discoveries in 2010. Additions to our proved reserves exceeded our production volumes for the year. We plan to spend some \$3 billion in 2011 in our continuing search for more resources.

In Downstream, we continued our investments to increase refining capability in the US Gulf Coast. We also signed binding agreements with Cosan to form a marketing and biofuels joint venture in Brazil. Through it, we will for the first time become a wholesale producer of ethanol derived from sugar cane. We think such biofuels provide the most commercially feasible way for us to reduce carbon dioxide emissions from road transport over the next two decades. And for the longer term we will bring to the venture the results of our advanced-biofuels R&D programme.

To make our R&D programme an intrinsic part of Shell's strategic objectives, we adopted a new technology strategy in 2010. It emphasises continued strong investment in research, speeding up the commercialisation of ideas, and working more closely with strategic external partners, such as customers and universities.

MAKING OUR STRATEGY DELIVER VALUE

Our successful projects and future growth opportunities help us increase our potential value to partners, customers and shareholders alike. But there is still more $t_0$ come

I know I speak for my colleagues at Shell when I say that we are eager to get on with the job.

Peter Voser

Chief Executive Officer

shell.com/stationlocator

Recent speeches by Peter Voser: www.shell.com/speeches

SUMMARY BUSINESS REVIEW

PERFORMANCE INDICATORS

KEY PERFORMANCE INDICATORS	2010	2009
Total shareholder return (%)	17.0	22 B
Net cash from operating activities (\$ billion)	27	21
Project delivery (%) [A]	75	n/a
Production available for sale (thousand boe/d)	3,314	3,142
Sales of liquefied natural gas (million tonnes)	16.8	13.4
Refinery and chemical plant availability (%)	92.4	93.3
Total recordable case frequency (injuries per million working hours)	1.2	1.4
ADDITIONAL PERFORMANCE INDICATORS
Income for the period (\$ million)	20,474	12,718
Net capital investment (\$ million)	23,680	28,882
Return on average capital employed (%)	11.5	8.0
Gearing at December 31 (%)	17.1	15.5
Earnings per share on an estimated current cost of supplies basis (\$)	3.04	1.60
Proved oil and gas reserves at December 31 (million boe) [B]	14,249	14,132
Operational spills over 100 kilograms	193	275
Employees (annual average)	97,000	101,000

[A] A new key performance indicator that reflects Shell's capability to complete a defined set of projects on time and within budget, compared with targets set in the annual Business Plan.

[B] Excludes reserves attributable to non-controlling interest in Shell subsidiaries held by third parties.

RISK FACTORS

Shell's operations and earnings are subject to competitive, economic, political, legal, reaulatory, social, industry, business and financial risks. These could have a material adverse effect separately, or in combination, on our operational performance, earnings or financial condition. Investors should carefully consider the risks below. They should also be aware that our Articles of Association limit the jurisdictions under which shareholder disputes are settled.

• Our operating results and financial condition are exposed to fluctuating prices of crude oil, natural gas, oil products and chemicals.
• · Our ability to achieve strategic objectives depends on how we react to competitive forces
• The global macroeconomic environment as well as financial and commodity market conditions influence our operating

results and financial condition as our business model involves trading, treasury, interest rate and foreign exchange risks.

• · Our future hydrocarbon production depends on the delivery of large and complex projects, as well as our ability to replace oil and gas reserves.
• An erosion of our business reputation would have a negative impact on our brand, our ability to secure new resources, our licence to operate and our financial performance.
• Our future performance depends on the successful development and deployment of new technologies.
• Rising climate change concerns could lead to additional regulatory measures that may result in project delays and higher costs.

• The nature of our operations exposes us to a wide range of health, safety, security and environment risks.

• An erosion of the business and operating environment in Nigeria could adversely impact our earnings and financial position.

• " We operate in more than 90 countries, with differing degrees of political, legal and fiscal stability. This exposes us to a wide range of political developments that could result in changes to laws and regulations. In addition, Shell companies face the risk of litigation and disputes worldwide.
• Our operations expose us to social instability, terrorism and acts of war or piracy that could have an adverse impact on our business.
• . We rely heavily on information technology systems for our operations.
• We have substantial pension commitments, whose funding is subject to capital market risks.
• The estimation of reserves involves subjective judgements based on available information and the application of complex rules, so subsequent downward adjustments are possible. If actual production from such reserves is lower than current estimates indicate. our profitability and financial condition could be negatively impacted.
• . Many of our major projects and operations are conducted in joint ventures or associated companies. This may reduce our degree of control, as well as our ability to identify and manage risks.
• Violations of antitrust and competition law carry fines and expose us or our employees to criminal sanctions and civil suits.
• Shell is currently subject to a Deferred Prosecution Agreement with the US Department of Justice for violations of the US Foreign Corrupt Practices Act.
• The Company's Articles of Association determine the jurisdiction for shareholder disputes. This might limit shareholder remedies.

SUMMARY OF RESULTS AND STRATEGY

INCOME FOR THE PERIOD		\$ MILLION
	2010	2009
Earnings by segment
Upstream	15,935	8,354
Downstream [A]	2,950	258
Corporate	91	1,310
Earnings on a current cost of supplies basis	18,976	9,922
Current cost of supplies adjustment [A]	1,498	2,796
Income for the period	20,474	12,718

[A] With effect from 2010, Downstream segment earnings are presented on a current cost of supplies basis. Comparative information is consistently presented.

EARNINGS

Earnings on a current cost of supplies basis (CCS earnings) in 2010 were 91% higher than in 2009. The increase reflected higher realised oil and gas prices and production in Upstream as well as higher margins in Downstream.

For CCS earnings, the purchase price of volumes sold during the period is based on the estimated current cost of supplies during the same period after making allowance for the estimated tax effect. CCS earnings therefore exclude the effect of changes in the oil price on inventory carrying amounts.

In 2010, Upstream earnings were \$15,935 million, 91% higher than in 2009. This reflected the effect of significantly higher realised prices for both oil and gas in combination with higher production volumes. Moreover, the 2010 earnings included significant gains from the divestment of various assets.

Oil and gas production available for sale in 2010 was 3,314 thousand barrels of oil equivalent per day (boe/d), compared with 3,142 thousand boe/d in 2009.

Downstream earnings in 2010 were \$2,950 million, compared with \$258 million in 2009. Earnings increased significantly because of higher realised refining margins and increased volumes.

MARKET OVERVIEW

The demand for oil and gas is strongly linked to the strength of the global economy. For that reason, projected economic growth is considered an indicator of the future demand for our products and services.

The global economy continued to recover in 2010 from the recession of late 2008 and

early 2009 that was triggered by the severe financial crisis in the USA and Europe. The contours of the global recovery, however, have differed significantly across countries. Most emerging markets weathered well the global downturn and grew robustly in 2010, with output in China and India growing by 10.3% and 9.7% respectively. In contrast, the USA and the euro area saw output grow by 2.8% and 1.8% respectively, which was not sufficiently rapid to bring down high unemployment rates.

In 2011, global output growth is set to continue, led by the emerging markets. Key uncertainties to the outlook are associated with high sovereign debt burdens in some European countries, fragile US and European consumer confidence with high unemployment and indebtedness, and global frictions over imbalances and exchange rates.

Oil and natural gas prices

Oil prices traded in a range of \$70-85 per barrel throughout most of 2010 but ended the year at a high of \$94 per barrel. On average, 2010 prices were considerably higher than they were in 2009. Brent crude oil averaged \$79.50 per barrel in 2010, compared with \$61.55 in 2009; West Texas Intermediate averaged \$79.45 per barrel in 2010, compared with \$61.75 a year earlier.

Natural gas prices saw a more pronounced downward trend in 2010 compared with 2009. The Henry Hub prices fell from a monthly average high of \$5.80 per million British thermal units (MMBtu) in January to a monthly low of \$3.48 per MMBtu in October, when inventories were high and production had to be discouraged. From November until the end of 2010, Henry Hub prices reversed their trend with the

onset of winter weather. Averaged over the year, the Henry Hub per-MMBtu price was higher in 2010 than in 2009 - \$4.40 compared with \$3.90. In the UK prices at the National Balancing Point averaged 42.12 pence/therm in 2010, compared with 30.93 pence/therm in 2009.

Unlike crude-oil pricing, which is global in nature, gas prices vary significantly from region to region. We produce and sell natural gas in regions whose supply, demand and regulatory circumstances differ markedly from those of the US's Henry Hub or the UK's National Balancing Point. Natural gas prices in the Asia-Pacific region and in some parts of continental Europe are predominantly indexed to oil prices. However, natural gas prices are increasingly moving to spot market pricing in continental Europe. In Europe contractual time-lag effects resulted in flat prices throughout the first quarter of 2010, while demand was still feeling the impact of the recession. Oil-indexed prices started to rise in the second quarter, maintaining a very significant premium above the UK's National Balancing Point.

Refining and petrochemical market trends

Refining margins in 2010 showed some improvement over those of 2009 in all key refining centres. Margins were supported by the growing demand for oil products in 2010 as the world moved out of recession. But they were also subjected to downward pressure from the continuing high inventories, particularly for middle distillates, and industrial overcapacity following the start-up of major refining facilities in Asia. Chemicals margins in 2010 were higher than expected because of unanticipated demand growth, high unplanned plant downtime, feedstock constraints in the Middle East and a large price differential between crude oil and US natural gas. Industry refining margins in 2011 will be supported if global oil

demand continues to grow with economic recovery, but their growth may be tempered by the continuing industrial overcapacity.

STRATEGY

Our strategy seeks to reinforce our position as a leader in the oil and gas industry in order to provide a competitive shareholder return while helping to meet global energy demand in a responsible way. Safety and corporate responsibility are at the heart of our activities.

Intense competition exists for access to upstream resources and to new downstream markets. But we believe our technology, project-delivery capability and operational excellence will remain key differentiators for our businesses. We expect around 75% of our capital investment in 2011 to be in our Upstream projects.

In Upstream we focus on exploration for new oil and gas reserves and developing major projects where our technology and know-how adds value to the resource holders.

In our Downstream businesses, our emphasis remains on sustained cash generation from our existing assets and selective investments in growth markets.

Meeting the growing demand for energy worldwide in ways that minimise environmental and social impact is a major challenge for the global energy industry. We are committed to improving energy efficiency in our own operations, supporting customers in managing their energy demands, and continuing to research and develop technologies that increase efficiency and reduce emissions in oil and gas production.

Our commitment to technology and innovation continues to be at the core of our strategy. As energy projects become more complex and more technically demanding, we believe our engineering expertise will be a deciding factor in the growth of our businesses. Our key strengths include the development and application of technology, the financial and projectmanagement skills that allow us to deliver large oil and gas projects, and the management of integrated value chains. We leverage our diverse and global business portfolio and customer-focused businesses built around the strength of the Shell brand.

OUTLOOK

We have defined three distinct lavers for Shell's strategy development: near-term performance focus; medium-term growth delivery; and maturing next-generation project options for the longer term.

Performance focus

In the near term, we will emphasise performance focus. We will work on continuous improvements in operating performance, with an emphasis on health, safety and environment, asset performance and operating costs. Shell's underlying costs declined by some \$2 billion in 2010, and by over \$4 billion since 2008. Asset sales are a core element of the strategy - improving our capital efficiency by focusing investment on the most attractive growth opportunities. There are expected to be asset sales of up to \$5 billion in 2011 as Shell exits from non-core positions.

We have initiatives underway that are expected to improve Shell's industry-leading Downstream businesses, focusing on the most profitable positions and growth potential. Shell has plans to exit from non-core refining capacity and from selected retail and other marketing positions and is taking steps to improve the quality of its Chemicals assets.

We are planning a net capital investment of some \$2.5-27 billion in 2011. This amount relates largely to investments in projects where the Final Investment Decision has already been taken or is expected to be taken in 2011.

Growth delivery

Organic capital investment is expected to be \$25-30 billion per year between 2012 and 2014, as Shell invests for long-term growth. Annual spending will be driven by the timing of investment decisions and the near-term macro outlook.

In early 2010, Shell defined a set of ambitious financial and operating targets to rebalance the financial framework to a cash flow surplus, and to grow Shell. These targets are driven by Shell's performance in maturing new projects for investment and by project start-ups.

Cash flow from operations, excluding changes in working capital, was \$24 billion in 2009. We expect cash flow to grow by around 50% from 2009 to 2012 assuming a \$60-per-barrel oil price and an improved environment for natural gas

prices and downstream margins. In an \$80-per-barrel environment. 2012 cash flow should be at least 80% higher than 2009 levels.

In Downstream we are adding new refining capacity in the USA and making selective arowth investments in marketina.

Oil and gas production is expected to average 3.5 million boe/d in 2012, compared with 3.3 million boe/d in 2010. We are confident of further growth by 2014 to 3.7 million boe/d.

Maturing next-generation project options

Shell has built up a substantial portfolio of options for the next wave of growth. This portfolio has been designed to capture price upside and minimise Shell's exposure to industry challenges from cost inflation and political risk. Key elements of this opportunity set are in the Gulf of Mexico, North American tight gas and Australian LNG. These projects are part of a portfolio that has the potential to underpin production growth to the end of the decade. Shell is working to mature these projects, with an emphasis on financial returns.

RESERVES AND PRODUCTION

In 2010, Shell added 1,653 million boe proved reserves before taking into account a net negative impact from commodity price changes of 198 million boe proved reserves and a net negative impact from acquisition and divestment activity of 85 million boe proved reserves. Of the total net additions of proved oil and gas reserves before production of 1,370 million boe. 1.197 million boe came from Shell subsidiaries and 173 million boe were associated with the Shell share of equityaccounted investments.

In 2010, total oil and gas production available for sale was 1,210 million boe. An additional 32 million boe were produced and consumed in operations. Production available for sale from subsidiaries was 855 million boe with an additional 25 million boe consumed in operations. The Shell share of the production available for sale of equityaccounted investments was 355 million boe with an additional 7 million boe consumed in operations. Accordingly, after taking into account total production, we had a net increase of 128 million boe in proved oil and gas reserves, of which 317 million boe came from subsidiaries and a net decrease

of 189 million boe was associated with the Shell share of equity-accounted investments.

RESEARCH AND DEVELOPMENT

In 2010, our research and development (R&D) expenses remained above \$1 billion (\$1,019 million, compared with \$1,125 million in 2009).

Following the creation of a single R&D organisation in 2009, we adopted in 2010 an integrated company-wide technology

identify the most suitable ways to meet the growing global demand for energy. Of course, we will continue to foster our proprietary technology and drive in-house development of differentiating technologies wherever it makes business sense to do so.

Our new technology strategy enables us to support current business activities with "core technologies" while developing "technological firsts" for the medium term and "emerging technologies" for the long term. Our key "core" technology developments are intended: to improve oil and gas recovery from existing fields; to further enhance our exploration success; to provide better ways to conduct operations in deep water; to grow our GTL and LNG businesses; and to deliver advanced fuels and lubricants that give customers increased fuel efficiency and engine performance. Delivering technological "firsts" will allow us to move into more challenging operational environments, such as the Arctic, and pursue next-generation biofuels. They are also designed to allow us to unlock difficult-to-produce oil and gas resources, and provide ways to abate carbon dioxide emissions or to capture and store them.

In 2011, our R&D programme will continue to pursue the same key targets as those we had in 2010, although we foresee a further shift in focus to upstream-related and gas-related technologies. We aim to continue reducing the time for a technology to progress from initial idea to field trials and then on to large-scale deployment. We will also continue to keep a healthy balance between new and more mature projects in our R&D portfolio, increasing the number of early-stage concepts while terminating less-promising projects more quickly.

Our new integrated R&D organisation and our focused technology strategy, in combination with our industry-leading talent, make us confident that our technology will keep differentiating us from the competition.

More about our operational performance can be found in our Investors' Handbook to be published in May 2011 on www.investorshandbook.shell.com

UPSTRFAM

KEY STATISTICS		\$ MILLION
	2010	2009
Revenue (including inter-segment sales)	68,198	55,140
Segment earnings	15,935	8,354
Including:
Production and manufacturing expenses	13,697	13,958
Selling, distribution and administrative expenses	1,512	2,206
Exploration	2,036	2,178
Depreciation, depletion and amortisation	11,144	9,875
Share of profit of equity-accounted investments	4,900	3,852
Net capital investment	21,222	22,326
Oil and gas production available for sale (thousand boe/d)	3,314	3,142
LNG sales volume (million tonnes)	16.76	13.40
Proved reserves (million boe) [A]	14,249	14,132

[A] Excludes reserves attributable to non-controlling interest in Shell subsidiaries held by third parties.

Our Upstream businesses explore for and extract crude oil and natural gas, often in joint ventures with international and national oil companies. This includes the

extraction of bitumen from mined oil sands which we convert into synthetic crude oil. We liquefy natural gas by cooling and transport it to customers across the world.

We convert natural gas to liquids (GTL) to provide cleaner-burning fuels. We also market and trade natural gas (including LNG) in support of our Upstream businesses.

EARNINGS

Segment earnings in 2010 were \$15,935 million, 91% higher than in 2009. The increase was mainly due to higher realised oil, natural gas and LNG prices, higher production volumes, lower exploration expenses and lower underlying depreciation (when excluding impacts of asset impairments), partly offset by higher production taxes. Additionally, 2010 earnings included a net gain of \$1,493 million related to identified items compared with a net charge of \$134 million in 2009. The net gain in 2010 mainly related to gains on divestments, partly offset by asset impairments and write-offs, mark-to-market valuation of certain gas contracts and the cost impacts from the US offshore drilling moratorium (\$185 million). The net charge

in 2009 mainly related to impairments and redundancy charges, partly offset by exceptional tax items and divestment gains.

NET CAPITAL INVESTMENT

Net capital investment was \$21 billion in 2010, compared with \$22 billion in 2009. Capital investment in 2010 was \$26 billion (including \$11 billion in exploration expenditure). This represents an 8% increase from 2009 capital investment of \$24 billion. 2010 capital investment included \$7 billion in acquisitions, primarily relating to East Resources. Proceeds from divestments were \$4 billion in 2010 and \$2 billion in 2009.

PORTFOLIO ACTIONS AND BUSINESS DEVELOPMENT

In Africa and Europe we completed an asset swap with Hess to acquire assets in Gabon and in the UK North Sea in return for Shell's interest in a pair of Norwegian offshore fields.

In Australia Shell and PetroChina completed the acquisition of all of the shares in Arrow Energy Limited; the total cash consideration was some \$3.1 billion (Shell interest in Arrow 50%). Also in Australia we sold 29.18% of our interest in Woodside, or 10.0% of Woodside's issued capital, for a total price of \$3.2 billion, reducing Shell's interest in the company to 24.27%.

In Brazil we announced the Final Investment Decision to support phase 2 of the Parque das Conchas (BC-10) project (Shell interest $50%$ .

In China Shell and PetroChina announced plans to appraise, develop and produce tight gas under a 30-year production-sharing contract in an area of approximately 4,000 square kilometres in the Jinqiu block of central Sichuan Province. In addition, shale gas assessment work commenced in January 2010 in the Fushun block that covers another area of also approximately 4,000 square kilometres.

In Nigeria we sold our 30% interest in three production leases (oil mining leases 4, 38 and 41) and related equipment in the Niger Delta to a consortium led by two Nigerian companies.

In Qatar we signed a new exploration and production-sharing agreement for Qatar block D. Under the agreement, the partners will jointly explore for natural gas in an

area of 8,089 square kilometres onshore and offshore Qatar. The total term of this agreement is 30 years and will start with a five-year First Exploration Period.

In Syria we sold a 35% interest in Syria Shell Petroleum Development (SSPD), previously 100% owned, to China National Petroleum Corporation. SSPD has interests in three production licences covering some 40 oil fields, with production in 2010 of approximately 20 thousand boe/d (Shell share).

In the USA we acquired the majority of assets held by East Resources for a cash consideration of \$4.5 billion. The assets acquired cover an area of some 2,800 square kilometres (700 thousand net acres) of highly contiguous acreage, with the primary focus on the Marcellus shale, centred in Pennsylvania in the north-east USA. Additionally, we acquired and began exploration drilling on some 1,000 square kilometres (250 thousand net acres) of mineral rights in the Eagle Ford shale play in south Texas.

Also in the USA we announced the Final Investment Decision for the Mars B project (Shell interest 71.5%), a tension leg platform in the Gulf of Mexico with a 100 thousand boe/d capacity.

Furthermore, also in the USA, in 2011 we divested our Rio Grande Valley south Texas portfolio for \$1.8 billion as part of ongoing asset optimisation.

PRODUCTION

In 2010, hydrocarbon production available for sale averaged 3,314 thousand boe/d, which was 5% higher than in 2009. It represents the first year-on-year increase since 2002. Higher production was mainly driven by new fields coming on-stream (notably Gbaran-Ubie in Nigeria in 2010), the continued ramp-up of certain fields brought on-stream before 2010 (notably Parque das Conchas (BC-10) in Brazil and Sakhalin 2 in Russia), improved security conditions in Nigeria and increased demand, mainly in Europe. This increase was partly offset by natural field declines, divestments and production-sharing contract price effects.

LNG sales volumes in 2010 of 16.76 million tonnes were 25% higher than in 2009. This increase mainly reflected the ramp-up in sales volumes from the Sakhalin 2 LNG project and improved feed gas supplies to Nigeria LNG helped by the start-up of the Gbaran-Ubie field.

In Canada we started production from expanded mining facilities at our oil sands operations. Production from the new Jackpine Mine, combined with existing production from the Muskea River Mine. will feed the Scotford Upgrader, which processes the oil sands bitumen into synthetic crude. Construction for the expansion of the Scotford Upgrader has been underway, and will come on-stream in 2011, allowing synthetic crude production capacity to rise to 255 thousand boe/d (Shell share 60%).

While security in Nigeria remains fragile, the situation has improved in 2010, allowing the restart of certain facilities that were previously inaccessible. Overall 2010 production in Nigeria was some 400 thousand boe/d compared with some 280 thousand boe/d in 2009 (Shell share).

In Nigeria oil and gas production started from the Gbaran-Ubie project in the Niger Delta (Shell interest 30%). In early 2011, Gbaran-Ubie achieved peak gas production of 1 billion standard cubic feet of gas per day (scf/d); oil production has reached some 50 thousand barrels per day (b/d) and is expected to peak at some 70 thousand b/d.

Major construction of the Qatargas 4 project has been completed and first LNG was produced in January 2011, with production expected to reach full capacity in 2011.

EXPLORATION

During 2010, Shell participated in nine notable exploration discoveries and six notable successful appraisals, in Australia, Brazil, Brunei, Oman, the US Gulf of Mexico and North America onshore. Discoveries will be evaluated in order to establish the extent of the volumes they contain.

In total, Shell secured rights to some 53,000 square kilometres of new exploration acreage. This was more than offset by divestments, relinquishments and licence expiry of acreage, which took place in various countries (mainly Malaysia, Norway, Saudi Arabia and the UK).

DOWNSTREAM

KEY STATISTICS		S MILLION
	2010	2009
Revenue (including inter-segment sales)	336,216	250,362
Segment earnings [A]	2,950	258
Including:
Production and manufacturing expenses	10,592	11,829
Selling, distribution and administrative expenses	13,716	14,505
Depreciation, depletion and amortisation	4,254	4,399
Share of earnings of equity-accounted investments [A]	948	661
Net capital investment	2,358	6,232
Refinery availability (%)	92	93
Chemical plant availability (%)	94	92
Refinery processing intake (thousand b/d)	3,197	3,067
Oil products sales volumes (thousand b/d)	6,460	6,156
Chemicals sales volumes (thousand tonnes)	20,653	18,311

[A] With effect from 2010, Downstream segment earnings are presented on a current cost of supplies basis. Comparative information is consistently presented.

Shell's Downstream organisation is made up of a number of different businesses. Collectively these turn crude oil into a range of refined products, which are moved and marketed around the world for domestic, industrial and transport use. The products include gasoline, diesel, heating oil, aviation fuel, marine fuel, lubricants, bitumen, sulphur and liquefied petroleum gas (LPG). In addition, we produce and sell petrochemicals for industrial use worldwide

Our Manufacturing business includes Refining as well as Supply and Distribution. Marketing includes our Retail, Business to Business (B2B), Lubricants and Alternative Energies businesses. Our Chemicals business has dedicated manufacturing and marketing units of its own. We also trade crude oil, oil products and petrochemicals primarily to optimise feedstock for our Manufacturing and Chemicals businesses and to supply our Marketing businesses.

EARNINGS

Segment earnings in 2010 were \$2,950 million, compared with \$258 million in 2009.

Manufacturing reported a loss in 2010, but the loss was less than in 2009 primarily due to higher realised refining margins and higher refinery processing intakes. Margins increased globally as a result of better macroeconomic conditions and strona year-on-year growth, particularly in non-OECD countries.

Marketing earnings related to oil products increased compared with those of 2009 because of lower costs, which were partly offset by lower Retail and B2B margins. In 2010, earnings also benefited from lower depreciation and impairment charges compared with 2009.

Although not as significant as Marketing, Chemicals reported near-record earnings in 2010, accounting for approximately 50% of overall Downstream earnings. Earnings increased compared with those of 2009 on the back of an improved market environment, resulting in higher realised margins, higher sales volumes and increased earnings from equity-accounted investments.

Earnings from trading activities were lower than in 2009 due to reduced volatility levels and fewer storage opportunities as a result of a less pronounced contango market structure (forward prices higher than current spot prices).

Downstream earnings in 2010 included net charges related to identified items of \$923 million (2009: \$1,682 million).

In 2010, revenues increased by \$85,854 million over those of 2009, reflecting higher average oil prices in 2010 and increased chemical margins and sales volumes arising from greater demand.

Refinery processing intake in 2010 was 4% higher than it was in 2009 reflecting improved demand - particularly in Asia. Total oil products sales volumes in 2010

were 5% higher than in 2009. Oil products marketing sales volumes (adjusted for the impact of divestments) increased by 1% primarily due to higher B2B volumes. In 2010, chemical sales volumes increased by 13% compared with those of 2009, mainly due to the start-up of the Shell Eastern Petrochemicals Complex (SEPC) in Singapore.

NET CAPITAL INVESTMENT AND PORTFOLIO ACTIONS

Net capital investment was \$2.4 billion in 2010, compared with \$6.2 billion in 2009.

Capital investment was \$4.8 billion in 2010, of which \$3.2 billion was in Manufacturing and Chemicals, \$1.4 billion was in Marketing, and \$0.2 billion was in new equity and loans in equity-accounted investments. Capital investment was \$7.5 billion in 2009, of which \$4.4 billion was in Manufacturing and Chemicals.

An investment milestone for the Chemicals business was reached in May 2010, when we announced the start-up of the ethylene cracker at the SEPC. The 100% Shell-owned ethylene cracker has a capacity of 800,000 tonnes of ethylene per annum, as well as 450,000 tonnes of propylene and 230,000 tonnes of benzene per annum. The SEPC project is our largest petrochemical investment to date, creating our largest fully integrated refinery and petrochemical hub.

In the Marketing businesses we continued to invest in selected retail markets, such as those of Germany and China, and in our growing Lubricants businesses in China and Russia.

Divestment proceeds were \$2.4 billion in 2010 compared with \$1.3 billion in 2009. We are on track with our Downstream asset sales programmes to refocus our portfolio on material positions with growth potential.

In New Zealand we sold our Downstream business, including the 17.1% shareholding in the 104 thousand b/d refinery at Marsden Point, for some \$0.5 billion.

In Greece we sold our Downstream businesses, and entered into an agreement for the continued use of the Shell brand in the Greek market, for a consideration of ground \$0.3 billion. The sale included Shell's retail, commercial fuels, bitumen, chemicals, supply and distribution, and LPG businesses, as well as a lubricants oil blending plant.

In Germany we sold our 90 thousand b/d Heide refinery and some wholesale commercial activities for approximately \$0.1 billion.

In Finland and Sweden we sold the majority of our refining and marketing businesses, including Shell's 100% owned 87 thousand b/d Gothenburg refinery.

We also sold our Downstream businesses in Costa Rica, Gibraltar, Laos and Panama in separate transactions.

Shell announced that it has agreed to divest the majority of its shareholdings in most of its Downstream businesses in Africa. The proposed deal will raise a total of approximately \$1 billion.

Shell confirmed it has received an offer to buy its 272 thousand b/d Stanlow refinery and associated local marketing businesses in the UK for a total consideration of some $$1.3$ billion.

We have continued to make progress with longer-term growth options. In Brazil we

signed a binding agreement to form a joint venture (Shell interest 50%) with Cosan for the production of ethanol, sugar and power, as well as the supply, distribution and retailing of transport fuels.

In Qatar we signed a Memorandum of Understanding with Qatar Petroleum to study jointly the development of a major petrochemical complex that would include a mono-ethylene glycol plant of up to 1.5 million tonnes per annum. Combined with the output of other olefin derivatives, the plant is expected to produce more than 2 million tonnes per year of chemicals.

CORPORATE

The Corporate segment covers the nonoperating activities supporting Shell. It includes Shell's holdings and treasury organisation, its headquarters and central functions as well as its self-insurance activities.

EARNINGS

Segment earnings for 2010 were \$91 million, compared with \$1,310 million in 2009. Net interest and investment income decreased by \$669 million. An increase in debt resulted in increased interest cost with interest rates remaining relatively flat. Capitalised interest decreased, reflecting a reduction in the capitalised interest rate and the completion and start-up of related projects. Interest income was lower due to lower average cash balances and lower interest rates.

Foreign exchange gains of \$644 million in 2009 were mainly driven by the depreciation of the US dollar against most other currencies on loan payable balances in operating units with a non-US dollar functional currency.

Other earnings increased by \$52 million in 2010 compared with 2009, mainly because of increased tax credits and reduced costs

HQUIDITY AND CAPITAL RESOURCES

The most significant factors affecting our operating cash flow are earnings and movements in working capital. The main drivers impacting our earnings include: realised prices for crude oil and natural gas; production levels of crude oil and natural gas; and refining and marketing margins.

Since the contribution of Upstream to earnings is larger than that of Downstream, changes affecting Upstream - particularly changes in realised crude oil and natural gas prices and production levels - have the largest impact on Shell's operating cash flow.

In Downstream, changes in any one of a range of factors derived from either within the industry or the broader economic environment can influence margins. The precise impact of any such changes depends on how the oil markets respond to them.

In the longer term, replacement of oil and gas reserves will affect our ability to maintain or increase production levels in Upstream, which in turn will affect our cash flow and earnings.

We have a diverse portfolio of fielddevelopment projects and exploration opportunities. That diversity can help to reduce the impact of political and technical risks in Upstream, including the impact on the associated cash flow provided by our operating activities.

It is our intention to continue to divest and, where appropriate, make selective acquisitions as part of active portfolio management in line with our strategy, and influenced by market opportunities.

FINANCIAL CONDITION AND LIQUIDITY

Shell's financial position is strong. In 2010, we generated a return on average capital employed (ROACE) of 11.5% with a year-end gearing ratio of 17.1% (2009: 15.5%). We returned \$10.2 billion to our shareholders through dividends in 2010 as part of which we issued 18,288,566 shares to shareholders who elected to receive new shares instead of cash.

DIVIDENDS

Our policy is to grow the US dollar dividend in line with our view of the underlying earnings and cash flow of Shell. When setting the dividend, the Board of Directors looks at a range of factors, including the macro environment, the current balance sheet and future investment plans. In addition, we may choose to return cash to shareholders through share buybacks, subject to the capital requirements of Shell. In September 2010, we introduced a Scrip Dividend Programme that enables shareholders to increase their shareholding by electing to receive any dividends declared by the Board in the form of new shares instead of cash.

NET CAPITAL INVESTMENT

Our capital investment was \$30.6 billion in 2010 (2009: \$31.7 billion). Proceeds from divestments were \$6.9 billion in 2010 (2009: \$2.9 billion).

SHARE REPURCHASES

During 2009 and 2010, the Company did not purchase any of its ordinary shares for cancellation.

$\blacktriangleright$ shell.com/innovation

OUR PEOPLE

Shell employed an average of around 97,000 people in over 90 countries during the year. Our people are recruited, trained and recompensed according to a People Strateav based on four priorities: assuring sources of talent now and in the future; strengthening leadership and professionalism; enhancing individual and organisational performance; and improving systems and processes. In 2010, our People Strategy remained unchanged, but much of its execution focused on making our new organisational structure work.

2010 EMPLOYEES BY GEOGRAPHICAL AREA

average numbers

ORGANISATIONAL AND BEHAVIOURAL CHANGE

The 2009 reorganisation involved building $-$ from the top down $-$ a simpler, leaner organisational structure with clearer accountabilities, enabling more customer focus and faster decision making. It reinforces our belief that Shell can become the world's most innovative and competitive energy company. We announced that 7.000 staff would leave Shell as a result of this restructuring. This process was completed in 2010. As at December 31, 2010, Shell employed approximately 93,000 people.

Our focus has now shifted to individual and organisational performance. We identified five behavioural imperatives that can be applied in daily work: external focus; commercial mindset; delivery; speed; and simplicity. Our Human Resources systems and delivery programmes will encourage these characteristics as we carry out our work. Despite staff reductions in 2010, we maintained external recruitment in order to deliver our strategy and plans in the future. The majority of our graduates and experienced hires continues to come from technical disciplines. We also continue to transfer work to our growing business service centres around the world.

EMPLOYEE COMMUNICATION AND INVOLVEMENT

Two-way dialogue with our staff - directly and, where appropriate, via staff councils or recognised trade unions - is important to us. It is part and parcel of our work practices. On a quarterly basis, staff are able to learn of Shell's operational and financial results from a variety of sources, including letters to staff from the Chief Executive Officer, webcasts, publications and face-to-face gatherings.

The Shell People Survey is one of the principal tools used to measure employee engagement: the degree of affiliation and commitment to Shell. It provides valuable insights into employees' views and it has had a consistently high response rate. The average index score in 2010 was 71% favourable, which is a decrease of 7 percentage points from the 2009 index score.

We encourage safe and confidential reporting of views about our processes and practices. Our global telephone helpline and website enable employees to report breaches of our Code of Conduct and the Shell General Business Principles, confidentially and anonymously (see page 26 1).

DIVERSITY AND INCLUSION

We have a long-standing commitment to create a culture that embraces diversity and fosters inclusion (D&I). By embedding these principles in our operations, we better understand the needs of our varied customers, partners and stakeholders throughout the world. Our intent is to provide equal opportunity in recruitment, career development, promotion, training and reward for all employees, including those with disabilities.

By the end of 2010, the proportion of women in senior leadership positions had risen to 15.3%, compared with 14.0% in 2009. In 36% of the countries where Shell companies are based, local nationals filled more than half the senior leadership positions, compared with 37% in 2009.

Our third global D&I target focuses on employees' perception of inclusion in our working culture. It is monitored by means of an indicator that is an average of the responses to five questions in the Shell People Survey. In 2010, the D&I indicator was 66% favourable, which is a decrease of 3 percentage points from 2009.

FNVIRONMENT AND SOCIFTY

Our success in business depends on our ability to meet a range of environmental and social challenges. We must show we can operate safely and manage the effect our activities can have on neighbouring communities and society as a whole. If we fail to do this, we may lose opportunities to do business, our reputation as a company may be harmed, and our "licence to operate" may be impacted.

The Shell General Business Principles include a commitment to sustainable development that involves balancing short- and long-term interests, and integrating economic, environmental and social aspects into our business decisions. We have rigorous standards and a firm governance structure in place to help manage potential impacts. We also work with communities, partners and nongovernmental organisations (NGOs) among others to tackle potential impacts and share benefits of our operations and projects.

SAFFTY

The Deepwater Horizon incident in 2010, with its tragic loss of life and environmental pollution, impacted our entire industry. We are reviewing recommendations from investigations into the incident, and comparing them to our existing standards and operating practices. Emerging regulations may have implications for us, including further project delays.

Sustaining our licence to operate depends on maintaining the safety and reliability of our operations. They include exploration and production projects, refineries and chemicals plants. We manage safety risk across our businesses through rigorous controls and compliance systems combined with a safety-focused culture. Our global standards and operating procedures define the controls and physical barriers we require to prevent incidents. For example, our offshore wells are designed with at least two independent barriers to minimise the risk of uncontrolled release of hydrocarbons. We regularly inspect, test and maintain these barriers to ensure they are meeting our standards.

CLIMATE CHANGE

Growth in energy demand means that all forms of energy will be needed over the

longer term. With hydrocarbons forecast to provide the bulk of the energy needed over the coming decades, policy makers are focusing on regulations which balance energy demand with environmental concerns. The management of carbon dioxide $(CO_2)$ emissions – the most significant greenhouse gas (GHG) - will become increasingly important as concerns over climate change lead to tighter environmental regulations.

As energy demand increases and easily accessible oil and gas resources decline, Shell is developing resources that take more energy and advanced technology to produce. This growth includes expanding our conventional oil and gas business, our oil sands operations in Canada, our gas-to-liquids (GTL) business in Qatar and our global liquefied natural gas (LNG) business. As our business grows, there will be an associated increase in our Upstream CO₂ emissions.

We are seeking cost-effective ways to manage CO₂ and see potential business opportunities in developing such solutions. Our main contributions to reducing CO₂ emissions are in four areas: supplying more natural gas; supplying more biofuels; progressing carbon capture and storage; and implementing energy efficiency measures in our operations.

Around one-third of the world's CO₂ emissions comes from power generation. For most countries, using more gas in power generation can make the largest contribution, at the lowest cost, to meeting their emission reduction objectives this decade. In combination with renewables and carbon capture and storage, natural gas is also essential for a significantly lower CO₂ pathway beyond 2020. With Shell's leading position in LNG and new technologies in recovering natural gas from tight rock formations, we can supply natural gas to replace coal in power generation.

We see biofuels as the most practical and commercially viable way to reduce CO₂ emissions from transport fuels over the coming years. When finalised, our proposed Raízen joint venture with Cosan in Brazil will produce 2 billion litres annually of ethanol from sugar cane - the best performing of today's biofuels in terms of CO₂ emissions. We are also investing in research to develop and commercialise advanced biofuels.

The International Energy Agency has said carbon capture and storage could contribute as much as 19% of the CO₂ mitigation effort required by 2050. To advance these technologies Shell is involved in projects, including the Mongstad test centre in Norway, the Gorgon project in Australia and the Quest project in Canada.

We continue to focus on implementing energy efficiency measures in our operations. In 2010, we met the voluntary taraet that we set in 1998 for the direct GHG emissions from the facilities we operate to be at least 5% lower than our comparable 1990 level. The flaring, or burning off, of gas in our Upstream business contributed to our overall GHG emissions in 2010. The majority of this flaring takes place at facilities where there is no infrastructure to capture gas produced with oil. Most of the continuous flaring takes place in Nigeria, where the security situation and a lack of funding from the government partner had previously slowed progress on projects to capture associated gas. In 2010, SPDC began working on projects worth \$2 billion that will help further reduce gas flaring.

We have also started to meet customer demands to help them conserve energy and reduce their CO₂ emissions. Shell's FuelSave, for example, is one of the most advanced fuel-economy gasolines in the world. Any petrol car can use it, and drivers can on average save up to one litre of fuel per 50-litre fill-up.

SPILLS

Large spills of crude oil and oil products can incur major clean-up costs. They can also affect our licence to operate and harm our reputation. Oil spills resulting from sabotage and theft of crude oil in Nigeria remain significant, but there are still instances where spills occur in our operations from operational failures, accidents or corrosion. Shell has clear requirements and procedures to prevent spills, and multi-billion dollar programmes are underway to maintain or improve our facilities and pipelines. These efforts have helped reduce the number of operational spills in recent years.

In the event that a spill occurs, we have in place a number of recovery measures to minimise the impact. Our major installations have plans to respond to a spill. We are able to call upon significant resources such

as containment booms, collection vessels and aircraft. We conduct reaular response exercises to ensure these plans remain effective

OIL SANDS TAILINGS AND LAND RECLAMATION

Tailinas are a mixture of sand, clay, water and heavy metals left over after bitumen - an extra-heavy oil - has been removed from the mined ore. Tailings contain naturally occurring chemicals that are toxic, so we continually monitor them, assess their potential environmental impact, and take measures to protect wildlife and to prevent contamination of surface water and groundwater.

The land used in our oil sands mining must be reclaimed - for example, through revegetation or reforestation - to a state that matches its pre-mined condition, as required by the Alberta government. When dried, tailings are used in the reclamation process. In 2010, we started up a commercial-scale field demonstration to speed up the drying of tailings. We also announced plans to share our tailings research and technology with other oil sands operators and to collaborate on future research.

WATER

As world energy demand rises, the energy industry is becoming one of the larger industrial consumers of fresh water globally. Shell's water footprint may expand in the future with the development of unconventional resources, such as tight gas and oil sands, and our biofuels business. A combination of growing stakeholder expectations, water-related legislation and demand for water resources may drive action that affects our ability to secure access to fresh water and to discharge water from our operations.

We develop and use advanced technologies to reduce our need for fresh water. For example, our petrochemical complex in Singapore uses our proprietary OMEGA technology to make monoethylene glycol - a raw material for the manufacture of polyester and antifreeze. The OMEGA process uses 20% less steam than conventional processes.

At our oil sands project in Canada we use far less than our water allocation from the Athabasca River, and we minimise the amount withdrawn during the winter months, when the flow rate is low. We also recycle water from collection ponds for tailings.

Once operational, our Pearl GTL plant in Qatar will take no fresh water from its arid surroundings. Instead, it will recycle water produced by the GTL manufacturing processes.

BIOFUELS

In 2010, we sold 9.6 billion litres of

biofuels in petrol or diesel blends, making us one of the world's laraest biofuel distributors. In new and renewed contracts with suppliers, we introduce sustainability clauses covering workers' rights and the protection of biodiversity. By the end of 2010, 83% of our suppliers by volume had signed up to these clauses.

We are developing our capabilities to produce sustainable biofuels components.

Our proposed \$12 billion Raízen joint venture with Cosan in Brazil will produce 2 billion litres annually of ethanol from sugar cane - the most sustainable and cost-competitive of today's biofuels. Sugar-based ethanol can reduce net CO₂ emissions by up to 70% compared with petrol.

We continue to invest in developing more advanced biofuels for the future. These new technologies will take time to reach commercial scale. Government support will be required to accelerate their speed of development.

NEIGHBOURING COMMUNITIES

Gaining the trust of local communities is essential to the success of our projects and operations. In 2010, we introduced global requirements for "social performance" - how we perform in our relationship with communities. The requirements set clear rules and expectations for how we engage and respect communities that may be impacted by our operations. All major installations and new projects appoint a person who is responsible for assessing social impacts and working with management to find ways to mitigate them. We also have specific requirements for minimising our impact on indigenous peoples' traditional lifestyles, and on handling involuntary resettlement and arievance issues.

More environmental and social performance data can be found in the Shell Sustainability Report 2010 to be published in April 2011 on www.shell.com/sustainability

shell.com/environmentsociety

THE BOARD OF ROYAL DUTCH SHELL PIC

Jorma Ollila E 10 CHAIRMAN

Born August 15, 1950. A Finnish national, appointed Chairman of the Company with effect from June 2006. He started his career at Citibank in London and Helsinki, before moving in 1985 to Nokia, where he became Vice President of International Operations. In 1986, he was appointed Senior Vice President Finance and between 1990 and 1992 he served as President of Nokia Mobile Phones, Between 1992 and 1999 he was President and Chief Executive Officer of Nokia, and from 1999 to June 2006 he was Chairman and Chief Executive Officer. He is currently Chairman of the Board of Nokia.

Lord Kerr of Kinlochard GCMG M M M M M

DEPUTY CHAIRMAN AND SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR Born February 22, 1942. A British national, appointed a Non-executive Director of the Company in October 2004. He was a Nonexecutive Director of Shell Transport from 2002 to 2005. A member of the UK Diplomatic Service from 1966 to 2002, he was UK Permanent Representative to the EU, British Ambassador to the USA and Foreign Office Permanent Under Secretary of State. In 2004, he became an independent Member of the House of Lords. He is a Non-executive Director of Rio Tinto plc, Scottish American Investment Company plc and Scottish Power, a BAE Systems Advisory Board member and Chairman of Imperial College and the Centre for European Reform.

Peter Voser CHIEF EXECUTIVE OFFICER Born August 29, 1958. A Swiss national, appointed Chief Executive Officer of the Company with effect from July 2009. Previously, Chief Financial Officer since October 2004. He first joined Shell in 1982 and held a variety of finance and business roles in Switzerland, the UK, Argentina and Chile, including Chief Financial Officer of Oil Products. In 2002, he

joined the Asea Brown Boveri (ABB) Group of Companies, based in Switzerland as Chief Financial Officer and member of the ABB Group Executive Committee. He returned to Shell in October 2004, when he became a Managing Director of Shell Transport and Chief Financial Officer of the Royal Dutch/Shell Group. He was a member of the Supervisory Board of Aegon N.V. from 2004 until 2006, a member of the Supervisory Board of UBS AG from 2005 until April 2010 and a member of the Swiss Federal Auditor Oversight Authority from 2006 until December 2010. He is currently a Director of Catalyst, a non-profit organisation which works to build inclusive environments and expand opportunities for women and business, and was appointed to the Board of Directors of Roche Holdings Limited at its 2011 AGM. Peter is also active in a number of international and bilateral organisations, including the European Round Table of Industrialists and The Business Council.

CHIEF FINANCIAL OFFICER

Born July 13, 1961. A British national, appointed Chief Financial Officer of the Company with effect from May 2009. He joined Shell in 1982 as an engineer at the Stanlow refinery in the UK. After qualifying as a member of the Chartered Institute of Management Accountants in 1989, he held various finance posts, including Finance Manager of Marketing in Egypt, Controller for the Upstream business in Egypt, Oil Products Finance Adviser for Asia-Pacific, Finance Director for the Mekong Cluster and General Manager Finance for the South East Asian Retail business. He was appointed Head of Group Investor Relations in 2001 and Chief Financial Officer for Exploration & Production in 2004.

Malcolm Brinded CBE EXECUTIVE DIRECTOR, UPSTREAM INTERNATIONAL

Born March 18, 1953. A British national, appointed an Executive Director of the Company in October 2004 responsible for global Exploration & Production, and from July 2009 for Upstream International. He was previously a Managing Director of Shell Transport from March 2004 and, prior to that, a Managing Director of

Royal Dutch from 2002. He joined Shell in 1974 and has held various positions around the world including in Brunei, the Netherlands and Oman. He was also Country Chair for Shell in the UK. He is a member of the Niaerian Presidential Honorary International Investor Council, Chairman of the Shell Foundation and a Trustee of the Emirates Foundation and the International Business Leaders Forum. In October 2010, he was appointed a Non-executive Director of Network Rail.

Josef Ackermann MIM NON-EXECUTIVE DIRECTOR Born February 7, 1948. A Swiss national, appointed a Non-executive Director of the Company in May 2008. He is Chairman of the Management Board and the Group Executive Committee of Deutsche Bank AG. He was appointed to these positions in 2006 and 2002 respectively. He joined Deutsche Bank's Management Board in 1996, with responsibility for the investment banking division. He started his professional career in 1977 at Schweizerische Kreditanstalt (SKA), where he held a variety of positions in corporate banking, foreign exchange/money markets, treasury and investment banking. In 1990, he was appointed to SKA's Executive Board, on which he served as President between 1993 and 1996. He is currently also a member of the Supervisory Board of Siemens AG and a member of the Board of Directors of Zurich Financial Services Limited.

Guy Elliott MIG NON-EXECUTIVE DIRECTOR Born December 26, 1955. A British national, appointed a Non-executive Director of the Company with effect from September 2010. He is Chief Financial Officer of Rio Tinto plc and Rio Tinto Limited, positions he has held since 2002. Following a period in investment banking, he joined the Rio Tinto Group in 1980 after gaining an MBA at INSEAD. He has held a variety of marketing, strategy and general management positions, including Head of Business Evaluation and President of Rio Tinto Brasil. He was Non-executive Director and Senior Independent Director of Cadbury plc from 2007 and 2008 respectively until March 2010, and served as Chairman of the Audit Committee until April 2009.

Charles O. Holliday MMIOO NON-EXECUTIVE DIRECTOR

Born March 9, 1948. A US national, appointed a Non-executive Director of the Company with effect from September 2010. He served as Chief Executive Officer of DuPont from 1998 to January 2009 and Chairman from 1999 to December 2009. He joined DuPont in 1970 after receiving a B.S. in industrial engineering from the University of Tennessee and held various manufacturing and business assignments including President of DuPont Asia/Pacific, living in Tokyo for six years, before becoming Chairman and Chief Executive Officer. He previously served as Chairman of the World Business Council for Sustainable Development, Chairman of The Business Council, Chairman of Catalyst and Chairman of the Society of Chemical Industry - American Section and is a founding member of the International Business Council. He is a Director of Bank of America Corporation and Deere & Company.

Gerard Kleisterlee MI NON-EXECUTIVE DIRECTOR

Born September 28, 1946. A Dutch national, appointed a Non-executive Director of the Company with effect from November 2010. He is President/Chief Executive Officer and Chairman of the Board of Management of Koninklijke Philips Electronics N.V. since April 2001. After holding several positions within Philips since he joined it in 1974, he was appointed as Chief Executive Officer of Philips' Components division in 1999 and Executive Vice-President of Philips in 2000. He is a member of the European Round Table of Industrialists, Chairman of both IMD's Foundation Board and Executive Committee, member of the Supervisory Board of De Nederlandsche Bank N.V., Daimler AG and a Director of Dell Inc. He is also the Chairman of the Foundation of the Cancer Centre Amsterdam. [A]

[A] It was announced in February 2011 that Gerard Kleisterlee will be appointed as a Non-executive Director of Vodafone Group plc on April 1, 2011. He will succeed the Chairman of Vodafone following the retirement of the present incumbent at its 2011 AGM. Gerard Kleisterlee will retire from his current position at Koninklijke Philips Electronics N.V. on March 31, 2011.

Wim Kok G M

NON-EXECUTIVE DIRECTOR Born September 29, 1938. A Dutch national, appointed a Non-executive Director of the Company in October 2004. He was a member of the Royal Dutch Supervisory Board from 2003 to July 2005. He chaired the Confederation of Dutch Trade Unions (FNV) before becoming a Member of the Lower House of Parliament and parliamentary leader of the Partij van de Arbeid (Labour Party). Appointed Minister of Finance in 1989 and Prime Minister in 1994, serving for two periods of government up to July 2002. Member of the Supervisory Boards of KLM N.V. and TNT N.V.

Christine Morin-Postel @ IO NON-EXECUTIVE DIRECTOR

Born October 6, 1946. A French national, appointed a Non-executive Director of the Company in October 2004. She was a member of the Royal Dutch Supervisory Board from July 2004 and was a Board member of Royal Dutch until December 2005. Formerly she was Chief Executive of Société Générale de Belgique, Executive Vice-President and member of the Executive Committee of Suez S.A., Chairman and Chief Executive Officer of Crédisuez S.A. and a Non-executive Director of Pilkington plc and Alcan Inc. She is a Non-executive Director of 3i Group plc, British American Tobacco plc and EXOR S.p.A.

Jeroen van der Veer MIO NON-EXECUTIVE DIRECTOR Born October 27, 1947. A Dutch national,

appointed a Non-executive Director of the Company with effect from July 2009. Previously, Chief Executive since October 2004. He was appointed President of Royal Dutch in 2000, having been a Managing Director since 1997, and was a Board member until December 2005. He was a Director of Shell Canada Limited from April 2003 until April 2005. He joined Shell in 1971 in refinery process design and held a number of senior management positions around the world. He is Vice-Chairman and Senior Independent Director of Unilever (which includes Unilever N.V. and Unilever plc), Vice-Chairman of ING Group, a member of the Supervisory Board of Koninklijke Philips Electronics N.V. and has

various roles in several foundations and charities. [A]

[A] It was announced in February 2011 that Jeroen van der Veer will be appointed as Chairman of the Supervisory Board of Koninklijke Philips Electronics N.V. with effect from the close of business of its 2011 AGM and in March 2011 it was announced that he would be retiring as a Director of Unilever N.V. and Unilever plc with effect from the close of business of the Unilever N.V. 2011 AGM.

Hans Wijers G | @ @

NON-EXECUTIVE DIRECTOR Born January 11, 1951. A Dutch national, appointed a Non-executive Director of the Company with effect from January 2009. He is Chief Executive Officer and Chairman of the Board of Management of Akzo Nobel N.V. He joined Akzo Nobel N.V. in 2002 as a Board member, and was appointed Chairman in 2003. He obtained a PhD in economics in 1982 while teaching at the Erasmus University Rotterdam. Later he became Managing Partner of The Boston Consulting Group. He served as Dutch Minister for Economic Affairs from 1994 to 1998, after which he returned to The Boston Consulting Group as Senior Partner until his appointment as a Board member of Akzo Nobel N.V. He is a trustee of various charities and a member of the European Round Table of Industrialists.

Michiel Brandies COMPANY SECRETARY

Born December 14, 1954. A Dutch national. appointed as Company Secretary and General Counsel Corporate of the Company in February 2005. Previously he was Company Secretary of Royal Dutch. He joined Shell in 1980 as a Legal Adviser.

On March 9, 2011, the Board approved certain changes to Board Committee membership. Subject to Directors' reappointment at the 2011 AGM, the new arrangements are with effect from May 18, 2011.

BOARD COMMITTEE MEMBERSHIP

	Current	New
Audit Committee
Corporate and Social Responsibility Committee
Nomination and Succession Committee
Remuneration Committee
Chairman
Member

SUMMARY REPORT OF THE DIRECTORS

Business Review

The information relating to the Business Review can be found in the "Chairman's message" on page 2 , the "Chief Executive Officer's review" on pages 4 and 5 and also in the "Summary Business Review" on pages 6 to 17 , all of which are incorporated in this report by way of reference. Throughout this Summary Report of the Directors, the Board aims to present a balanced and understandable assessment of the Company's position and prospects in its reporting to shareholders and other interested parties.

Board of Directors

The Directors during the year were Josef Ackermann, Malcolm Brinded, Guy Elliott (appointed with effect from September 1, 2010), Simon Henry, Charles O. Holliday (appointed with effect from September 1, 2010), Sir Peter Job (stood down with effect from May 18, 2010), Lord Kerr of Kinlochard, Gerard Kleisterlee (appointed with effect from November 1, 2010), Wim Kok, Nick Land (stood down with effect from October 31, 2010), Christine MorinPostel, Jorma Ollila, Lawrence Ricciardi (stood down with effect from May 18, 2010), Jeroen van der Veer, Peter Voser and Hans Wijers.

Appointment and reappointment of directors

In line with the 2010 UK Corporate Governance Code, all Directors will retire at each Annual General Meeting (AGM) and, subject to the Articles of Association and their wish to continue as a Director of the Company, seek reappointment by shareholders. This practice was introduced at the 2010 AGM. At the 2011 AGM, Wim Kok will not be seeking reappointment. He will be standing down after having served eight years as a Non-executive Director. Shareholders will also be asked to vote on the appointment of Linda G. Stuntz as a Director of the Company with effect from June 1, 2011. It was announced on March 9, 2011, that Linda G. Stuntz will become a member of the Audit Committee with effect from June 1, 2011, subject to her appointment as a Director of the Company at the 2011 AGM.

Directors	' interests

	January 1, 2010[A]			December 31, 2010 [B]
	Class A	Class B	Class A	Class B
Josef Ackermann	10,000	–	10,000	–
Malcolm Brinded	20,028	140,855	20,240	141,941
Guy Elliott	–	3,177[C]	–	3,177
Simon Henry	4,175	38,673	4,175	49,836
Charles O. Holliday	–	–[C]	–	20,000[D]
Lord Kerr of Kinlochard	–	15,000	–	17,500
Gerard Kleisterlee	–	–[C]	–	–
Wim Kok	4,000	–	4,000	–
Christine Morin-Postel	8,485	–	8,485	–
Jorma Ollila	25,000	–	25,000	–
Jeroen van der Veer	190,195	–	190,195	–
Peter Voser	90,694	–	110,694	–
Hans Wijers	5,000	–	5,251	–

[A] Excludes interests in shares or options awarded under the Long-term Incentive Plan, the Deferred Bonus Plan, the Restricted Share Plan and the share option plans as at January 1, 2010.

[B] Excludes interests in shares or options awarded under the Long-term Incentive Plan, the Deferred Bonus Plan, the Restricted Share Plan and the share option plans as at December 31, 2010.

[C] At the date of appointment.

[D] Held as 10,000 ADSs (RDS.B ADS). One RDS.B ADS represents two Class B shares.

The biographies of all Directors are given on pages 18 and 19 and, for those seeking appointment or reappointment, also in the Notice of the AGM. Details of the Executive Directors' contracts can be found on page 24 and copies are available for inspection from the Company Secretary. Furthermore, a copy of the form of these contracts has been filed with the US Securities and Exchange Commission as an exhibit.

The terms and conditions of appointment of Non-executive Directors are set out in their letters of appointment with the Company which, in accordance with the 2010 UK Corporate Governance Code, are available for inspection from the Company Secretary. No Director is, or was, materially interested in any contract subsisting during or at the end of the year that was significant in relation to the Company's business.

Qualifying third-party indemnities

The Company has entered into a deed of indemnity with each Director under identical terms. The deeds indemnify the Directors to the widest extent permitted by the applicable laws of England against all liability incurred as a Director or employee of the Company or of certain other entities.

Directors' interests

There were no changes in Directors' share interests during the period from December 31, 2010, to March 9, 2011, except for those changes in the interests in shares or options awarded under the Longterm Incentive Plan, the Deferred Bonus Plan, the Restricted Share Plan and the share option plans.

As at March 9, 2011, the Directors and Senior Management [A] of the Company beneficially owned individually and in aggregate (including shares under option) less than 1% of the total shares of each class of the Company shares outstanding.

[A] Matthias Bichsel, Hugh Mitchell, Marvin Odum, Peter Rees and Mark Williams.

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SUMMARY DIRECTORS' REMUNERATION REPORT

In 2010, we built on the strong foundations of 2009's constructive engagements with major shareholders and shareholder institutions. We continued our dialogue to ensure that the proposals we put in place in 2010 were in line with shareholders' views. The issues raised during the year were: Executive Directors' contracts, the clawback of incentives and the proration of long-term incentives on the termination of a Director's employment. We considered their input, discussed our proposals with shareholders again and decided to implement additional changes to Executive Directors' remuneration policy from 2011.

Given the economic and regulatory environment and the continuing focus on executive remuneration, our ongoing dialogue is critical. The general satisfaction from the shareholders we have met gives us confidence that our remuneration policies are well suited to promote Shell's long-term success. We remain committed to our dialogue with shareholders about remuneration and after the publication of the 2010 Annual Report and Form 20-F, we will be holding further meetings with major shareholders to obtain their feedback and ensure future alianment between their views and those of the Remuneration Committee (REMCO).

The table summarises 2010 compensation for Executive Directors. The earnings amount includes salary, bonus paid in 2011 for 2010 performance and other cash and non-cash remuneration. The

2010 SUMMARY COMPENSATION (UNAUDITED)			€ THOUSAND
	Peter Voser	Malcolm Brinded	Simon Henry
Earnings [A]	5,361	3,523	2,456
Value of released LTIP awards [B]	0	0
Value of released DBP awards	179	188	0
Value of released PSP awards			419[C]
Value of exercised share options	0	1,342	0
Total compensation
in euro	5,540	5,053	2,875
in dollar	7,337	6,692	3,807
in sterling	4,750	4,332	2,465

[A] More details can be found on page 25.

[B] Represent the value of 2007 LTIP awards that vested in March 2010.

[C] Value of performance shares Simon Henry received prior to his appointment as an Executive Director, released in March 2010.

amounts shown as "value of released DBP awards" represent the value of matching shares delivered at vesting of 2007 Deferred Bonus Plan (DBP) awards on bonuses from 2006, less the original amount deferred.

EXECUTIVE DIRECTORS

The Executive Director remuneration package comprises a base salary, an annual bonus, long-term incentives, as well as a pension plan and other benefits.

REMCO considers the link between an Executive Director's pay and Shell's business strategy as critical. Most of the compensation package is therefore linked to the achievement of stretch targets that are consistent with the execution of Shell's strategy.

BASE SALARY

REMCO determines remuneration levels by reference to companies of comparable size, complexity and global scope. The current key comparator group consists of BP, Chevron, ExxonMobil and Total as well as a selection of top Europe-based companies.

Executive Directors' salaries were frozen since June 2009, except for promotional adjustments. REMCO reviewed Executive Directors' annual base salary levels and made the following decisions regarding salary adjustments as of January 1, 2011: Chief Executive Officer Peter Voser's salary was set at €1.550.000: Executive Director Malcolm Brinded's salary remained at €1,175,000; and Chief Financial Officer Simon Henry's salary was set at €890,000.

STRATEGIC ALIGNMENT
Short term	Medium term	Longer term
PERFORMANCE FOCUS	PRODUCTION GROWTH	NEXT-GENERATION PROJECT OPTIONS
SUPPORTED BY COMPETITIVE BASE SALARIES AND ANNUAL BONUS MEASURES: $\blacksquare$ Cash flow • Operational excellence • Sustainable development, underpinned by safety	SUPPORTED BY LTIP OPERATIONAL MEASURES: $\bullet$ Cash flow growth • Hydrocarbon production growth "Total shareholder return (TSR) Earnings per share (EPS) growth on a CCS basis	SUPPORTED BY LONG-TERM PERSONAL SHAREHOLDING

ANNUAL BONUS

REMCO uses the annual bonus to focus on the short-term targets that the Board sets each year as part of the Business Plan and on individual performance against these targets.

They are a balance of stretching but realistic financial, operational, project delivery and sustainable development targets, captured in a scorecard, set and approved by REMCO. The outcome of the performance year is usually known in February of the next year, and REMCO translates this into a score between zero and two. REMCO exercises its judgement to make sure that the final annual bonus results for Executive Directors are in line with Shell's current year performance.

REMCO set the Executive Directors' Scorecard result at 1.37, noting that:

• " cash flow from operations was above target at \$27.4 billion;
• · operational excellence was above target:
• project delivery was above target, with selected projects being delivered on time and on budget;
• hydrocarbon production was above target at 3,314 thousand boe/d;
• LNG sales was above target at 16.76 mtpa; and
• refinery availability was on target at 92.4%
• · Shell's sustainability performance in 2010 improved compared with 2009:
• occupational safety, as measured by the total recordable case frequency (TRCF), was outstanding at 1.2 per million working hours - the lowest level Shell has recorded: and
• the Sustainable Asset Management (SAM) company's assessment, which is used by the Dow Jones Sustainability Indexes (DJSI), reported overall improvement in Shell's sustainable development performance. The 10% of the Executive Directors' Scorecard that is linked to the DISI was based on that assessment; however, considering

Shell's exclusion from the DJSI World Index in 2010, REMCO decided to apply downward discretion and set the DISI/SAM-linked 10% on the scorecard to zero, REMCO determined not to use DJSI/SAM in the Executive Directors' Scorecard for 2011.

For the 2011 Executive Directors' Scorecard, the DISI/SAM assessment of sustainable development will be replaced with a combination of targeted internal indicators (10% weight): operational spills (in number and volume): energy efficiency: and fresh water use, REMCO considered the assessment by DJSI/SAM and in consultation with the Corporate and Social Responsibility Committee determined that these measures, in addition to the existing safety measure (10% weight), reflect some of the most important sustainability issues faced by Shell.

The target level of the 2010 bonuses as a percentage of base salary was unchanged from 2009: 150% for the Chief Executive Officer and 110% for the other Executive Directors. The maximum bonus levels for the Chief Executive Officer and other Executive Directors were 250% and 220% respectively.

REMCO took into account the 2010 Executive Directors' Scorecard result and individual performances and determined the annual bonuses payable for 2010 for Executive Directors. For the Chief Executive Officer, this outcome resulted in the annual bonus amount exceeding the existing maximum level of 250% of his base salary. REMCO applied the limit, and determined the Chief Executive Officer's bonus as €3,750,000 (250% of base salary). Executive Director Malcolm Brinded's annual bonus was determined as €2,302,000 (196% of base salary) and the Chief Financial Officer's annual bonus as €1,537,000 (181% of base salary).

LONG-TERM INCENTIVES

There are two main long-term incentive programmes currently in use: the Long-term Incentive Plan (LTIP) and the Deferred Bonus Plan (DBP). Consistent with the long-term nature of Shell's strategy, LTIP and DBP determine more than half of an Executive Director's remuneration. Both plans grant share-based awards linked to the future price and dividends of Royal Dutch Shell plc shares. Awards vest depending on Shell's performance against predefined measures and targets over a three-year

performance period. These plans focus on performance relative to the other oil majors: BP, Chevron, ExxonMobil and Total. They reward Executive Directors if Shell outperforms its peers on the basis of a combination of total shareholder return, earnings per share growth on the basis of current cost of supplies, net cash arowth from operating activities and hydrocarbon production arowth.

The LTIP and DBP vest on the basis of relative performance rankings:

RELATIVE PERFORMANCE RANKINGS
Shell's overall rank	Number of
against peers, taking	conditional
into account the	performance
weightings of the four	shares ultimately
performance measures	awarded
1st	2 x initial LTIP award
	2 x half of the deferred
	bonus shares
2nd	1.5 x initial ITIP award
	1.5 x half of the deferred
	bonus shares
3rd	0.8 x initial LTIP award
	$0.8 \times$ half of the deferred
	bonus shares
4th or 5th	Nil

Proration While annual bonus, and consequently the DBP award, is already prorated in the final year of employment, as of 2011. LTIP awards will also be prorated on an Executive Director's departure based on service within the performance period. The prorated awards will vest at the end of the performance period, subject to satisfaction of performance conditions. REMCO retains the discretion to modify the prorating if it considers that this would not be appropriate.

Vesting In 2008, Executive Directors were granted conditional awards of performance shares under the LTIP and matching shares under the DBP. At the end of the performance period, which was from January 1, 2008, to December 31, 2010, Shell was ranked second amongst its peer group in terms of TSR. REMCO also considered the underlying financial performance of Royal Dutch Shell plc and decided to release 150% of shares under the LTIP, and 150% of performancerelated matching shares under the DBP.

Award On February 1, 2011, REMCO determined to award the Chief Executive Officer a conditional award of performance UJCTGU-WPFGT-VJG-.6+2-YKVJ-C-HCEG-XCNWG-QH-VJTGG-VKOGU-JKU-DCUG-UCNCT[-CPF--VKOGU-DCUG-UCNCT[-HQT-QVJGT-'ZGEWVKXG-&KTGEVQTU-

TIMELINE FOR 2011 LTIP SHARE AWARDS

Performance period Retention period
February Award			Vesting		Release
2011	2012	2013	2014	2015	2016

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TIMELINE FOR 2010 DEFERRED BONUS PLAN
Performance period for annual
bonus		Deferral period
	February Award			Release
2010	2011	2012	2013	2014

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COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

Shell paid and/or accrued a total amount of compensation of \$42,291,000 [A] (2009: \$48,895,000) for services in all capacities that Directors and Senior Management at Shell provided during the year ended December 31, 2010. In addition, Shell accrued a total amount of \$6,583,000 (excluding inflation), to provide pension, retirement and similar benefits for Directors and Senior Management during the year ended December 31, 2010.

[A] Compensation includes gains realised from long-term incentive awards released and share options exercised during the year.

More details can be found in the full Directors' Remuneration Report in the Annual Report and Form 20-F for the year ended December 31, 2010, on www.shell.com/annualreport

PERFORMANCE GRAPHS

The graphs below compare the TSR performance of Royal Dutch Shell plc over the past five financial years with that of the companies comprising the Euronext 100 share index and the FTSE 100 share index. The Board reaards the Euronext 100 and the FTSE 100 share indices as appropriate broad market equity indices for comparison, as they are the leading market indices in Royal Dutch Shell plc home markets.

EARNINGS OF EXECUTIVE DIRECTORS IN OFFICE DURING 2010 (AUDITED)						€ THOUSAND
		Peter Voser		Malcolm Brinded		Simon Henry[A]
	2010	2009	2010	2009	2010	2009
Salary	1,500	1,267	1,175	1,175	850	449
Bonus [B]	3,750	1,864	2,302	1,422	1,537	542
Cash benefits [C]	107	23		8	29	76
Non-cash benefits [D]	4	3	45	49	40	2
Total earnings
in euro	5,361	3,157	3,523	2,654	2,456	1,069
in dollar	7,100	4,390	4,666	3,692	3,253	1,486
in sterling	4,596	2,814	3,020	2,367	2,106	952

[A] 2009 earnings for Simon Henry relate to his time as Executive Director (May-December 2009).

[B] The annual bonus figures are shown in the table in their related performance year and not in the year in which they are paid.

[C] Includes employer contributions to insurance plans, school fees, car allowances and tax compensation.

[D] Comprises life and medical insurance, company-provided transport for home-to-office commuting and lease cars.

The aggregate amount paid to or receivable by Executive Directors from Royal Dutch Shell plc and other Shell companies for services in all capacities during the fiscal year ended December 31, 2010, was €11,340,000 (2009: €16,927,000, which includes earnings of Linda Cook and Jeroen van der Veer, who served as Executive Directors in 2009).

EARNINGS OF NON-EXECUTIVE DIRECTORS IN OFFICE DURING 2010 (AUDITED)				THOUSAND
		2010		2009
Non-executive Directors	€	\$	€	\$
Josef Ackermann	132	175	132	184
Guy Elliott [A]	47	62
Charles O. Holliday [A]	47	63
Sir Peter Job [B]	50	67	146	202
Lord Kerr of Kinlochard	224	297	207	288
Gerard Kleisterlee [C]	23	31
Wim Kok	162	215	162	225
Nick Land [D]	131	174	145	202
Christine Morin-Postel	160	212	160	223
Jorma Ollila [E]	750	993	750	1,043
Lawrence Ricciardi [F]	62	82	163	227
Jeroen van der Veer	132	175	66	92
Hans Wijers	150	199	137	190

[A] Guy Elliott and Charles O. Holliday were appointed with effect from September 1, 2010.

[B] Sir Peter Job stood down with effect from May 18, 2010.

[C] Gerard Kleisterlee was appointed with effect from November 1, 2010.

[D] Nick Land stood down with effect from October 31, 2010.

[E] Jorma Ollila received no additional payments for chairing the Nomination and Succession Committee and for membership of the Remuneration Committee. He has the use of an apartment when on business in the Hague.

[F] Lawrence Ricciardi stood down with effect from May 18, 2010.

HISTORICAL TSR PERFORMANCE OF ROYAL DUTCH SHELL PLC

Growth in the value of a hypothetical €100 holding and £100 holding over five years. Euronext 100 and FTSE 100 comparison based on 30 trading day average values.

SUMMARY OF CORPORATE GOVERNANCE

The Company is committed to the highest standards of corporate governance and believes that such standards are essential to business integrity and performance. This report on Corporate governance sets out the policies and practices of the Company that have been applied during the year.

The Board confirms that during the year the Company complied with the principles and provisions set out in Section 1 of the 2008 Combined Code on Corporate Governance (the Combined Code) except that for the period from May to December only two of the three members of the Remuneration Committee were deemed to be wholly independent. This issue was addressed with the appointment of Charles O. Holliday, a wholly independent Non-executive Director, as a member of the Committee with effect from January 1, 2011.

In addition to complying with applicable corporate governance requirements in the UK, the Company must follow the rules of the Euronext Amsterdam Stock Exchange as well as the Dutch securities laws because of its listing on this exchange. The Company must likewise follow US securities laws and the New York Stock Exchange (NYSE) rules and regulations because its securities are registered in the USA and listed on the NYSE.

NYSE GOVERNANCE STANDARDS

In accordance with the NYSE rules for foreign private issuers, the Company follows home-country practice in relation to corporate governance. However, foreign private issuers are required to have an audit committee that satisfies the requirements of the US Securities and Exchange Commission's Rule 10A-3. The Company's Audit Committee satisfies such requirements. The NYSE also requires a foreign private issuer to provide certain written affirmations and notices to the NYSE as well as a summary of the ways in which its corporate governance practices significantly differ from those followed by domestic US companies under NYSE listing standards.

SHELL GENERAL BUSINESS PRINCIPLES

The Shell General Business Principles define how Shell companies are expected to conduct their affairs. These principles include, among other things, Shell's commitment to support fundamental human rights in line with the legitimate role of business and to contribute to sustainable development.

SHELL CODE OF CONDUCT

Directors and employees are required to comply with the Shell Code of Conduct, which is intended to help them put Shell's business principles into practice. The Code clarifies the basic rules and standards they are expected to follow and the behaviours they are expected to apply. The Shell Code of Conduct was revised in 2010.

CODE OF ETHICS

Executive Directors and Senior Financial Officers of Shell must also comply with a Code of Ethics. The Code is specifically intended to meet the requirements of Section 406 of the Sarbanes-Oxley Act and the listing requirements of the NYSE (see above).

SHELL GLOBAL HELPLINE

Employees, contract staff and third parties with whom Shell has a business relationship (such as customers, suppliers and agents) may raise ethics and compliance concerns through the Shell Global Helpline. The Shell Global Helpline is a worldwide reporting mechanism, operated by an external third party, which is open 24 hours a day, seven days a week through local telephone numbers and through the internet.

BOARD STRUCTURE AND COMPOSITION

For the period up to the 2010 AGM the Board comprised the Chairman, Jorma Ollila; three Executive Directors including the Chief Executive Officer; and nine Nonexecutive Directors, including the Deputy Chairman and Senior Independent Nonexecutive Director, Lord Kerr of Kinlochard.

At the 2010 AGM, Charles O. Holliday was appointed a Non-executive Director with effect from September 1, 2010, and Sir Peter Job and Lawrence Ricciardi stood

down as Non-executive Directors, Nick Land also stood down as a Non-executive Director with effect from October 31, 2010. Guy Elliott and Gerard Kleisterlee were appointed Non-executive Directors with effect from September 1, 2010, and November 1, 2010, respectively. As a result of these changes, the Board comprises the Chairman, three Executive Directors and nine Non-executive Directors. A list of current Directors, with their biographies, is given on pages 18 and 19 图.

The Board meets eight times a year and has a formal schedule of matters reserved to it. This includes: overall strategy and management; corporate structure and capital structure; financial reporting and controls; internal controls; approval of the Annual Report and Form 20-F; approval of interim dividends; significant contracts; and succession planning and new Board appointments.

ROLE OF DIRECTORS

The roles of the Chairman, a non-executive role, and the Chief Executive Officer are separate, and the Board has agreed their respective responsibilities. The Chairman, Jorma Ollila, is responsible for the leadership and management of the Board and for ensuring that the Board and its committees function effectively. The Chief Executive Officer, Peter Voser, bears overall responsibility for the implementation of the strategy agreed by the Board, the operational management of the Company and the business enterprises connected with it. He is supported in this by the Executive Committee, which he chairs.

NON-EXECUTIVE DIRECTORS

Non-executive Directors are appointed for specified terms of office, subject to the provisions of the Articles of Association (the Articles) regarding their appointment and reappointment at the AGM. Appointments are subject to three months' notice, and there is no compensation provision for early termination.

The Non-executive Directors bring a wide range of skills and international business

experience to Shell. They also bring independent judgement on issues of strategy, performance and risk through their contribution to Board meetings and to the Board's committee meetings. The Chairman and the Non-executive Directors meet routinely without the Executive Directors to discuss, amona other thinas, the performance of individual Directors.

All the Non-executive Directors as at the end of 2010 are considered by the Board to be wholly independent, with the exception of Jeroen van der Veer who served as Chief Executive up until his retirement from that role on June 30, 2009. The standard by which Directors' independence is determined can be found within the Nomination and Succession Committee Terms of Reference.

SIGNIFICANT COMMITMENTS OF THE CHAIRMAN

The Chairman's other significant commitments are given in his biography on page 18 Th.

BOARD ACTIVITIES DURING THE YEAR

The Board met eight times during the year, seven of which meetings were held in the Hague, the Netherlands. The agenda for each meeting comprised a number of regular items, including reports from each of the Board committees and from the Chief Executive Officer, the Chief Financial Officer and the other members of the Executive Committee. At most meetings the Board also considered a number of investment, divestment and financing proposals. During the year the Board considered numerous strategic issues and approved each of the quarterly and full-year financial results and dividend announcements. The Board received regular reports from the various functions, including Corporate (which includes Human Resources, Health and Security), Legal and Finance (which includes Investor Relations).

INDUCTION AND TRAINING

Following appointment to the Board, Directors receive a comprehensive induction tailored to their individual needs. This includes meetings with senior management to enable them to build up a detailed understanding of Shell's business and strategy, and the key risks and issues with which they are faced. Throughout the year, regular updates on developments in legal matters, governance and accounting are provided to Directors. The Board regards site visits as an integral part of ongoing Director training. Additional training is available so that Directors can update their skills and knowledge as appropriate.

EXECUTIVE COMMITTEE

The Executive Committee operates under the direction of the Chief Executive Officer

ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS [A]
			Corporate and	Nomination
			Social	and
			Audit Responsibility	Succession	Remuneration
	Board	Committee	Committee	Committee	Committee
Josef Ackermann	6/8				4/5
Malcolm Brinded	8/8
Guy Elliott	3/3	1/1
Simon Henry	8/8
Charles O. Holliday	3/3
Sir Peter Job	2/2				2/2
Lord Kerr of Kinlochard	8/8	5/5	4/4	7/7
Gerard Kleisterlee	1/1	0/0
Wim Kok	8/8		4/4	7/7
Nick Land	6/7	5/5	4/4
Christine Morin-Postel	8/8	5/5
Jorma Ollila	8/8			7/7	3/3
Lawrence Ricciardi	2/2			2/2
Jeroen van der Veer	8/8		4/4
Peter Voser	8/8
Hans Wijers	8/8				5/5

[A] The first figure represents attendance and the second figure the possible number of meetings. For example, 6/8 signifies attendance at six out of eight possible meetings. Where a Director stepped down from the Board or a Board committee during the year, or was appointed during the year, only meetings before stepping down or after the date of appointment are shown.

in support of his responsibility for the overall management of the Company's business and affairs. The Chief Executive Officer has final authority in all matters of management that are not within the duties and authorities of the Board or of the shareholders' general meeting.

EXECUTIVE COMMITTEE

Peter Voser	Chief Executive Officer
Matthias Bichsel	Projects & Technology Director
Malcolm Brinded	Executive Director Upstream International
Simon Henry	Chief Financial Officer
Hugh Mitchell	Chief Human Resources & Corporate Officer
Marvin Odum	Upstream Americas Director
Peter Rees	Legal Director [A]
Mark Williams	Downstream Director

[A] Peter Rees was appointed as Legal Director and a member of the Executive Committee with effect from January 1, 2011, following the retirement of Beat Hess with effect from December 31, 2010.

BOARD COMMITTEES

There are four Board committees made up of Non-executive Directors.

Audit Committee

The current members of the Audit Committee are Christine Morin-Postel (Chairman of the Committee), Guy Elliott (with effect from September 1, 2010), Lord Kerr of Kinlochard and Gerard Kleisterlee (with effect from November 1, 2010), all of whom are financially literate, independent. Non-executive Directors, Nick Land stood down as a Director of the Company and member of the Committee with effect from October 31, 2010. For the purposes of the 2010 UK Corporate Governance Code, Christine Morin-Postel qualifies as a person with "recent and relevant financial experience" and for the purposes of US securities laws is an "audit committee financial expert". The Committee met five times during the year and Committee members' attendances are shown in the table on this page.

The key responsibilities of the Committee are to assist the Board in fulfilling its oversight responsibilities in relation to: internal control and financial reporting; the effectiveness of the risk management and internal control system; compliance with applicable external legal and regulatory requirements; monitoring the qualifications, expertise, resources and independence of both the internal and external auditors; and assessing each year the auditors' performance and effectiveness.

The Committee keeps the Board informed of the Committee's activities and recommendations. Where the Committee is not satisfied with, or wherever it considers action or improvement is required concerning any aspect of, risk management and internal control, financial reporting or audit-related activities, it promptly reports these concerns to the Board. It invites the external auditors, the Chief Financial Officer, the Chief Internal Auditor, the Executive Vice-President Controller and the Vice-President Accounting and Reporting to attend each meeting. Other members of management attend as and when requested. The Committee also holds private sessions with the external auditors and the Chief Internal Auditor without members of management being present.

Corporate and Social Responsibility Committee

The members of the Corporate and Social Responsibility Committee are Wim Kok (Chairman of the Committee), Charles O. Holliday (with effect from January 1, 2011), Lord Kerr of Kinlochard and Jeroen van der Veer. Nick Land stood down as a Director of the Company and member of the Committee with effect from October 31, 2010. The Committee met four times during the year and Committee members' attendances are shown on page 27 4

The aim of the Committee is to maintain a comprehensive overview of the policies and conduct of the subsidiaries of the Company with respect to: the Shell General Business Principles; sustainable development; health, safety, security, the environment and social performance; the Shell Code of Conduct; and major issues of public concern. It reports its own conclusions and recommendations to executive management and the Board. In this regard, the Committee fulfils its responsibilities by reviewing with management: Shell's overall health, safety, security, environmental and social performance; Shell's annual performance against the Code of Conduct; the management of social and environmental impacts at major projects and operations; and emerging social and environmental issues. It additionally provides input for Shell's Sustainability Report and reviews a draft of the Report before publication. It also meets face-toface with the Report's External Review Committee.

In addition to holding regular formal meetings, the Committee also visits Shell locations, meeting with local staff and external stakeholders in order to observe how Shell's standards regarding health, safety, security, the environment and social performance are being implemented in practice. During 2010, the Committee visited the Pernis refinery and Nederlandse Aardolie Maatschappii (NAM) production facilities, both located in the Netherlands, as well as Shell's operations in the Niger Delta

Nomination and Succession Committee

The members of the Nomination and Succession Committee are Jorma Ollila (Chairman of the Committee), Lord Kerr of Kinlochard and Wim Kok. Lawrence Ricciardi stood down as a Director of the Company and member of the Committee with effect from the close of business of the 2010 AGM held on May 18, 2010. The Committee met seven times during the year and Committee members' attendances are shown on page 27

The Committee keeps under review the leadership needs of the Company. It identifies and nominates suitable candidates for the Board's approval to fill vacancies as and when they arise. The Committee also makes recommendations on who should be appointed Chairman of the Audit Committee, the Corporate and Social Responsibility Committee and the Remuneration Committee In consultation with the relevant chairman it also recommends who should sit on the Board committees. It makes recommendations on corporate governance quidelines, monitors compliance with corporate governance requirements and makes recommendations on disclosures connected to corporate governance and its appointment processes.

During the year, the Committee dealt with issues related to: director search, succession and nomination; Board committee membership rotation; and the executive management structure. It also considered: the Dodd-FrankWall Street Reform and Consumer Protection Act; induction arrangements for new Non-executive Directors; and the Terms of Reference of various Board committees. Additionally, it conducted an evaluation of the Company's corporate governance arrangements. Finally, the Committee dealt with the Board evaluation process and considered any potential conflicts of interest and the independence of the Non-executive Directors.

Remuneration Committee

The members of the Remuneration Committee are Hans Wijers (Chairman of the Committee), Josef Ackermann and Charles O. Holliday (with effect from January 1, 2011). Sir Peter Job stood down as a Director of the Company and member of the Committee with effect from the close of business of the 2010 AGM held on May 18, 2010. He was succeeded as a member of the Committee by Jorma Ollila. lorma Ollila stood down as a member of the Committee with effect from December 31, 2010. The Committee met five times during the year and Committee members' attendances are shown on page 27 F.

The Committee determines and agrees with the Board the remuneration policy for the Chief Executive Officer and Executive Directors and, within the terms of this policy, determines the individual remuneration package for the Chief Executive Officer and the Executive Directors. The Committee also considers and advises on the terms of any contract to be offered to an Executive Director. It monitors the remuneration for other senior executives and makes recommendations. The Committee's Terms of Reference were amended in 2010 to align with the latest developments in UK corporate governance concerning remuneration.

In 2010, the Committee built on 2009's constructive engagements with major shareholders and shareholder bodies. These engagements gave shareholders the opportunity to raise issues of concern, to ensure that the proposals the Committee put in place in 2010 were in line with shareholders' views. The Committee intends to continue its dialogue about remuneration with major shareholders. After the publication of the 2010 Annual Report and Form 20-F, it will be holding further meetings with major shareholders to obtain their feedback and ensure future alignment between their views and the Committee's.

BOARD EVALUATION

The Board carried out a performance evaluation of itself, its Committees, the Chairman and each of the Directors. As in previous years, this was led by the Nomination and Succession Committee, which on this occasion engaged an external facilitator to assist in the process.

The full Board discussed the results of the evaluation of the Board and its committees.

EVALUATION
Body or Director to be	Online questionnaires	Reports prepared by external
evaluated	completed by:	facilitator and sent to:
Board as a whole	All Directors	Chairman
Chairman	All Directors	Deputy Chairman
Directors	All Directors	Chairman
Board committees	Committee members	Committee chairmen

whereas the results of the evaluation of the Chief Executive Officer and the other Executive Directors were discussed by the Chairman and the Non-executive Directors. The evaluation of the Chairman was discussed by the full Board in the Chairman's absence.

RESULTS PRESENTATIONS AND ANALYSTS MEETINGS

The quarterly and annual results presentations and all major analysts meetings are announced in advance on the Shell website and through a regulatory release. These presentations can be followed live via webcasting or tele-conference. Other meetings with analysts or investors are not normally announced in advance, nor can they be followed by webcast or any other means. Discussions in such meetings are always limited to information already in the public domain. Presentations in such meetings are available at www.shell.com. This is in line with the requirement to ensure that all shareholders and other parties in the financial market have eaual and simultaneous access to information that may influence the price of the Company's securities. The Chairman, the Deputy Chairman, the Chief Executive Officer, the Chief Financial Officer and the Executive Vice-President Investor Relations report regularly to the Directors on the views of major shareholders.

GOING CONCERN

The Directors consider that, taking into account the assets and income of Shell, the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors adopt the going concern basis for the Summary Consolidated Financial Statements contained in this Review.

CONTROLS AND PROCEDURES

The Board is responsible for Shell's system of internal control and for reviewing its effectiveness. It has delegated authority to the Audit Committee to assist it in fulfilling its responsibilities in relation to internal control and financial reporting.

A single overall control framework is in place that is designed to manage rather than eliminate the risk of failure to achieve business objectives. It therefore only provides a reasonable and not an absolute assurance against material misstatement or loss. In general, the Shell Control Framework applies to all wholly-owned Shell companies and to those ventures and other companies in which the Company, directly or indirectly, has a controlling interest.

The following diagram illustrates the Control Framework's key components, Foundations, Organisation and Processes. "Foundations" comprise the objectives, principles and rules that underpin and establish boundaries for Shell's activities. "Organisation" sets out how the various legal entities relate to each other and how their business activities are organised and managed. "Processes" refer to the more material processes, including how authority is delegated, how strategy, planning and appraisal are used to improve performance, how compliance is managed and how assurance is provided. All control activities relate to one or more of these components.

The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks to the achievement of Shell's objectives. This has been in place throughout the year and, up to the date of this Review, is regularly reviewed by the Board and accords with the avidance for directors, known as the Turnbull Guidance.

Shell has a variety of processes for obtaining assurance on the adequacy of risk management and internal control. The Executive Committee and the Audit Committee regularly consider group-level risks and associated control mechanisms. The Board has conducted its annual review of the effectiveness of Shell's system of risk management and internal controls, including financial, operational and compliance controls.

More Corporate governance information can be found at www.shell.com/investor

• " a summary of the ways in which our practices differ from NYSE standards for US companies;
• . the terms of reference that explain the roles and responsibilities of the four Board committees:
• . the list of matters reserved for the Board for decision:
• . the Shell General Business Principles:
• . the Code of Conduct:
• . the Code of Ethics for Executive Directors and Senior Financial Officers; and
• . the Articles of Association.

CONTROL FRAMEWORK

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

These Summary Consolidated Financial Statements are an abridged version of the Consolidated Financial Statements of Shell and of the Directors' Remuneration Report for 2010. They do not contain sufficient information to allow for a full understanding of the results and the state of affairs of Shell. and of its policies and of arrangements concerning Directors' remuneration. The auditors' report on the Consolidated Financial Statements and the auditable part of the Directors' Remuneration Report was ungualified.

For further information consult the full 2010 Annual Report and Form 20-F at www.shell.com/annualreport

SUMMARY CONSOLIDATED STATEMENT OF INCOME		\$ MILLION
	2010	2009
Total revenue and other income	378,152	285,129
Income before taxation	35,344	21,020
Taxation	14,870	8,302
Income for the period	20,474	12,718
Income attributable to non-controlling interest	347	200
Income attributable to Royal Dutch Shell plc shareholders	20,127	12,518

EARNINGS PER SHARE
	2010	2009
Basic earnings per share	3.28	2.04
Diluted earnings per share	3.28	2.04

SHARES
	2010	2009
Basic weighted average number of Class A and B shares	6.132.640.190	6,124,906,119
Diluted weighted average number of Class A and B shares	6.139.300.098	6,128,921,813

SUMMARY CONSOLIDATED BALANCE SHEET (AT DECEMBER 31)		\$ MILLION
	2010	2009
Assets
Non-current assets	209,666	195,724
Current assets	112,894	96,457
Total assets	322,560	292,181
Liabilities
Non-current liabilities	72,228	69,257
Current liabilities	100,552	84,789
Total liabilities	172,780	154,046
Equity attributable to Royal Dutch Shell plc shareholders	148,013	136,431
Non-controlling interest	1,767	1,704
Total equity	149,780	138,135
Total liabilities and equity	322,560	292,181

/s/ Simon Henry

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS		S MILLION
	2010	2009
Net cash from operating activities (pre-tax)	42,712	30,731
Taxation paid	(15, 362)	(9, 243)
Net cash from operating activities	27,350	21,488
Net cash used in investing activities	(21, 972)	(26, 234)
Net cash used in financing activities	(1, 467)	(829
Increase/(decrease) in cash and cash equivalents before currency translation	3,911	(5, 575)
Currency translation differences relating to cash and cash equivalents	(186)	106
Increase/(decrease) in cash and cash equivalents	3,725	(5, 469)
Cash and cash equivalents at January 1	9,719	15,188
Cash and cash equivalents at December 31	13,444	9,719

SUMMARY RECONCILIATION OF NET DEBT [A]		\$ MILLION
	2010	2009
At January 1	(25, 314)	(8,081)
Cash flow
Borrowings	(9, 237)	(10, 597)
Cash and cash equivalents	3,911	(5, 575)
Other movements	(43)	(1,063)
Currency translation differences	(205)	$\overline{2}$
At December 31	(30, 888)	(25, 314)

[A] The Summary Reconciliation of Net Debt is not a primary statement and does not form part of the Summary Consolidated Statement of Cash Flows.

NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

1 NATURE OF THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

The Summary Consolidated Financial Statements have been derived from the Consolidated Financial Statements of Royal Dutch Shell plc ("the Company") and its subsidiaries (collectively known as "Shell").

The Consolidated Financial Statements have been prepared in accordance with the provisions of the Companies Act 2006, Article 4 of the International Accounting Standards (IAS) Regulation and with International Financial Reporting Standards (IFRS) as adopted by the European Union. As applied to Shell, there are no material differences from IFRS as issued by the International Accounting Standards Board (IASB), therefore the Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB.

The Consolidated Financial Statements are presented in US dollars (dollars) and include the financial statements of the Company and its subsidiaries, being those companies over which the Company, either directly or indirectly, has control through a majority of the voting rights or the right to

exercise control or to obtain the majority of the benefits and be exposed to the majority of the risks. Investments in companies over which Shell has the right to exercise significant influence but not control are classified as associated companies and are accounted for using the equity method. Interests in jointly controlled entities are also recognised using the equity method. Interests in jointly controlled assets are recognised by including the Shell share of assets, liabilities, income and expenses on a line-by-line basis.

2 DIVIDENDS

	S MILLION
	2010	2009
Interim dividends – Class A shares
Paid: \$1.68 per share
(2009: \$1.66)	5,239	5,969
Scrip: \$0.42 per share
(2009: n/a)	549
Total – Class A shares	5,788	5,969
Interim dividends – Class B shares
Paid: \$1.68 per share
(2009: \$1.66)	4.345	4,557
Scrip: \$0.42 per share
(2009: n/a)	63
Total – Class B shares	4,408	4,557
Total		10,196 10,526

On February 3, 2011, the Directors proposed a further interim dividend in respect of 2010 of \$0.42 per Class A share and \$0.42 per Class B share. The total dividend amounts to approximately \$2,629 million and is payable on March 25, 2011. Under the Scrip Dividend Programme, shareholders can elect to receive dividends in the form of Class A shares.

3 POST-BALANCE SHEET EVENTS

The sale of Shell's Rio Grande Valley portfolio in south Texas was concluded for agreed consideration of \$1.8 billion.

Shell agreed, subject to regulatory approval, a proposed divestment of the majority of its shareholdings in most of its Downstream businesses in Africa for total consideration of approximately \$1 billion.

Shell entered into an exclusivity agreement, expiring on April 1, 2011, under which Shell will sell its Stanlow refinery and associated local marketing businesses in the UK for total consideration of approximately \$1.3 billion.

INDEPENDENT AUDITORS' STATEMENT TO THE MEMBERS OF ROYAL DUTCH SHELL PIC

We have examined the Summary Consolidated Financial Statements, which comprise the Summary Consolidated Statement of Income, the Summary Consolidated Balance Sheet, the Summary Consolidated Statement of Cash Flows and the Notes to the Summary Consolidated Financial Statements together with the Summary Directors' Remuneration Report.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Directors are responsible for preparing the Annual Review and Summary Financial Statements in accordance with applicable United Kingdom law.

Our responsibility is to report to you our opinion on the consistency of the Summary Consolidated Financial Statements within the Annual Review and Summary Financial Statements with the full annual Consolidated Financial Statements, the Report of the Directors and the Directors' Remuneration Report, and their compliance with the relevant requirements of section 428 of the Companies Act 2006 and the regulations made thereunder.

We also read the other information contained in the Annual Review and Summary Financial Statements and consider the implications for our statement if we become aware of any apparent misstatements or material inconsistencies with the Summary Consolidated Financial Statements. The other information comprises the other items listed in the contents on page 1.

This statement, including the opinion, has been prepared for and only for the Company's members as a body in accordance with section 428 of the Companies Act 2006 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this statement is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We conducted our work in accordance with Bulletin 2008/3 issued by the Auditing Practices Board. Our report on the Company's full annual Consolidated Financial Statements describes the basis of

our audit opinion on those Consolidated Financial Statements, the Report of the Directors and the Directors' Remuneration Report.

OPINION

In our opinion the Summary Consolidated Financial Statements are consistent with the full annual Consolidated Financial Statements, the Report of the Directors and the Directors' Remuneration Report of Royal Dutch Shell plc for the year ended December 31, 2010, and comply with the applicable requirements of section 428 of the Companies Act 2006, and the regulations made thereunder.

PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors London March 9, 2011

Note:

• The maintenance and integrity of the Royal Dutch Shell plc website (www.shell.com) are the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the full annual Consolidated Financial Statements or the Summary Consolidated Financial Statements since they were initially presented on the website.
• · Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

ADDITIONAL SHAREHOLDER INFORMATION

SHARES

The Company has two classes of ordinary shares, Class A shares and Class B shares. The principal trading market for the Class A shares is Euronext Amsterdam and the principal trading market for the Class B shares is the London Stock Exchange. Ordinary shares are traded in registered form.

American Depositary Shares (ADSs) representing Class A ADSs and Class B ADSs outstanding are listed on the New York Stock Exchange. Each ADS represents two €0.07 shares of Royal Dutch Shell plc.

The following table shows the high, low and year-end prices for the periods specified for the Company's registered ordinary shares on the principal trading markets:

• of €0.07 nominal value on the London Stock Exchange;
• of €0.07 nominal value on Euronext Amsterdam; and
• of the ADSs on the New York Stock Exchange for the periods specified (ADSs do not have a nominal value).

SHARE PRICES
	Euronext Amsterdam Class A shares					New York Stock Exchange
				Class A ADSs
	High	Low	Year-end	High	Low	Year-end
	€	€	€
2006	28.53	24.32	26.72	72.38	60.17	70.79
2007	31.35	23.72	28.75	88.31	62.71	84.20
2008	29.63	16.25	18.75	88.73	41.62	52.94
2009	21.46	15.27	21.10	63.75	38.29	60.11
2010	25.28	19.53	24.73	68.54	49.16	66.78
	London Stock Exchange			New York Stock Exchange
	Class B shares			Class B ADSs
	High	Low	Year-end	High	Low	Year-end
	pence	pence	pence
2006	2,071	1,686	1,790	74.93	62.75	71.15
2007	2,173	1,600	2,090	87.94	62.20	83.00
2008	2,245	1,223	1,726	87.54	41.41	51.43
2009	1,897	1,315	1,812	62.26	37.16	58.13
2010	2,149	,550	2,115	68.32	47.12	66.67

DIVIDENDS

CLASS A AND B SHARES
	2010	2009	2008
Q1	0.42	0.42	0.40
Q 2	0.42	0.42	0.40
Q 3	0.42	0.42	0.40
Q4	0.42	0.42	0.40
Total	1.68	1.68	1.60

CLASS A SHARES			$\in$ [A]
	2010	2009	2008
Q1	0.32	0.32	0.26
Q 2	0.32	0.30	0.26
Q 3	0.31	0.28	0.31
Q4	0.30	0.30	0.30
Total declared in respect of the year	1.25	1.21	1.13
Amount paid during the year	1.25	1.21	1.07

[A] Euro equivalent, rounded to the nearest euro cent.

CLASS B SHARES			PENCE [A]
	2010	2009	2008
Q1	27.37	28.65	20.05
Q 2	26.89	25.59	20.21
Q 3	26.72	25.65	24.54
Q4	25.82	26.36	27.97
Total declared in respect of the year	106.80	106.25	92.77
Amount paid during the year	107.34	107.86	82.91

CLASS A AND B ADSs -Ś. 2009 2010 2008 $\overline{Q1}$ $0.84$ $0.80$ $0.84$ $Q₂$ 0.84 0.84 0.80 $Q₃$ $0.84$ $0.84$ 0.80 $Q_4$ 0.84 0.84 0.80 Total declared in respect of the year 3.36 3.36 $3.20$ 3.36 3.32 $3.12$ Amount paid during the year

[A] Sterling equivalent.

SCRIP DIVIDEND PROGRAMME

In September 2010, the Company introduced a Scrip Dividend Programme which enables shareholders to increase their shareholding by choosing to receive new shares instead of cash dividends if declared by the Board. Only new Class A shares are issued under the programme, including to shareholders who hold Class B shares.

When the programme was introduced, the Dividend Reinvestment Plans (DRIPs) provided by Equiniti and Royal Bank of Scotland N.V. were withdrawn; the dividend reinvestment feature of the plan provided by The Bank of New York Mellon was likewise withdrawn. If shareholders participated in one of these plans, they were not in most cases automatically enrolled in the Scrip Dividend Programme and if they wished to join the programme had in most cases to elect to do so

The tax consequences of electing to receive new Class A shares in place of a cash dividend will depend on individual circumstances.

Further details regarding the taxation consequences of the Scrip Dividend Programme can be found at www.shell.com/dividend

hell.com/app_irmedia

SHELL INVESTOR & MEDIA APP

Keep up-to-date with the latest company news while on the move by accessing the Shell Investor & Media app with your smartphone:

• share prices;
• · latest media releases;
• dividend updates;
• · latest financial results:
• · financial calendar: and
• contact information.

FINANCIAL CALENDAR

Financial year enas	DECEMBER 01, ZOTO
Announcements
Full year results for 2010	February 3, 2011
First quarter results for 2011	April 28, 2011
Second quarter results for 2011	July 28, 2011
Third quarter results for 2011	October 27, 2011
Dividend timetable [A]
2010 Fourth quarter interim [B]
Announced	February 3, 2011
Ex-dividend date	February 9, 2011
Record date	February 11, 2011
Scrip Reference Price announcement date	February 16, 2011
Closing date for scrip election and currency election [C]	February 25, 2011
Euro and sterling equivalents announcement date	March 4, 2011
Payment date	March 25, 2011
2011 First quarter interim
Announced	April 28, 2011
Ex-dividend date	May 11, 2011
Record date	May 13, 2011
Scrip Reference Price announcement date	May 18, 2011
Closing date for scrip election and currency election [C]	May 27, 2011
Euro and sterling equivalents announcement date	June 3, 2011
Payment date	June 27, 2011
2011 Second quarter interim
Announced	July 28, 2011
Ex-dividend date	August 3, 2011
Record date	August 5, 2011
Scrip Reference Price announcement date	August 10, 2011
Closing date for scrip election and currency election [C]	August 19, 2011
Euro and sterling equivalents announcement date	August 26, 2011
Payment date	September 19, 2011
2011 Third quarter interim Announced	October 27, 2011
Ex-dividend date	November 2, 2011
Record date
	November 4, 2011
Scrip Reference Price announcement date	November 9, 2011
Closing date for scrip election and currency election [C] November 18, 2011
Euro and sterling equivalents announcement date	November 25, 2011
Payment date	December 16, 2011
Annual General Meeting	May 17, 2011

• [A] This timetable is the intended timetable as announced on October 28, 2010.
• [B] The Directors do not propose to recommend any further distribution in respect of 2010.
• [C] Different scrip and dividend currency election dates may apply to shareholders holding shares in a securities account with a bank or financial institution ultimately holding through Euroclear Nederland. Such shareholders can obtain the applicable deadlines from their broker, financial intermediary, bank or other financial institution where they hold their securities account. A different scrip election date may also apply to registered and non-registered ADS holders. Registered ADS holders can contact The Bank of New York Mellon for the applicable deadline. Nonregistered ADS holders can contact their broker, financial intermediary, bank or other financial institution for the applicable election deadline.

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