1. Unlocking Value Through New Relationships Malcolm Brinded Shell UK Country Chairman Co-Chair of ILT Member of OGITF/PILOT since December 1998

2. Infrastructure Technology Partnerships Regional synergies Access to gas market Quality service industry Govt understanding Asset trading North Sea Challenges …. and Opportunities Ageing infrastructure Basin maturity Small field size Commercial complexities Global competition

3. Changing relationships Government / Industry relationships Licensee relationships Operator / Supply Chain relationships

4. U.K. Government / Industry co-operation GOVERNMENT JOINT INDUSTRY 2010 VISION 3 mln boe/d £3 bln p.a. Capex + 100,000 jobs + 50% exports (by 2005) £1 bln extra revenue from new business TASK FORCE PILOT Simpler regulations Fiscal understanding Improved Licensing Encourage Asset trading Stimulating Exploration Improved supply chain management (LOGIC) Progressing Partnerships More collabn projects Increased joint R&D (ITF) Improved Skills devpt Accelerate Undeveloped Discoveries etc.

5. North Sea Relationships UK and Norwegian sectors have developed in parallel to date: –licences, pipelines, plants, support bases, regulatory frameworks –little evidence of co-operation This has served industry well so far: –establishment of national industries and businesses –development of local competencies / skills sets With the maturation of the North Sea shelf, new challenges present themselves... UK - Norwegian improved co-operation is a key opportunity maximising resource value –opening of markets –greater use of combined infrastructure (e.g. gas transport) prolonging asset life and jobs –harmonisation of standards –operational synergies –research/development increasing joint share of global exports –joint marketing in third-party countries Governments critical to success

6. Changing Licensee Relationships Top Explorer and Project Management Experience Operational and Subsurface Excellence Majors & large independents Focus major project development 500 mln boe, $ 1000 mln 1 or 2 partners new play exploration competition Majors, independents, financiers Focus small field commercialisation 20 mln boe, $ 80 mln 3-10 partners mature asset management co-operation

7. Changing operator/supply chain relationships The Past The Future? Short Term Bidding from Local Suppliers E-Commoditisation Global Sourcing Bundling of Orders E-procured On-line bidding Lowest Cost Wins Intimate Partnerships Long Term Global or Local Aligned High in knowledge/Innovation High Value Wins

8. Summary The oil & gas industry is driven by global competitiveness Managing a mature basin requires industry and government focus and co-operation The Offshore North Sea must operate as a single entity –maximising resource value –prolonging asset life and jobs –increasing joint share of global exports –Governments, operators and contractors are critical to success Intentions must become Actions...