This Report combines the Annual Report and Accounts and the Annual Report on Form 20-F (“Report”) for the year ended December 31, 2007, for Royal Dutch Shell plc (“Royal Dutch Shell”, “the Company”) and its subsidiaries. It presents the Consolidated Financial Statements of Royal Dutch Shell (pages 112-161) and the Parent Company Financial Statements of Royal Dutch Shell (pages 182-194). This Report complies with all applicable UK regulations. This Report also includes the disclosure included in the Annual Report on Form 20-F for the year ended December 31, 2007, as filed with the U.S. Securities and Exchange Commission (“SEC”). Cross references to Form 20-F are set out on page 2 of this Report.

In this Report “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. “Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this Report refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this Report, associates and jointly controlled entities are also referred to as “equity-accounted investments”.

The term “Shell interest” is used for convenience to indicate the direct and/or indirect equity interest held by Shell in a venture, partnership or company (i.e., after exclusion of all third-party interests).

Except as otherwise specified, the figures shown in the tables in this Report represent those in respect of subsidiaries only, without deduction of minority interests. However, where figures are given specifically for oil production (net of royalties in kind), natural gas production available for sale, and both the refinery processing intake and total oil product sales volumes, the term “Shell share” is used for convenience to indicate not only the volumes to which subsidiaries are entitled (without deduction in respect of minority interests in subsidiaries) but also the portion of the volumes of equity-accounted investments to which Shell is entitled or which is proportionate to the Shell interest in those companies.

The Financial Statements contained in this Report have been prepared in accordance with the provisions of the Companies Act 1985, Article 4 of the International Accounting Standards (IAS) Regulation and with both International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and IFRS as adopted by the European Union. IFRS as defined above includes International Financial Reporting Interpretations Committee (“IFRIC”) interpretations.

Prior to the Shell’s date of transition to IFRS of January 1, 2004 it prepared Consolidated Financial Statements in accordance with US Generally Accepted Accounting Principles (“US GAAP”). Tables and disclosure that provide data over a five-year period show 2003 on a US GAAP basis.

The Consolidated Financial Statements of Royal Dutch Shell and its subsidiaries have been prepared using the carry-over basis to account for the Unification (see page 3) and on the basis that the resulting structure was in place throughout the periods presented.

Except as otherwise noted, the figures shown in this Report are stated in US dollars. As used herein all references to “dollars” or “$” are to the US currency.

The Operating and Financial Review (“OFR”) and other sections of this Report contain forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “objectives”, “outlook”, “probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should” and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this Report, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this Report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this Report. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this Report.

This Report contains references to Shell’s website. These references are for the readers’ convenience only. Shell is not incorporating by reference any information posted on www.shell.com.

DOCUMENTS ON DISPLAY

Documents concerning Royal Dutch Shell, or its predecessors for reporting purposes, which are referred to in this Report have been filed with the SEC and may be examined and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. For further information on the operation of the public reference room and the copy charges, please call the SEC at (800) SEC-0330. All of the SEC filings made electronically by Shell are available to the public at the SEC website at www.sec.gov (commission file number 001-32575). This Report, as well as the Annual Review, is also available, free of charge, at www.shell.com/annualreport or at the offices of Royal Dutch Shell in The Hague, the Netherlands and London, UK. You may also obtain copies of this Report, free of charge, by mail.

PART I						PAGES
Item 1.		Identity of Directors, Senior Management and Advisers					N/A
Item 2.		Offer Statistics and Expected Timetable					N/A
Item 3.		Key Information
		A.		Selected financial data			4-5, 207
		B.		Capitalisation and indebtedness			N/A
		C.		Reasons for the offer and use of proceeds			N/A
		D.		Risk factors			13-15
Item 4.		Information on the Company
		A.		History and development of the company			4-5, 10, 17-18, 21-22, 29-33, 35-40, 42-43, 45-48, 55-57, 117, 174-175
		B.		Business overview			10-12, 16-61, 66-75, 163-170
		C.		Organisational structure			3, E2-E4
		D.		Property, plant and equipment			10-12, 16-58, 68-71
Item 4A.		Unresolved Staff Comments					N/A
Item 5.		Operating and Financial Review and Prospects
		A.		Operating results			4-5, 10-12, 16-61
		B.		Liquidity and capital resources			62-65
		C.		Research and development, patents and licences, etc.			22, 36, 42, 46, 55, 59, 82, 121, 126
		D.		Trend information			10-12, 16-21, 34-36, 41-42, 44-45, 54-55
		E.		Off-balance sheet arrangements			64
		F.		Tabular disclosure of contractual obligations			65
		G.		Safe harbour		ii
Item 6.		Directors, Senior Management and Employees
		A.		Directors and senior management			80-85, 175
		B.		Compensation			93, 95-98
		C.		Board practices			82-92
		D.		Employees			66-67
		E.		Share ownership			76-77, 83
Item 7.		Major Shareholders and Related Party Transactions
		A.		Major shareholders			84, 173, 179
		B.		Related party transactions			83,134-135, 181, 203
		C.		Interests of experts and counsel			N/A
Item 8.		Financial Information
		A.		Consolidated Statements and Other Financial Information			50-52, 62, 110-161, 182-194, 195-203, 204-206
		B.		Significant Changes			82,161
Item 9.		The Offer and Listing
		A.		Offer and listing details			173, 204
		B.		Plan of distribution			N/A
		C.		Markets			173, 204
		D.		Selling shareholders			N/A
		E.		Dilution			N/A
		F.		Expenses of the issue			N/A
Item 10.		Additional Information
		A.		Share capital			N/A
		B.		Memorandum and articles of association			86, 106-107, 174-181
		C.		Material contracts			84, 103-104
		D.		Exchange controls			180
		E.		Taxation			180-181
		F.		Dividends and paying agents			N/A
		G.		Statement by experts			N/A
		H.		Documents on display		ii
		I.		Subsidiary Information			N/A
Item 11.		Quantitative and Qualitative Disclosures About Market Risk					90-91, 120, 145-149, 171-172
Item 12.		Description of Securities Other than Equity Securities					N/A
PART II						PAGES
Item 13.		Defaults, Dividend Arrearages and Delinquencies					N/A
Item 14.		Material Modifications to the Rights of Security Holders and Use of Proceeds					N/A
Item 15.		Controls and Procedures					90-92
Item 16.		[Reserved]
Item 16A.		Audit committee financial expert					87
Item 16B.		Code of Ethics					86
Item 16C.		Principal Accountant Fees and Services					77, 88, 158, 203
Item 16D.		Exemptions from the Listing Standards for Audit Committees					86
Item 16E.		Purchases of Equity Securities by the Issuer and Affiliated Purchasers					64
PART III						PAGES
Item 17.		Financial Statements					N/A
Item 18.		Financial Statements					111-161, 196-203
Item 19.		Exhibits					208

Abbreviations

The selected financial data set out below is derived, in part, from the Consolidated Financial Statements. The selected data should be read in conjunction with the Consolidated Financial Statements and related Notes, as well as the Operating and Financial Review in this Report.

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB). Prior to 2004, financial statements prepared in accordance with IFRS are not available. With effect from 2008, the usual five years of selected financial data will be provided.

With effect from 2007, wind and solar activities, which were previously reported within Other industry segments, are reported within the Gas & Power segment and Oil Sands activities, which were previously reported within the Exploration & Production segment, are reported as a separate segment. Prior period financial statements have been reclassified accordingly. During 2007, the hydrogen and CO₂ coordination activities were moved from Other industry segments to the Oil Products segment and all other activities within Other industry segments are now reported within the Corporate segment.

CONSOLIDATED STATEMENT OF INCOME DATA														$ million
		2007				2006				2005				2004
Revenue			355,782				318,845				306,731				266,386
Income from continuing operations			31,926				26,311				26,568				19,491
Income/(loss) from discontinued operations			–				–				(307	)			(234	)
Income for the period			31,926				26,311				26,261				19,257
Income attributable to minority interest			595				869				950				717
Income attributable to shareholders of Royal Dutch Shell plc			31,331				25,442				25,311				18,540

CONSOLIDATED BALANCE SHEET DATA														$ million
		2007				2006				2005				2004
Total assets			269,470				235,276				219,516				187,446
Share capital			536				545				571				604
Equity attributable to shareholders of Royal Dutch Shell plc			123,960				105,726				90,924				86,070
Minority interest			2,008				9,219				7,000				5,313
CAPITAL INVESTMENT														$ million
		2007				2006				2005				2004
Capital expenditure[A]:
– Exploration & Production			13,723				15,773				10,584				8,559
– Gas & Power			2,951				2,009				1,573				1,370
– Oil Sands			1,931				865				274				140
– Oil Products			3,671				3,363				2,810				2,761
– Chemicals			1,415				821				387				529
– Corporate			414				265				288				207
Total			24,105				23,096				15,916				13,566
Exploration expenses (excluding depreciation and release of currency translation differences)			1,115				949				815				651
New equity in equity-accounted investments			1,472				598				390				681
New loans to equity-accounted investments			380				253				315				377
Total capital investment*			27,072				24,896				17,436				15,275
*comprising
– Exploration & Production			15,919				17,079				11,772				9,569
– Gas & Power			3,532				2,351				1,656				1,652
– Oil Sands			1,931				865				274				139
– Oil Products			3,856				3,457				2,844				2,823
– Chemicals			1,419				877				599				868
– Corporate			415				267				291				224
Total			27,072				24,896				17,436				15,275

[A]		The difference between capital expenditure in this table and capital expenditure in the adjacent table (other consolidated data) relates to non-cash effects from new finance leases, the acquisition of assets with non-cash consideration and the pre-funding of working capital within jointly controlled assets.

QUARTERLY INCOME DATA (unaudited)																																						$ million
		Quarter 1				Quarter 2				Quarter 3				Quarter 4				2007 Year				Quarter 1				Quarter 2				Quarter 3				Quarter 4				2006 Year
Revenue			73,480				84,896				90,703				106,703				355,782				75,964				83,127				84,254				75,500				318,845
Cost of sales			60,666				68,715				76,713				90,603				296,697				61,922				67,838				70,383				62,846				262,989
Gross profit			12,814				16,181				13,990				16,100				59,085				14,042				15,289				13,871				12,654				55,856
Selling, distribution and administrative expenses			3,778				4,120				3,843				4,880				16,621				3,413				4,429				4,126				4,648				16,616
Exploration			272				450				608				382				1,712				281				250				401				630				1,562
Share of profit of equity-accounted investments			1,808				2,138				1,912				2,376				8,234				1,823				1,829				1,358				1,661				6,671
Interest and other income			1,125				747				340				486				2,698				441				228				346				413				1,428
Interest expense			224				270				302				312				1,108				286				275				286				302				1,149
Income before taxation			11,473				14,226				11,489				13,388				50,576				12,326				12,392				10,762				9,148				44,628
Taxation			4,032				5,415				4,448				4,755				18,650				5,310				4,865				4,507				3,635				18,317
Income for the period			7,441				8,811				7,041				8,633				31,926				7,016				7,527				6,255				5,513				26,311
Income attributable to minority interest			160				144				125				166				595				123				203				313				230				869
Income attributable to shareholders			7,281				8,667				6,916				8,467				31,331				6,893				7,324				5,942				5,283				25,442

Royal Dutch Shell plc     5

ROYAL DUTCH SHELL STRATEGY

Our strategy of More Upstream, Profitable Downstream remains unchanged. Realising our strategy will increasingly be shaped by what we believe are three hard truths: there has been a step-change in global energy demand as a result of a growing world population and the emerging economies of China and India entering into a more energy-intensive phase of their development; conventional supplies of oil and gas will struggle to keep pace with demand; and emissions of greenhouse gases, such as carbon dioxide (CO₂), will continue to rise with increased use of fossil fuels. Against this background Shell is leveraging a strong, wide-ranging energy portfolio and integrated value chains to meet the challenge of providing more energy in a secure and responsible way.

Against the background of high energy prices, competition for access to resources will remain intense. Cost inflation continues at a high rate, in certain cases exacerbated by a weakening US dollar. Capital cost inflation impacts the upstream and downstream projects alike. Continued focus on project delivery and on operational excellence will be key for success.

In our upstream businesses, we will continue to focus on developing major new projects with long, productive lives. In the downstream businesses, our emphasis will be on sustained cash generation and on continuing to reshape our portfolio with a focus on the faster growing markets of Asia Pacific. We create further value by managing our portfolio and leveraging our proprietary technology and the quality of our people.

Our strategy seeks to reinforce our position as a leader in the industry and provide investors with a competitive and sustained total shareholder return. In 2008, we expect around 80% of our capital investment will be in upstream and oil sands projects. In downstream, our capital programme will maintain and enhance our competitive position by improving the quality, safety and competitiveness of our refineries and building on our presence in growth markets.

Meeting growing world demand for energy in ways that minimise environmental and social impact is a major challenge for the global energy industry. Shell is committed to improving energy efficiency in its own operations and supporting customers in managing their energy demands. We are also working to create a world leading biofuels business and aim to build a material capability in the capture and storage of CO₂.

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 technologies and technical expertise will be telling factors in the growth of our business. Shell’s key strengths include the development and application of technology, the financial and project management skills that allow us to undertake large oil and gas projects, and the management of integrated value chains. We also benefit from having a diverse international business portfolio and customer-focused businesses built around the strength of the Shell brand. As such, we are well placed to be preferred partners for governments and other resource holders, now and in the future.

ACTIVITIES, INTERESTS AND PROPERTY

Our various activities are conducted in more than 110 countries and territories. Shell constitutes one of the largest independent oil and gas enterprises in the world (by a number of measures, including market capitalisation, operating cash flow and oil and gas production). Oil and gas, by far the largest of our business activities (including the oil and gas related revenues from the Exploration & Production, Gas & Power, Oil Sands and Oil Products segments), accounted for nearly 90% of revenue in 2007. We market oil products in more countries than any other oil company and have a strong position not only in the major industrialised countries but also in the developing ones. The distinctive Shell pecten (a trademark in use since the early part of the twentieth century) and trademarks in which the word Shell appears support this marketing effort throughout the world. Shell also ranks among the world’s major chemical companies (by sales); in 2007, the Chemicals segment accounted for just over 10% of the revenue of Shell.

A summary of revenue of Shell by business segment and by geographical region for the years 2005, 2006 and 2007 is set out below:

REVENUE BY BUSINESS SEGMENT (including intersegment sales)											$ million
			2007				2006				2005
EXPLORATION & PRODUCTION
Third parties				14,963				16,750				22,865
Intersegment				38,345				35,796				20,416
				53,308				52,546				43,281
GAS & POWER
Third parties				15,982				16,035				14,014
Intersegment				1,056				1,303				1,858
				17,038				17,338				15,872
OIL SANDS
Third parties				1,069				1,159				1,105
Intersegment				1,785				1,340				1,359
				2,854				2,499				2,464
OIL PRODUCTS
Third parties[A]				282,665				248,581				237,210
Intersegment				3,407				2,728				16,643
				286,072				251,309				253,853
CHEMICALS
Third parties[B]				41,046				36,306				31,018
Intersegment				4,865				4,444				3,978
				45,911				40,750				34,996
CORPORATE
Third parties				57				14				519
Intersegment				–				–				–
				57				14				519

Risk factors

Royal Dutch Shell plc     13

to it or do not deploy it effectively, it may affect delivery of the strategy as well as our operational performance and financial position.

RESOURCING CHALLENGES

CHANGES IN LEGISLATION AND FISCAL AND REGULATORY POLICIES

CURRENCY FLUCTUATIONS AND EXCHANGE CONTROLS

ECONOMIC AND FINANCIAL MARKET CONDITIONS

ESTIMATION OF RESERVES

SHAREHOLDER REMEDIES

ANTITRUST AND COMPETITION LAW

Competition Authority could result in enhanced fines. It is not uncommon for persons allegedly injured by antitrust violations to sue for damages. Both of these factors could have a material adverse effect on Shell’s results.

US GOVERNMENT SANCTIONS

PROPERTY AND LIABILITY

TRADING AND TREASURY

PENSION FUNDS

INTERNATIONAL DISPUTES

Royal Dutch Shell plc     15

EARNINGS 2007 COMPARED TO 2006 AND 2005

Shell businesses delivered strong operational and financial performance in 2007, resulting in earnings of $31.9 billion. Shell’s healthy financial position allowed it to return $13.4 billion to shareholders, through dividends and share repurchases, while capital investment reached $27.1 billion (see page 4). Return on average capital employed (ROACE)^[A], at the end of 2007 was 24.4% compared to 23.4% at the end of 2006. Gearing was 16.6% at the end of 2007 compared to 14.8% at the end of 2006. The 2007 dividend increased 13% to $1.44 per share compared to $1.27 in 2006.

The 2007 earnings were up 21% from 2006, which were in line with 2005. The increase in 2007 reflected higher oil and gas prices, the positive impact of increasing crude prices on our inventory, improved chemical margins and substantially higher interest and investment income, offset by lower production volumes, lower realised refining margins and lower trading contribution. In 2007, oil and gas production, including oil sands production, was 3,315 thousand boe/d, compared to 3,473 thousand boe/d in 2006. Production in 2007 reflected a combination of the positive and negative effects of several factors, including new field start-ups, reduced demand for natural gas in Europe, normal field declines, the impact of higher oil prices, and the security situation in Nigeria.

Exploration & Production earnings were $14,686 million in 2007 compared with $14,544 million in 2006, up 1%. Earnings reflected the impact of higher oil and gas prices, which were partly offset by lower production volumes, higher exploration expenses and higher costs, reflecting current industry conditions. In addition, earnings were lower as Shell’s share of earnings in the Sakhalin II project were reduced, following the partial divestment of the project in April 2007 and the resulting change of Sakhalin II from a fully consolidated subsidiary to an equity-accounted investment (Shell interest 27.5%). In 2006, earnings increased by 7% compared to 2005. This reflected higher oil prices, partly offset by lower production volumes, higher operating costs in line with industry conditions, increased pre-development activity levels and lower US gas prices.

Hydrocarbon prices were higher in 2007 compared with 2006 and 2005. Brent crude prices averaged $72.45 per barrel in 2007 compared with $65.10 in 2006 and $54.55 in 2005. West Texas Intermediate prices averaged $72.16 per barrel in 2007 compared with $66.04 in 2006 and $56.60 in 2005. Shell’s overall realised oil and natural gas liquids (NGL) prices were $67.99 a barrel, compared with $60.64 in 2006 and $50.59 in 2005. In the USA, realised oil and NGL prices averaged $66.49 a barrel, compared with $58.53 in 2006 and $48.94 in 2005. Outside the USA, realised oil and NGL prices averaged $68.24 a barrel compared with $60.99 in 2006 and $50.84 in 2005. Our overall realised gas prices averaged $5.14 per thousand standard cubic feet (scf) in 2007 compared with $5.08 in 2006 and $4.77 in 2005. In the USA, realised gas prices averaged $7.23 per thousand scf, compared with $7.74 in 2006 and $8.43 in 2005. Outside the USA, realised gas prices averaged $4.61 compared with $4.41 in 2006 and $3.84 in 2005.

Gas & Power earnings were up 6% in 2007 reaching $2,781 million, compared with $2,633 million in 2006 and $1,378 million in 2005.

[A]		ROACE is defined as income attributable to shareholders adjusted for Shell’s share of interest expense, after tax, as a percentage of Shell’s share of average capital employed for the period. Capital employed consists of total equity, current debt and non-current debt. For more information on ROACE see key performance indicators on pages 60 and 61.

Royal Dutch Shell plc     17

These portfolio actions had the following impact on Shell’s reserves. As a result of the Sakhalin II divestment, minority interests were reduced by 658 million boe and 402 million boe of proved reserves were transferred from Shell subsidiaries to the Shell share of equity-accounted investments. In addition, as a result of the acquisition of the minority interest in Shell Canada, minority interests were reduced by 72 million boe associated with Shell Canada’s proved oil and gas reserves and by 250 million boe associated with Shell Canada’s proven minable oil sands reserves.

At the end of the first quarter 2007, 100% of the Sakhalin II project net assets of approximately $15 billion were included in Shell’s balance sheet, offset by a minority interest of $6.7 billion representing the partners’ 45% interest in the project. As a result of the partial divestment, the consolidated financial statements of Shell no longer include the separate assets, liabilities and associated minority interest of the Sakhalin II project. Shell’s asset position in the project is now accounted for as an equity-accounted investment.

SEIC continues to be the operator of the Sakhalin II project. Gazprom and existing SEIC shareholders entered into an area of mutual interest arrangement, which covers both future Sakhalin area oil and gas exploration and production opportunities, and building of Sakhalin II into a regional oil and LNG hub.

PERFORMANCE AND CAPITAL

Please refer to pages 60-61 and 62-65 for discussion of key performance indicators and liquidity and capital resources.

RESERVES

In 2007, we entered into two exceptional transactions that affected our proved oil and gas and proven minable oil sands reserves position (see pages 17 and 18 for a full description of these transactions):

•		the divestment of 27.5% of our interest in the Sakhalin II project; and
•		our acquisition of the 22% minority interest in Shell Canada.

The effects of these exceptional transactions are complex in the context of our reported reserves position. The purpose of the adjacent table is to set out those effects, together with other changes in our reserves position that occurred during the year, on the same basis as they are evaluated by management. The table presents; the total net proved oil and gas reserves for Shell subsidiaries and the Shell share of equity-accounted investments; the total net proven minable oil sands reserves for Shell subsidiaries; and then eliminates the portion of the reserves that is attributable to the equity held by those with a minority interest in our subsidiaries. The result is the total net proved oil and gas and net proven minable oil sands reserves attributable to Royal Dutch Shell shareholders. We believe it is appropriate to summarise our overall reserves position in this manner as it reflects how we manage our reserve base, and that we do not distinguish between reserves of Shell subsidiaries and equity-accounted investments when making commercial investment decisions. We believe that this summary is necessary in the context of the transactions that occurred in 2007 in order for investors to have a fair and complete understanding of the effects of these transactions on our reserves position.

As shown in the table below, the material effects of the Sakhalin II divestment and Shell Canada acquisitions, together with other events, on proved oil and gas reserves and proven minable oil sands reserves attributed to Royal Dutch Shell shareholders consisted of the following:

•		We reduced the minority interest in our proved oil and gas reserves and our proven minable oil sands reserves from 999 million boe to 17 million boe, mainly as a result of the elimination of the minority interest in Shell Canada (including net proven minable oil sands reserves, 322 million boe) and the minority interest in Sakhalin (658 million boe). The figures quoted above between parentheses are before taking account of 2007 production.
•		While proved oil and gas reserves attributable to Royal Dutch Shell shareholders reflected the net reduction of 402 million boe of proved reserves relating to Sakhalin, this was offset by our development programme that yielded organic reserves additions of 1,315 million boe of additional proved oil and gas reserves (comprised of 228 million boe in relation to Shell subsidiaries and 1,087 million boe in relation to Shell’s share of equity-accounted investments) and 6 million boe of additional minable oil sands reserves.

After taking these two events into account, total net proved oil and gas reserves and net proven minable oil sands reserves attributable to Royal Dutch Shell shareholders decreased by 22 million boe in 2007, from 11,942 million boe to 11,920 million boe, or less than 0.2%. These totals reflect the volume impact of year-end driven price reductions of some 183 million boe for 2007 (largely due to our Qatar GTL project), 59 million boe for 2006 and 60 million boe for 2005.

	PROVED AND PROVEN RESERVES (At December 31)		million barrels of
			oil equivalent[C]
			2007				2006				2005
	Total net proved oil and gas reserves
	Shell subsidiaries			6,686				8,452				7,761
	Shell share of equity-accounted investments			4,140				3,355				3,705
	Total net proven minable oil sands reserves			1,111				1,134				746
	Total net minority interests share of Shell subsidiaries[A]			17				999				900
	Total net proved oil and gas and net proven minable oil sands reserves attributable to Royal Dutch Shell shareholders [B]			11,920				11,942				11,312

[A]		Total of minority interest associated with both net proved oil and gas reserves and net proven minable oil sands reserves.
[B]		Total of net proved oil and gas reserves and net proven minable oil sands reserves net of minority interests.
[C]		For this purpose, natural gas has been converted to barrels of oil equivalent using a factor of 5,800 standard cubic feet per barrel.

Investors should note that the above summary is presented to illustrate the complex effects of the two transactions that occurred during 2007. This summary should be read in the context of our Supplementary Information – Oil and gas (unaudited) and Supplementary Information – Oil sands (unaudited). This presentation has been included because we believe it is material to an investor’s understanding of our reserves position and the changes in 2007.

OUTLOOK AND STRATEGY

In 2007, the business environment for the exploration and production industry continued to be characterised by increasing oil prices (Brent average price in 2007 was $72.45 per barrel, up 11% from $65.10 per barrel in 2006) and activity levels. Associated with these increased prices, we saw tightness in the supply of oilfield goods and services, cost escalation and strong competition for new opportunities. Looking forward, we believe that the world will continue to experience a strong growth in energy demand due to population growth and economic development, and that after 2015 supplies of easy-to-access oil and gas will be increasingly challenged to keep up with demand.

The Exploration & Production strategy pursued consistently for the last four years remains unchanged and delivery is on track. We recognise that access to new resources continues to become more difficult as a result of host government requirements and strong competition for more conventional resources. Our strategy has four portfolio themes:

•		Sustaining our heartlands, i.e. our core countries that have the available infrastructure, expertise and remaining growth potential for Shell to sustain strong operational performance and support continued investment;
•		Focusing on new oil and gas projects where technology is a differentiator;
•		Building integrated gas opportunities; and
•		Unlocking unconventional oil and gas resources.

We continue to pursue an aggressive exploration programme to add more acreage in support of these themes. Our emphasis remains on drilling large exploration prospects, in selected basins and targeting under-explored areas with significant potential. We will also invest in organic growth, open up new positions and make selective acquisitions, divestments and asset swaps as a means to expand and revitalise our asset portfolio. In terms of our existing portfolio, we will continue to focus on production and project delivery, cost performance and operational excellence.

Shell seeks to sustain long-term production from our existing heartlands. This includes production from core countries such as Australia, Brunei, Canada, Denmark, Malaysia, the Netherlands, Nigeria, Norway, Oman, UK and USA.

We will look for further and stronger integrated gas positions such as in onshore USA, Europe, the Middle East, Russia, Africa and Australia. We will look to extend our leadership position in LNG, leveraging our presence across the natural gas value chain from exploration to production and markets, to maximise the value from our integrated gas projects. Examples of key project activity in this area include Sakhalin II in Russia, Nigeria LNG, Angel in North West Shelf, Australia and Qatargas 4. With respect to Nigeria, the impact of community disturbances in the western Delta continues to present a challenge. While we have achieved some success with restoring production in the western Delta, the security situation remains an ongoing risk to our business in Nigeria, not only affecting current production levels but also our ability to grow production in the future. It is difficult to work safely to repair damage to existing assets and construct new facilities. This situation will

20     Royal Dutch Shell plc

be closely monitored throughout 2008. Deep-water Nigeria production continues to perform well and has good prospects for future growth.

Leveraging technology is central to our strategy and we continue to increase our investment in research and development (R&D) and technology piloting. We remain focused on the development and application of technology as a key differentiator in securing access to good upstream opportunities and then delivering more value from them.

Such areas of focus include deep-water, enhanced oil recovery, tight gas, contaminated gas, heavy oil and GTL conversion. To build on our existing strengths, we have shifted our R&D emphasis further to subsurface and unconventional oil and gas technologies. For instance, in Canada, strengthened by the acquisition of the Shell Canada minority shares, we are maturing a variety of heavy oil opportunities. In the US Gulf of Mexico and Brazil, technology is key to the delivery of the Perdido and BC-10 deep-water projects respectively and in Qatar we are delivering the industry’s largest GTL facility. Across these themes we are increasing our portfolio of long-life projects, establishing new producing assets with low natural decline rates and high cash generation, especially at higher oil and gas prices.

Our focus on the reduction of costs will be sustained through optimised management of the supply chain and simplifying and standardising processes globally. We will continue to strengthen our capabilities in project delivery. Having people in place with the requisite skills is vital to the successful delivery of our strategy: in 2007 we recruited over 1,100 technical professionals in the upstream.

PRODUCTION

In 2007, hydrocarbon production (excluding production from oil sands) was 3,234 thousand boe per day. This was 5% lower than in 2006 and 6% lower than in 2005. Lower production in 2007 when compared with 2006 is attributable to field declines, divested volumes, one-off contractual settlements, and lower performance of non-operated assets, which were partly offset by new fields production and ramp-up volumes. The underlying production trend was down 2% compared with 2006 (excluding price impacts of production-sharing contracts (PSCs), divestments and one-off contractual settlements).

Field declines affecting oil production were seen in the USA, Brunei, Oman, Nigeria, Norway and UK during 2007. Operational shutdowns in the UK also impacted production levels. Similarly, natural gas production was impacted by declining fields in Malaysia, USA, UK and Canada as well as by lower seasonal demand in northwest Europe.

The effect of declining fields was partly offset by production from new fields. In China, Shell and PetroChina started commercial production and gas delivery from the Changbei gas field (Shell interest 50%). Located on the edge of the Maowusu desert in the Ordos Basin, it is the largest onshore Exploration & Production co-operative development Shell has had in China.

Shell achieved first offshore gas from the Pohokura field (Shell interest 48%) in New Zealand. This follows the delivery of onshore gas achieved in September 2006. First production was also delivered from the Deimos (Shell interest 71.5%) discovery in the Gulf of Mexico Mars Basin with an expected peak production for Phase 1 of 30,000 boe per day.