Compliments of a friend. His comment was 'this is a really big answer to a question that could have been brushed off.'
We do know the press article noting Shell/IOC negotiations preceded the CC by 3 hrs. The article was bolder and the CC answer defers to PNG Gov't as the entity Shell is courting more so than ennerOle.
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Martijn Rats - Morgan Stanley - Analyst
Hi, it's Martijn Rats at Morgan Stanley. The last time we were in this room, we all had a lot of questions why the dividend didn't go up more than it
went, and I think it is fair to say you expressed some caution and conservatism. Now we're having a quarter where Simon runs us through a list of
a few things that sort of seem to have gone against the results. And it sort of makes you wonder whether sort of back six months ago, you were
already thinking about perhaps some specific things that you might need to face during the year where you might really think about -- there is
always something that we need to anticipate.
I was just wondering if sort of in retrospect you can sort of comment on how that discussion went and how you see sort of that specific aspect
going forward?
Also with that I have one more smaller question. There seems to be a few headlines on discussions with InterOil in Papua New Guinea. I was
wondering if you could elaborate on that?
Peter Voser - Royal Dutch Shell Plc. - CEO
Yes, okay. I think, as it is dividend, they both go to Simon, but let me also just say something from here both in the Board -- the discussions with
the Board are very simple. They are on dividends. They are long-term and we have a policy and we take a long-term view. So short-time macroeconomic
assumptions do normally not play a big role because we really take long-term views.
But it is true when we had the first quarter, I was not very optimistic on the economy and I was very clear that I see the world going into a slowdown
and that has happened.
Now on your second point, which is do you foresee some changes over time? No, we don't. But we also emphasize in a very strong rate quarterly
results and Simon said in his part, there is snapshot and we have this interesting situation with this dividend from this LNG joint venture. If that
comes in two days earlier or later, does it really matter to us? No, but you can have a big miss in the market and that could be a problem.
So I think where I sit, I take a through the quarter view, a long-term view, but from an operational performance point of view clearly. Every month
the results need to be delivered, but I can tell you if you have got more security issues in Nigeria, our production can go more up and down and
that can wipe out growth and that is actually not what I want to talk with shareholders. I want to talk how we actually deliver the value in the long
term.
Over to you on Papua New Guinea and the rest of the dividend.
Simon Henry - Royal Dutch Shell Plc. - CFO
There is probably only one thing to add to the dividend. While we don't let the macro drive it entirely, we did have some concerns about where
the macro might go six months ago. Peter was on record saying exactly that, sometime in June, I think. Three days later, the price dropped $20 to
90, so we thought if it stays there, dividend will be off the discussion. So I think the market is more concerned about that linkage than we might
be.
PNG; there is gas, there is an intent for LNG projects from the government. The government we have been talking to for a couple of years now.
They announced last year that we were a preferred partner because of the capability they want to bring into the country, large project developers,
people who can develop markets and local capability. So yes, we've had discussions with PNG government. We've had discussions with InterOil
from time to time.
And I can't say too much about where those discussions are at the moment. Yes, we are interested in a project. Yes, it must meet exactly the criteria
that Peter laid out to compete with other LNG options.
We don't actually know yet whether that will be the case. There is a new government election process in progress at that moment in the country.
As they come out of that, confirmation of fiscal opportunity and where InterOil fits and the government thinking will enable potentially a project
to go ahead there. It's very difficult for us to say more because it is still quite uncertain at the moment.
It's an attractive play and the same effective geological trend that we are in in Australia and now in Indonesia, so it is one we think we can add a
lot of value to provided the other conditions are right.
Peter
