Risk Based Assurance Tool Confidential

Introduction
rev: 12/12/2010veo

Background
This tool was developed to help the DRB in defining a first Opportunity Assurance Plan (OAP) and defining the related fit-
for-purpose assurance level for their project. It is developed to base the assurance on the risks involved more than on the size
of the project. This means that relatively small project with substantial risks obtain more assurance than larger projects with
smaller risks. Obviously, at a certain moment in time the (headline) size of the project automatically makes it a high risk
project and sufficient assurance is required.

The assurance has been split into three (main) levels:

Premium Assurance
Focused Assurance
Self Assurance

How to use the Calculator

It is the intention to use the calculator in a facilitated meeting. The facilitator should be fluent with the calculator, its
backgrounds and its functioning.

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Opportunity Assurance Plan

rev: 12/12/2010veo

Opportunity Description
Pearl VEO-1 project: development of a (1) new Heavy Base Oil plant as part of the opportunity to maximize the Pearl products value. Part of this value enhancement are
also opportunities that are somewhat lagging in time: (2) GTL-Kero make increase through modifications to existing equipment and new pumps / piping, which can only
progress after completing a Movements study in Q1/2011. (3) progressing both HDF and (4) the HOG scrubber (tied into a CO2 capture program) both projects are in
Assess/ Select. Target completion Select phase for all is mid 2011. The opportunity is there to develop FEED for all projects in roughly same time frame, optimizing Shell
P&T / FEED contractor involvement in H2/ 2011, H1/ 2012.

Opportunity Data

No
Title Pearl VEO-1 project
Location Qatar
Business UI
BOM Sabeur Mansar
FE Project Manager Soan Thung
Project Manager Soan Thung
Opportunity Assurance Wim van Dam
Plan attendees Tjeerd Garritsen
Duurt Renkema
Jan de Waal
Mark Ravenscroft
Fred Berkenhagen

Preparer: S. Thung
Date of 1st Contact 14 January 2011
Revision Date: 21 January 2011
Revision No.: 1
Note on Revision: Discussion on Lessons Learned
Account code:

Assess Select Define Execute

Scope of this OAP Yes

Characteristics

Opportunity Statement:
We have an opportunity to add value to Pearl GTL through incrementally low investments (<$300mln Capex) beyond capacity creep and Operational Improvements which
will generate new revenues from 2016 onwards that yield high returns (Shell VIR>0.5) without precluding future options or impacting ongoing operations.

We will achieve this by:

Phase 1: Developing projects that do not require additional syn-gas but would maximise product value through production of new grades of base-oils and detergent feed-
stocks (HDF), maximising kerosene yield and increasing total product outturn (“Value Enhancement”) by 1. progressing the XHBO project through Select, by 2.
progressing GTL-Kero through Select after completing a Movements study, Target completion Select phase is mid 2011.

Phase 2: Creating extra production capacity post performance testing of Pearl GTL to process about 100-200 MMscfd of additional feed-gas, first from within the contract
area then from 3rd parties (“Debottlenecking”)

Scope:
See above

Key risks, constraints and sensitivities:

- tie-ins for projects to be completed in first T/A of T1/T2 in Q1/2015 resp Q1/2016 => Schedule driven
- availability of Pearl (operations + other) resources during 2011. - XHBO
products require new markets (to be developed?) - lack of focus from Shell
(P&T, Pearl) resources when project in competition for resources with Project Q, Pearl T3 (Bells), VEO-1 phase 2. - Oil Movements study delays
development of GTL-Kero such that joint FEED development is no longer possible. (slight risk)

At First Updated End Updated End Updated End

Capex Currency Remarks
Contact Assess Select Define
Project Headline Size USD 190 XHBO (200%), GTL-Kero, HOG scrubber
Accuracy Range Type 0 P50

Delivery, Assurance and Governance Models Use OAP Assessment tab for assessment

Project Execution Model Remarks

Project Classification medium
Recommended Execution
PT Executed Project
Model

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Selected Execution Model PT Executed Project Major project in DS terms, minor in US.

Opportunity Assurance Model Remarks

RBA Model Premium Assurance
By selecting DS projects, right balance is reflected in assessment tool, but not project
Selected Focussed Assurance size. Project is minor in upstream standards

Governance Structure / personnel

Decision Executive: Andy Brown
Decision Review Board Claire Harris
Guy de Kort
Brian Davis
Rob Overtoom
Phil MacDonald
Krey Stirland
Richard Gort

BOM Sabeur Mansar

FE Project Manager Soan Thung
Project Manager Soan Thung
Business Opportunity Team Soan Thung
Sabeur Mansar
Niels Fabricius
Jodie Winnett
Tim Brown
Sandeep Singla

Assurance Plan

Business Assurance
Assurance Activity Who Assess Select Define Execute Remarks
Opportunity Framing Completed for Select phase, 16 december 2010, confirmation required
Workshop Yes at start of Define.
Integrated Audit Plan This OAP covers the audits sufficiently, for Select, Next phase
Yes
No Yes Contractors to be audited
Value Assurance Review VAR2 skipped confirmed by DE. Signed off PDQ will be starting
Yes
Yes Yes point for Select.
Finance Controls Specify: Compliance, ABC, Cost Recovery, Annual Assurance Letter process (relevant of new
No Ventures), Tax, Treasury

Economic Model Review

completed in Assess by Sabeur Mansar and Tim Brown and Sandeep
Yes
Kumar. Will be completed internally in business, check in VAR
Yes Yes Yes
Commercial Agreement
Review This is work in progress by the business. Internal in business.
Yes Yes

Post Investment Review

(PIR) Business to confirm. Part of VAR5?
Yes

Project Assurance
Assurance Activity Who Assess Select Define Execute Remarks

C&P Review Pearl contract standard differs from Shell global standard. Review can be considered in Execute

Project Controls and

Yes Yes Yes
Assurance Plan

Project Assurance Review Yes Yes Combine with VAR during FEED. In execute called a PER
Yes
Peer Reviews/ Health
Yes Technical PEER review for the XHBO at end of Select.
Checks

Wells NA

Estimate & Schedule

Yes In select TA2 sign off should be sufficient
Review

LIRA Yes To be discussed in next phase

FSI, OIP embedment in contracts to be verified a.o., In Select TA2 (from Pearl?) should be
OR&A review Yes suffient
Yes
HSE Readiness Review including HSE review can be part of Project Assurance Review. TA2
Yes
Yes sign off should be sufficient
Construction Readiness
Review Yes

Top Quartile Project Delivery

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At First Updated End Updated End Updated End

Project Drivers Remarks
Contact Assess Select Define
Project type - Cost/schedule
driven Cost Cost

Project Executed in
Turnaround? Yes Yes Only KERO and XHBO tie-in scope other scope SIMOPS on Pearl.

Project Targets
UDC No No
Capital Efficiency Yes Yes

Benchmarking Plan
IPA Yes Yes perhaps only XHBO project part to be benchmarked.
Internal

Value Improvement Processes (VIP's)

Ref Indentify Assess Select Define Execute
Opportunity Framing External
ORG facilitated
workshop
Risk Management Internal Internal Internal
PG20 facilitated facilitated facilitated
workshop workshop workshop
C&P Strategy Development External
PG5 facilitated
workshop
Design Class Focussed Focussed
PG8c
meeting meeting
Value Engineering External External
PG8d facilitated facilitated
workshop workshop
Availability Focussed Focussed
Assurance/Reliability PG8e
meeting meeting Update PEARL model?
Target Costing PG8f
Lessons Learned External External
One to one
PG12 facilitated facilitated Discussed with Wim Witte to do External Facilitation at
discussion
workshop workshop end of FEED and Execute.
Constructability External External
Focussed
PG17 facilitated facilitated
meeting
workshop workshop

Key CP considerations

- Test the need to tender (LS or not?) with QP

- Requirements to use frame agreements
- Is there a possibility to make use of Q buying power/agreements
- Capture opportunity to work with FEED / Implementation contractors already familiar with Shell, Pearl and site conditions. - Consider
roll over contract opportunity from FEED to Implementation as option to save time as well as a option to convert Cost reimbursable to LS during Execute.
- Use of Pearl contract templates and lessons learned.

Lessons Learned

Key Characteristics - ME based project (Qatar); convertible LS contract, Shell P&T led project,
- model type 3 execution as revamp in existing site
- First larger modification to new built mega site

Analogous Projects - Pearl scope elements

- Nanhai experience? Contact Imants Freiberg
- Bukom ECC debottlenecking Contact Bert Krieckaert
- Pernis HDS-6

Follow-up Actions

Replication and Repeat Execution

Within the Project - In many ways Pearl will provide the templates for contracts, vendor base, execution plans etc

Across other projects see above

People - process leads have been exposed in many ways to Pearl / Qatar in past during development of Pearl
- drive to have technical leads with PEARL experience

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Process First of its kind

Plant New plant

Schedule / Key Milestones

Planned Date
Updated End Updated End Updated End
Project Phase Item (First Contact
Assess Select Define
Meeting)

First Contact Discussion 14-Jan-11

Opportunity Framing Revie 16-Dec-10
Assess
Risk Management Review 1-Feb-11
VAR2 12-Jan-11
Kick off date 15-Feb-11
CP Strategy Workshop 1-Apr-11
Select Value Engineering Worksho 1-Apr-11
IPA Pacesetter Interview *
VAR3 1-Sep-11
Kick-off Date 15-Sep-11
VAR4 1-Jul-12
Define
IPA Prospective Interview
FID 1-Aug-12
Kick-off Date
PER1
PER2
Start Construction
PER3
Execute
PER4 NA
PER5 NA
PER6 NA
RFSU date
Product on Specification
PIA/ PAR5
Closure
IPA Close-out
* Note - Only one IPA Pacesetter required - either at end Select or at end Pre-FEED

Sign-off

Sign-Off name:
(DE) date:
signature

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Opportunity Assurance Assessment Hide

rev: 12/12/2010veo

Opportunity

Opportunity Data Help text

Financials Up
Headline size 170 M US 100% Headline Size
% Shell Share 100% % Shell Share
Operator Shell Shell Operated (e.g. NAM) / Not Shell Controlled JV (e.g. PDO) / NOV (e.g. Qatargas)

Upstream/Integrated: Upstream and integrated projects, commercial projects with technical aspects.
Midstream : Midstream (e.g. LNG/GTL) projects, or upstream without subsurface, large
Opportunity type Downstream downstream greenfield projects.
Commercial : Commercial opportunities without technical aspects.
Downstream : Downstream projects (brownfield, for large greenfield project use Midstream).

Risk Assessment See more detailed range statements in next tab Help text
Technical Risk Narrative for selection Technical Risk

Subsurface Uncertainty Risk ### N/A

Unit configuration standard, novel technology

Surface Complexity Risk
Project Execution Risk
(see below). Standard refinery project L = Repeat of typical project, isolated project no integration to other plants and/or site infrastructure
M = Standard Refinery process, project with site integration into existing infrastructure and other units/facilities
M 2
H = Integrated units, chemicals, project with integration demand resulting in additional investements/expansions in adjecent units
and facilities
Kero = turnaround related full scope; XHBO
only for tie-ins. L = Good technical infrastructure, cost driven, no execution integration into turnaround
M 2 M = Technical infrastructure not complete, parts of the project (upto 50%) integrated into turnaround execution
H = Very limited technical infrastructure, entire project has turnaround based execution

Novel HBO technology.

L : All technology applied within Shell (10 years, 3 applications).
Novel Technology Risk H 3 M: Technology not applied within Shell, considerable experience outside Shell (5 years, 3 applications).
H : Technology not applied within Shell, limited/no experience outside Shell.

Economic Risk Non-Technical Risks

Unique Group 3 products, predicable
economics, margin variation possible. products L : Well predictable economics (wages, currency), margin well predictable.
Economic Risk M 2 XHBO need outlet. Needs development. M: Limited economic risks (wages, currency), larger variation in margin possible.
H : High economic risks (high impact currency fluctuations, wide variation in margin possible.

Commercial Risk
Needs confirmation from Sabeur (BOM).
L : Commercial and JV contracts in place, no problems expected, partners with longstanding relationships.
M: Expect some problems completing commercial and JV contracts, partners with no clear alignment.
Commercial Risk L 1
H : No clear commercial and JV contracts in place, access to goods and services is limited by local environment, or dealing with
partners known to be out of alignment or adversarial.

Organizational Risk

L : Well established line of business in a region where relationships governments/regulators/venture partners are well understood.
Business Environment Risk L 1 M: Unusual business conditions or relationship challenges in a region that is otherwise well understood.
H : New country entry, new venture, new line of business, area with known issues/relationship challenges.

First project post Pearl, no established P&T

organisation on site (Qatar). RET required for
FEED/ Implementation. Engagement with local
Risk of Asset/Project staff will be a challenge. Operational resources L : Expert Team in place and available.
Team's Capability to
Deliver
M 2
not earmarked / too busy during 2011. P&T M: More-Experienced Team in place and available.
H : Less-Experienced Team in place.
team is experienced.

TA for Operational deliverables such as OIP

may need to rest in Pearl. L : Very Mature with DCAF
DCAF Maturity Risk M 2 M: DCAF Practice Embedded in Project
H : Basic Framework Exists

Political/Societal Risk
Existing facility, industrial area, Shell operated.
L : No reputational issues, No community issues, No permit issues expected.
M: Some reputational issues, no NGO issues, limited community issues, manageable permit uncertainties.
Environmental / SP Risk L 1
H*: High profile reputational issues, Major NGO issues, Serious community issues, Major permit uncertainties, Unstable
region/country, Obstructive host government, Militant Trade unions.

Summation of Risk Factors: M * : In case of Basic Assurance and a H score in this category a Peer Review is recommend for this risk.

Project Classification & Project Execution Model Selection

Headline Size Risk & Uncertainty Project Classification

medium ma jor ma jor

100 MUSD

ba se medium ma jor 3 Major

50 MUSD

ba se ba se medium
• = actual position
Narrative for selection
OE=Operating Entity.
Competence No Is the OE currently executing this type and size of projects?

Pearl staff must focus on start-up in 2011. Post

Capacity No start up in 2012 no staff expected to remain. Are the required resources (number & experience) currently available in the OE?

Recommended Project Execution Model

1 PT Executed Project

Risk Based Assurance Model Selection

Headline Size Risk & Uncertainty Recommended Assurance Model

Focused Premium Premium

100 MUSD

Self Focused Premium 3 Premium Assurance General indication of related assurance activities, see Introduction tab.
50 MUSD

Self Self Focused

• = actual position
Remarks:

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Risk Assessment Range Statements

rev: 12/12/2010veo

Upstream/Integrated projects
TECOP Assessment
Upstream/Integrated projects
Technical Risk Low
Subsurface Uncertainty Development in a well-
understood, mature,
basin/province
Medium
Development in a relatively
new province, or in a new
horizon in a more mature
area
High
Development in a new
province or in a particularly
unusual setting in an
established province

Surface Complexity Straight-forward repeat Unusual development Midstream integration

execution of a typical
production system with
traditional hydrocarbons
(contains process safety
risks)
configuration, non-traditional (LNG/GTL), Deepwater
facilities throughput, or development (contains
integration of new kit into an process safety risks).
existing production system
(contains process safety
risks)

Project Execution Risk - Single location. - Single location. - Multi locations.

- Single business.
- Well developed location.
- very low likelihood of late
concept changes
- C&P straight forward.
(contains construction safety
risks)
- Single business.
- Known/manageable
logistical challenges
- low likelihood of post-DG3
concept changes.
- Limited C&P issues.
(contains construction safety
risks)
- Cross Business.
- Logistic challenges,
- potential for late changes to
concept.
- C&P challenges.
(contains construction safety
risks)

Novel Technology Risk No novel technology, all New Technology, not New technology, not applied
technology applied within applied within Shell, within Shell, limited
Shell considerable experience experience outside Shell
outside Shell.

Economic Risk
Economic Risk Well predictable economics Limited economic risks High economic risk (high
(wages, currency), OpEx and (wages, currency), larger impact currency
margin well predictable. Cost variation in OpEx and fluctuations), wide variation
recovery predictable. margin possible. Cost in OpEx and margin
recovery unsure. possible. Unclear Cost
recovery.

Commercial Risk
Commercial Risk Commercial contracts in
place, no problems expected
and/or dealing with a set of
partners with longstanding
cooperative relationships.
Expectation of some
problems in completing
commercial contracting, or
dealing with partners where
no clear alignment has been
established
No clear commercial
contracts in place, access to
goods and services is limited
by local environment, or
dealing with partners known
to be out of alignment or
adversarial.

Organizational Risk
Business Environment Risk Well established line of Unusual business conditions New country entry, new line
business in a country or or relationship challenges in of business, or an area with
region where relationships a country/region that is known issues or government
with governments, regulators otherwise well understood relationship challenges
and partners are well
understood

Risk of Asset/Project Team's Focussed at people and Focussed at people and Focussed at people and
Capability to Deliver experience. experience. experience.
Expert Team in Place and More-Experienced Team in Less-Experienced Team for
available (for the coming place and available (for the the coming phase
phase). coming phase).
DCAF Maturity Focussed at work processes Focussed at work processes Focussed at work processes
and controls. and controls. and controls.
Very Mature with DCAF DCAF Practice Embedded in Basic Framework Exists
Project

Political/Societal Risk
Environmental / SP Risk - No reputational issues. - Some reputational issues. - High profile reputational
- No community issues. - No NGO issues. issues.
- No permit issues expected. - Limited community issues. - Major NGO issues.
- Manageable permit - Serious community issues.
uncertainties. - Major permit uncertainties.
- Unstable region/country.
- Obstructive host
government.
- Militant Trade unions.

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Maintenance

Protection
The sheets are protect (but not under password yet). Unprotect by right-click on the tab and select
'Unprotect Sheet…'.

Pull down menus

The HML pull down menus are constructed with the data function.

Stand on the cell and select 'data' (menu bar), 'Data Validation' (Data Tools), 'Data Validation' (in pull
down menu) and a window pops up. Select 'List' in 'Allow' field, select 'F50-F53' in Source field.
These (hidden) cells contain 'H', 'M' and 'L'. In case other options are allowed in the future increase the
range and add the option.

Colours

The colours used are the 'official' Shell colours. The colours are taken from the official Shell ppt
templates. The can be checked under 'colours', 'more colours' tab. The colours used for this
spreadsheet are:
Red = R: 255, G: 0,B: 0
Dark yellow = R: 247, G:209, B: 23
Light Yellow = R: 252, G: 237, B: 162

Font
Futura Medium, taken from the official Shell ppt templates.

Lay-out
The lay-out is not specific except that titles are red font on dark yellow background and the
background is extended on the left side. 'Sub-headings' are white font on a red background. Both have
been 'copied' form the official ppt templates.

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