My name is Tjerk Huysinga, EVP Investor Relations at Shell. Thanks to all for joining Shell's 2022 LNG Outlook. We will start with a presentation from Wael Sawan, Shell Director for Integrated Gas, Renewables and Energy Solutions, and Steve Hill, EVP Energy Marketing. Following the presentation, we will welcome your questions. To ask a question, you need to be dialed in via the telephone line. Please press star one to be added to the queue. If you wish to be removed from the queue, please press star two. I now hand over to Wael and Steve. Thanks, Tjerk, and let me add my welcome. Thank you all for joining us today. I'm very pleased to be able to talk to all of you, even if COVID prevents many of us from meeting in person. We are in year three of the pandemic. Lockdowns are easing in some places, while others continue more cautiously. It hasn't been easy for sure, but I'm really proud of the resilience and the strength shown across the globe, and particularly of our industry, to deliver the energy that is needed to keep the lights on, homes heated, and goods transported. Thousands of people have been working tirelessly to run plants, manage terminals, and sail ships to deliver LNG in spite of difficult operating conditions. I'd just like to acknowledge the contribution of these brilliant men and women who are our industry's frontline and enable its reputation for resilience despite their own personal challenges. As I said, these are extraordinary times, and we would like to take you through what's happened in the industry this year and provide an outlook on gas markets in general and LNG more specifically. Before we do so, I just want to show you the cautionary note as usual. If we move to the next slide, please. We have three parts to our presentation today. I'll kick off by giving you a bit of a flavor of where natural gas and LNG markets are, and in particular, the role that natural gas and LNG are playing in support of net zero emissions. I'll then hand over to Steve to talk you through 2021 and what we've seen through the year, but also to provide some reflections and observations around what to look forward to. We can move to the next slide, please. Now, this is an iconic picture here. FueLNG is a joint venture between Keppel and ourselves. What you see here is the first ship-to-container ship LNG bunkering activity that happened just recently in Singapore. It really heralds, I think, a new dawn for LNG bunkering in Asia, creating an exciting growth opportunity for LNG into the future. We can go to the next slide, please. Now, as the world recovered from the impact of the global pandemic, we saw continued momentum on decarbonization targets. Leading up to COP26, there were some big announcements on net zero goals as well as near-term emissions targets for 2030. What you can see on the slide here, in particular in yellow, is that some 112 countries have now signed up to net zero emissions commitments by 2050. When we look at 2030, countries like the U.S., for example, that has signed up to a 50%-52% reduction in net emissions. Also, as you can see, China and India are beginning to really take some short or shorter-term targets. That matters because just China, India, and the U.S. make up some 50% of global emissions. Therefore, if they are able to achieve those targets, that will see a meaningful reduction in overall emissions. In the short term, the majority of that is coming from coal to gas switching. Take China, for example, that is trying to limit the growth of coal consumption, but also trying to focus investments into gas peak shaving power plants, as well as encouraging gas into industry and LNG, for example, into vehicles and into shipping. If you add to that the fact that renewable growth in Asia and in China in particular is going to be supported by the complementary role that gas provides, it gives you a sense of the outlook for gas into the future. We can move to the next slide, please. Now, building on this concept of switching potential of gas as an immediately available option to lower emissions, I just wanted to take a look at a couple of sectors, and we'll deepen that out in a moment. The electricity sector accounts for around a third of total global emissions, and around 70% of that comes from coal, and three-quarters of that coal is in Asia. The potential pathway towards, say, a 20% reduction in coal-fired power into Asia and replacing that by gas could result in a 680 million tons per annum reduction in CO2. That's the equivalent of taking the entire absolute emissions of Germany out in one go. Similarly, in transportation, that accounts for just under a quarter of overall global emissions. Our ability, for example, to be able to use LNG instead of alternative fuels for shipping can result in a 23% reduction in overall emissions. If we can break through by 10% into heavy goods vehicles and into shipping and replace the conventional fuels with LNG, you'll achieve another 75 million tons per annum of emissions reduction. Then if one projects into the future, looking at the potential role that hydrogen can play and taking an assumption of a 70% green hydrogen space and 30% blue hydrogen, our ability to be able to have that penetration into the global energy mix could result in a 475 million ton per annum reduction of CO2 emissions, equivalent to around the emissions of 70 countries. These moves could potentially be impactful in reducing the overall emissions here and now. If we can move to the next slide, please. When energy systems transform to meet, or while energy systems transform to meet the Paris ambitions of limiting rises in global temperature, what we need is reliable, available, at scale, and lower emissions energy supply options to be able to underpin that transformation. The momentum of the energy transition can slow down or even decelerate if energy supply becomes unreliable and prices become volatile. Gas has a key role to play as the energy systems transition, both as a foundational backstop to further the use of renewable energy, but also as an immediately available option to lower emissions in hard-to-electrify sectors where zero-emission fuels are still in development. The intent of this slide is just to give you a sense of what analysts are talking about when it comes to the gas scenarios, and the one on the left here shows you multiple views. If we just hone in on the three IEA views, the two top ones, the STEPS scenario, as well as the APS, so the announced pledges case, both show you an increase up to 2040 in overall gas consumption. The net zero emissions scenario by the IEA, or the 1.5 degree scenario, shows you a plateauing of gas through the next decade and then a slight decline thereafter. If you look at the breakdown in the middle of the slide here, what you'll see is electricity continues to be the lion's share of the mix. Importantly, industry and transportation in all scenarios continue to grow and become meaningful parts of the overall demand pull for gas. Then finally, the chart on the right is here to remind us that ultimately, if we are to move towards net zero emissions, we don't just need gas, we need decarbonized gases. What you see here is the complementarity of gas with renewables or gas with CCS. Eventually, bioLNG and biomethane will be critical elements to be able to make sure that we also abate the emissions that come with gas. We can move to the next slide here. Now in the next four slides, we'll be talking about the role of gas and LNG in helping decarbonize sectors, and I'll start by talking about the electricity sector and the partnership of gas and renewables. The one on the left here shows a specific day, the 24th of April, 2021. That is a landmark day in that for a few moments that day, the share of renewables in the energy mix was close to 95%, a real record. If you look at that same day and move to the evening time, by which time the sun is no longer shining, and therefore the 11 GW of solar energy is no longer available to the grid, gas moved up from an average of roughly 10% in the daytime to around 45%, showing the complementarity that it brings to be able to sustain the energy generation through the day. Look at the U.K., where in July, a low of around 5% wind generation into the energy mix meant that gas had a bigger role to play and had to step up to be able to make for that shortfall. Whereas towards the latter end of the year, when wind generation was closer to 40% of the total, gas could be dialed down. If we look at the last slide or the last chart here, apologies, we can go indeed. On the Brazil hydro energy mix, what you find is, of course, hydro continues to be a core part of Brazil's overall energy generation. Actually, hydro globally is as much as solar, wind, and all other renewable energies combined. Given the drought conditions that Brazil suffered from last year, it led to a significant step-up in LNG imports, some tripling of the overall LNG import into Brazil. You can see the flexibility that LNG offered to be able to bridge that gap. Let's now move to the next slide, please. I want to move into the industry sector and maybe hone in on aluminum. Aluminum is going to be a critical part of the energy transition. It's likely to grow by north of 4% per annum over the coming years, going from around 100 million tons per annum market today to closer to 335 million tons per annum by 2050. Now, aluminum has multiple roles, including, for example, in long-distance power cables, in EVs, or for that matter, in modern electronics. Around 57% of the overall aluminum capacity sits in China. However, north of 75% of the emissions that come from the aluminum sector also sit in China. That's because of the reality with subcritical coal and power being on-site generating the electricity that the aluminum, the carbon-intensive aluminum sector needs. Therefore, if we are to move that sector into gas usage instead of coal and replace some of that on-site generation, you could potentially reduce the overall emissions from aluminum by 46%, the equivalent of a Vietnam or even a Thailand. Material savings just from that aluminum sector within the Chinese context. If we can move to the next slide, please. I'm going to move now to the shipping sector. Shipping is responsible for around 3% of total global emissions. The landscape of possibilities for shipping decarbonization is wide, and there are several fuel options being considered. As CO2 emissions are cumulative, waiting is really not an option. Until net zero fuels emerge, the industry needs to take advantage of the best available fuel options at scale to lower emissions immediately, which today is LNG. If you look at LNG vessels in operation today, there's around 250, and there's another 400 on order. So by 2028 or so, we expect to see around 650 vessels on waters. That's a doubling of the overall LNG demand, close to 5 million tons per annum by that timeframe. What's particularly interesting is that 30% of new vessel orders are LNG-fueled. If you look at the segments there, cruise liners, for example, have almost half of the new orders coming from LNG-fueled ships. Container ships have just under a third, whereas the smaller segment of passenger car carriers is almost now exclusively LNG-powered. Particularly interesting here is that over time, we can decarbonize that LNG because you can use bioLNG or synthetic LNG as drop-ins to be able to support the shipping sector as it aims to decarbonize. If you move to the next slide, please. Here, let's talk about the building sector. Now, energy demand from buildings and building construction continues to rise as more people come out of energy poverty and urbanization increases in developing countries. People are buying their first fridges and microwaves, cooling and heating their homes, and moving to built environments. According to the IEA, a third of the total global energy consumed comes from buildings and building construction sectors combined. In terms of global emissions, building sector is responsible for nearly 10% of global energy-related CO₂. Decarbonizing the sector will require scalable and flexible energy. Within the Chinese context here, what you can see is that electricity makes up around half of the overall energy that is consumed within that segment. Two-thirds of that comes from coal-fired power. Our ability to shift that over to gas allows us to reduce some 620 million tons per annum of emissions. Consider as well cold countries like the U.K., where in the colder days of winter, you require around 7 times more gas heating than on a typical summer day. That means you have to have significant redundancy built into the system, but that comes at a serious cost. Take the French example here. France, of course, has electricity going through the seasonal variations you'd expect, but you also see in orange on this chart how gas underpins the flexibility that France relies on. That's either gas that is directly provided to gas boilers in the home or hybrid between gas and electricity, or gas, for example, into open cycle gas turbines within the French electricity infrastructure. In addition to the role of gas, of course, you need to think about storage. What you see on the right of this chart here is that combined cycle gas turbine in partnership with carbon capture and sequestration offers the most affordable and available storage option in the interim. That's going to be a critical piece as countries think about how to build that flexibility to be able to cater either to seasonality or to market fluctuations. Let's go to the next and to my final slide. Here I want to talk a bit about LNG and the outlook for LNG growth before I hand over to Steve. What you can see from the left-hand chart here is that the LNG market is expected to continue to grow and grow robustly. Last year, the demand was around 380 million tons per annum, and the projections see LNG growing to around 700 million tons per annum by 2040. Around 70% of that growth comes from Asia. You'll see in the middle chart the four key components that underpin the LNG demand, starting with the legacy demand into countries like South Korea and into Japan that continue to draw on LNG supplies for a while to come. The growing segment there in blue is to make up for declining domestic production in places like South Asia and Southeast Asia. The yellow represents gas or LNG in support of domestic gas production as well as imported gas through pipelines, and that's predominantly in China. The small red sliver is one that's today small but growing, as you can see, and that is LNG bunkering and referenced earlier on to the FueLNG bunkering that I mentioned. The last chart is particularly interesting when you look at the LNG market 'cause what it says is that 77% of the overall Asian gas demand is going to be served through LNG. Therefore, the message is that LNG and natural gas continue to be a critical part of the overall energy transition for the coming decades. I'll leave it to Steve to tell you a bit more about 2021. Steve. Thanks, Wael Sawan. Thanks for explaining the important role LNG and natural gas have in the energy transition. I'm gonna talk for a while now about what happened in 2021, which was probably the most eventful year we've seen since we've started doing these outlook presentations. In addition to being an interesting year in its own right, it also gives us some clues of what can go wrong if the energy transition isn't managed well. If we can move on, please. This slide is the key summary of the year. Obviously, we know now that it's been a year dominated by high prices and concerns about gas inventories in Europe. This is shown in the pricing chart on the right-hand side of this chart. Price spikes are not unusual in the gas industry, but they often look like the spike we saw this time last year at the left-hand side of that price chart. Normally, when you get a price spike in the gas industry, it's local, it's short-lived, and it's directly related to a tightness in gas supply, either related to very cold weather, a supply disruption, or another geopolitical issue. What we saw in the second half of the year was unprecedented. The level of prices achieved, the sustained period for which we saw those high level of prices, the fact it was a global issue, not just a local issue, they were all new factors that we hadn't seen before. Probably most surprising of all was the fact that this price rally actually happened toward the end of the summer. It wasn't driven by any shortage in gas. It was driven by an expectation or a fear of running out of gas several months later. There are several different reasons that came together to cause this, price spike or this high price situation that we saw. Clearly, we acknowledge that high prices at this level aren't good for any market. We'll talk about those in quite a bit of detail over the upcoming slides. We have some of the key reasons just shown here. Supply constraints, both in LNG and in domestic gas in Europe and in pipeline supplies into Europe. A strong economic rebound post-COVID and strong LNG demand as a result, particularly in China, but across Asia. Low inventories following the very cold winter we had between 2020 and 2021. Various weather events affecting demand and alternative fuel supply, and the overall pressurized energy complex that we saw during 2021. If you can move on to the next slide, please, we'll talk about the supply side of the equation. There's actually two stories here. There's one about U.S. supply and one about everybody else. The industry grew by 21 million tons, which is very healthy, but that was dominated by the U.S., which actually supplied an additional supply of 24 million tons to the market during 2021. As you can see in the second slide, just six years after the start of U.S. exports, it almost caught up with Australia and Qatar as the world's largest exporters. On the fourth slide, you'll see that the U.S. production projects were pretty much running at capacity the whole year. The only dip in March was driven by a hurricane in the U.S. Gulf. Whereas we saw a very different situation in 2020 when there was a big turndown in U.S. export volumes driven by the COVID-related demand destruction we saw that year. U.S. exports was the positive story. The more challenging story we saw was LNG supplies from other sources. You can see that in the first chart here, because there's probably as many countries that saw a reduction in LNG exports in 2021 as there were that saw an increase despite the very strong financial incentive to produce. Again, you can see that again in the third chart, which shows that during the summer of 2021, the industry was operating at a much lower utilization than we normally see outside the U.S. That wasn't driven by lack of demand or prices. It was simply driven by various operational issues that had to be managed. If you move on to the next chart, please, and we look at China. 15 years after China's first LNG imports, it overtook Japan and became the world's largest LNG importer. Whereas we think about 2021 as being a year which was all about Europe, when we look at this chart, we actually see something that may be a little bit unexpected. Most of the countries on the left-hand side of the chart, the countries that saw an increase in imports in 2021, were actually countries in Asia, the ones that are shown in the lavender color here. Whereas most of the European markets shown in yellow actually saw a reduction in LNG imports during 2021. If we move on to the next chart, we'll talk about China in a little bit more detail. Chinese demand continues to grow very, very strongly, and we expect that to continue. China only has about 8.5% gas in its overall energy mix at the moment, which is only just over half the government's ambition for 15% by 2030. As you can see in the first chart here, the LNG imports into China in 2021 grew far greater than any forecast by 12 million tons or 18%. That was driven by strong demand growth that you see in the second chart, where we saw an increase in demand in all those sectors that Wael talked about previously, power, buildings, transport, but particularly in industry. That caused an increase in the amount of domestic gas production in China, pipeline imports, and LNG supplies. The LNG had a disproportionate large role to play in bringing in additional gas into China, partially because of the flexibility it brings. Gas demand in China is increasing, but so is the seasonality, as a lot of gas in China is used for winter heating. Therefore, because China has a very low level of storage compared to Europe or the U.S., China needs very flexible gas and LNG supply to meet that seasonality and demand. It's the flexibility of the LNG industry that's able to provide the seasonality that China needs in its LNG imports. If you move on to the next chart. Another big demand story last year was Brazil. Wael talked about how a lack of hydroelectric caused more gas-fired demand for power. Brazil had one of its driest years for 90 years in 2021, and that caused the inventories, the reservoir inventories to be at a low level for most of the year. Again, that caused more gas-fired generation to be operated and a big increase in LNG in order to enable that. Once again, the flexibility of the global LNG industry provided the reliability of the power industry in Brazil. Then if we move on to Europe, this will probably take. If we move to the next slide, please. Europe is quite a complicated story in 2021, so if you bear with me while I work through this. It's a very important story because LNG prices were driven by the European gas market for much of the year. The first chart shows, first of all, that gas demand in Europe increased quite significantly from 2020, particularly in the building sector. That was very much a result of moving beyond the COVID demand destruction we saw in 2020. Therefore, more demand, Europe needed more supply. Actually, it saw lower domestic gas production and lower LNG imports. The extra gas supply into Europe predominantly came from increased pipeline supplies, mostly from Norway, from Algeria, and from Azerbaijan. The second chart shows that Europe really saw a year of two halves. In the first half of the year, gas demand increased significantly. Prices were relatively low. The 2021 winter was a cold winter and a long winter, and therefore, particularly towards the end of the winter, Europe needed more gas to come in to provide power generation, heating, and to rebuild inventories. What happened during the second half of the year that was quite unusual was the change in the Russian pipeline supply volumes. If you look at 2020 Russian volumes into Europe, which is the red line on the third chart, you saw a low level of deliveries the first half of the year, and then a rapid increase in the second half of the year as Europe moved out of COVID shutdowns and into the winter period. In 2021, the amount of Russian gas that came into Europe was about the same as 2020 overall. You saw a different pattern. You saw a more typical level of supply in the first half of the year, and then a decline, an unexpected decline in the second half of the year, which led to the low inventories, and the tight market conditions that we've seen, and you can see on the final chart here. If we move on to the next chart, please. Another interesting phenomenon we saw in Europe last year was a reduction in renewable generation, and that's not intuitive. The actual amount of renewable generation capacity in Europe increased by about 6%. Because of the weather conditions, specifically lower wind, the amount of electricity that was generated from that increased capacity actually reduced by 3%. Therefore, as you see on the third chart, other forms of fuel was needed for generation. Gas in the first half of the year, and then in the second half of the year, you actually saw a reduction in gas as prices increased and an increase in the amount of nuclear generation that was online. If we move on to the next chart. This shows some other factors that contributed towards the higher prices we saw in 2021. Typically, when you get high prices, they get mitigated through switching. The first chart here is one we've shown for a few years. It's the coal to gas switching price range for Europe. The gray shaded area is basically a function of the black line, the coal price, and the red line, the carbon price. Therefore, there's a certain gas price at which gas is competitive to coal, and there's a price at which coal is competitive to gas. Typically, when the gas price is within the gray area, gas is more competitive depending on location. As you see at the start of the year, gas was at the bottom of that range, and we saw a lot of gas generation. As gas prices increased throughout the year, you actually saw gas to coal switch to get power generation, and ultimately the gas price broke out of that range, and therefore, the only way the gas price could be moderated was through other external interventions, either more gas coming into Europe or demand destruction. The LNG market also has a traditional correction measure for high prices, which is switching, gas to oil generation in Japan. Typically, when LNG prices go above a certain level, Japanese LNG buyers buy less LNG and burn more low-sulfur crude oil in their power plants. As you see here, compared to five or 10 years ago, there's much less oil-fired generation capacity in Japan. Another one of these mechanisms to manage high prices or to mitigate high prices is starting to disappear. The final chart here shows one of the other phenomena we saw this year, which was an increase in the amount of financial players, such as hedge funds that were active in the European gas market and the LNG market. Typically, these players have operated in oil markets, but not so much in gas outside the U.S. An increased amount of financial money coming into the market also has the ability to impact prices and increase volatility. This chart shows how the volume of gas contracts on European financial exchanges increased significantly over the last year or two. This isn't a complete story because this is just the amount of trades done on exchange, and some trades are done off exchanges, but it's the best representation we have to show the increased activity and the increased players in this market. If we can move on one more, please. Obviously, these low inventories in Europe, these high prices caused a demand response, sorry, a supply response, and they did, but it actually took longer for that to happen than many would have expected. The first chart here shows the economics of sending a cargo from the U.S. to either Asia or Europe. Anything positive shows an economic incentive to go to Asia. Anything below the line shows an incentive to go to Europe. While there was a very big incentive to deliver cargoes to Europe, that didn't actually happen until December. Even though we could see the low inventories coming for a number of months, Asia's efforts to restock their inventories and make sure they didn't have low inventories in the winter meant that cargos didn't come to start to refill Europe until very, very late. You can see that in the second chart here, which shows where all the cargos that came out of the U.S. were delivered to by region. The most interesting section to look at are the ones in blue. These are the ones that come into the flexible gas markets in Northwest Europe. You saw a lot of cargos from the U.S. come into Europe in March and April when we had the end of that cold winter and prices were low. It wasn't really until December that we started to see a big influx of U.S. cargoes into Europe, in the higher price environment. What's actually very noticeable here is the cargoes in orange, the U.S. cargoes that went to Brazil to mitigate the dry weather there. If we move on. This is the last chart of this section, and it's meant to provide a forecast for 2022. The supply side of the forecast should be pretty good. It shows that about two-thirds of the growth in supply we expect to see this year will come from North America, and that will make the U.S. the biggest LNG producer in the world, for the first time, as I say, just 7 years after starting its exports. The right-hand side has to be a lot more uncertain considering the current environment that we're operating in. Had all things been normal, we would have expected that Asia to again be the dominant market for growth in LNG demand in 2022. We'll see how that plays out over the coming months. If we now move forward, just to show you another photo that we're very proud of. This is the status of the construction in our LNG Canada plant, and as you see, quite a lot of activity underway there. If you move on, please. When we made this presentation last year, we were still in the middle of the COVID situation. The message that we delivered last year was that demand would recover much quicker than supply. COVID saw demand destruction, but we forecast that demand would bounce back strongly, which it has. Whereas we said the impact of COVID on supply would take much longer to work through, and we're seeing that actually play out. The first chart here shows that the amount of new supply coming into the market over the next four years will be much less than we've been experiencing over recent years. The second chart shows that while we're past the trough of the investment reduction we saw in COVID, the amount of upstream investment we're expecting today is significantly less than the pre-COVID time. We have less new supply coming to the market and less money being invested in upstream in the industry. One of the consequences of that is a decline in domestic gas production, particularly in Southeast Asia and Europe, two markets where LNG will presumably fill the gap that's created. You can see how the market is starting to recognize this situation on the last chart. We saw an increase in long-term contracts entered into, particularly from the U.S. and Qatar in 2021, as buyers are starting to recognize this market tightness and contract new firm long-term supplies in order to provide more security of supply and reduce their exposure to the spot market which they've seen this year be more volatile than they've ever experienced previously. If we move on. China is doing a good job in terms of taking control over its future and security of supply, exposure. The first chart shows all the long-term contracts that were entered into in 2021 by end country importers. As you see, about two-thirds of those volumes were contracted by China. Conversely, only about 10% were entered into by European buyers. Why is that important for China? Well, it's because of the middle chart. The black line shows that about 30% of LNG today is supplied to end users under spot short-term contracts, whereas 70% are supplied under long-term contracts. However, China sort of was seeing an increase in proportion of spot supply as its overall market was growing rapidly and therefore becoming more and more exposed to spot prices and supply uncertainty. Therefore, by signing long-term contracts, China is reducing its security of supply risk going forward. The last chart is important because these long-term contracts China has signed have long contract terms on average 15 years, which means the term of these contracts go well beyond the 2030 target for China to reach its peak emissions. This shows there is no conflict between securing long-term LNG to provide security of supply and a cleaner fuel and to be reducing your emissions at the same time. If we move on to the next slide. While China is doing a good job in addressing its security supply issues, Europe less so. The first chart shows Europe's overall gas balance, and we see that gas demand in Europe is expected to decline slightly over the coming decade. However, pipeline imports from the likes of Russia, Algeria, Norway are expected to decline at a faster rate, and domestic production, particularly in the U.K. and the Netherlands, are also expected to decline at a faster rate. Therefore, even though the European gas market is shrinking, the need for LNG is increasing. That's probably a message which not everybody was expecting. The German power situation in the second chart gives you a good explanation of why gas demand is more resilient in Europe than many people think. Germany is towards the end of its process to phase out nuclear power, and it's also planning to reduce its coal-fired power by two-thirds by the end of this decade. In fact, the new government in Germany has a policy to completely eliminate coal-fired power by 2030. That's creating the need for more other sources of power, and as you can see here, renewable generation is growing rapidly. It's expected to increase by 80% during this period. As Wael explained earlier, renewable generation needs a partner to bring reliability, and that today is still natural gas, and therefore we expect natural gas demand to actually increase, not reduce, during this period. Europe needs more LNG going forward. And when you look at the chart here, you see that actually at first glance, Europe is very well supplied with long-term LNG contracts. When you dig a bit deeper, what you realize is the area shown in blue here is what's known as flexible long-term contracts. These are contracts where the supplier can take the cargoes away by providing some notice if they have a better opportunity or have other reasons to do so. Therefore, while the LNG demand in Europe is expected to grow, the reliance on the spot market or the vulnerability to the spot market is expected to increase significantly. This is very much driven by the regulatory uncertainty around gas in Europe, making it harder for European utilities to sign long-term contracts in the same way as Chinese utilities are. If we move on. We're now gonna look further ahead to 2040, and the first chart here shows the very rapid growth in demand we expect to see from Southeast Asia, South Asia, and China, representing about two-thirds of the overall LNG demand growth. This is driven by economic growth and coal to gas switching in China, but it's particularly driven by LNG replacing declining domestic gas production in Southeast Asia. This is demand that is very, very certain. It's not dependent on economic growth. It's simply replacing domestic gas with LNG into existing gas customers through existing gas infrastructure. We pull all this together in the way we usually do and end up with the supply demand chart on the right. The area in red is the LNG production that's in operation today, and that obviously declines over time as fields deplete and projects come to the end of their natural life. The area in yellow is the LNG that's under construction today, including the mega trains in Qatar. The blue is the range of central case demand forecasts from most industry commentators. What you see is for the next few years, we have a quite tight set of market conditions where demand could exceed supply. Then we definitely have a significant supply-demand gap opening up from the middle of the decade. The supply-demand gap is bigger than we were forecasting this time last year based on continued strong demand growth and more uncertainty, more issues with the supply mix. If we move forward to our final slide. We've told you a story about why the world needs more LNG and more LNG projects, but when we started talking today, we talked about decarbonization, and we're gonna finish with decarbonization. These new LNG projects need to not only be competitive but also have lower emissions than in the past. This chart shows some of the many actions that are being taken in order to reduce the emissions of the LNG supply chain. We've seen a lot more action in this space in 2021 than ever before. That could be CCS or renewable power associated with the upstream production or liquefaction, operational efficiencies with shipping, renewable power again used for regasification or blending hydrogen into the gas output, and also a particular focus on more transparency about LNG emissions along the value chain and efforts to offset those to get to net zero solutions. If we move on to our final slide, then just to summarize, I think we've probably labored some of these messages, but natural gas has a very significant role to play in the world's journey to a net zero world. 2021 was an unusual year in terms of the amount of volatility that we saw in gas markets, and it demonstrated some of the fragility we see in the energy system today, which makes us concerned as we go into the energy transition. Because for the world to meet its needs for energy security, reducing emissions, and economic growth, more LNG will be needed, and we're seeing real momentum for that to be lower carbon LNG production. Thank you very much. We'll now move on to the Q&A session. Can we have Thanks, Steve, and maybe just a request. We're going to, of course, have another session after this on the IG update. If at all possible, ask for one to two questions max to make sure everyone gets a turn, but also to try to focus the questions in this session on the LNG outlook. We'll come back later on after the IG update and maybe take some of the more specific Shell questions. Tracy, can I go to you to invite the first question, please? Thank you, sir. As a reminder, to ask a telephone question, please signal by pressing star one on your telephone keypad. We will now take our first question from Irene Himona of Société Générale. Please go ahead. Thank you. Good afternoon, both. I had some questions around your chart on page 28, the LNG supply demand gap. In both your 2020 and 2021 LNG outlooks, you had presented that gap as occurring in around 2030. This year, it has shifted by 5 years to 2025, which is a big difference. As you stated, Steve, this is because of falling domestic production in Asia and Europe. My question really is, are there some ways of getting around this? We heard recently, for example, of a fast-tracked modular LNG development in the Congo starting up next year. What would it take to shift your expectation of that gap occurring in 2025, please? Thank you. Thanks, Irene. You wanna take that one, Steve? The way the data is presented, you can't have a specific year for when there's a gap because the blue area is a range, and the demand could be at the top of the range of demand forecast or the bottom. Depending on where we are in the range, that determines when you have a gap. You are absolutely right. We are forecasting a tighter medium-term market than we were last year, and we are forecasting a earlier need for significant new LNG investment than we were next year. I think there's various things that can happen. First of all, LNG is just a function or a subset of the overall gas market. As we've seen this year, it's very much affected by broader events in the gas market. The LNG market does not exist on a standalone basis. Particularly when we look at demand, we have to see what are the factors that are affecting gas demand. High prices are not actually good for any market. They're not good for demand creation. Ultimately, prices being too high causes demand destruction, and that's not in anybody's interest, so we are quite keen that things start to normalize relatively soon. In terms of new projects, they are happening. Obviously, the Qataris are leading the way with a significant investment in new energy supply at the moment. The U.S. is also the other leading source of new LNG projects. The U.S. is probably a particularly good place to look at regarding your question because it has shown an ability to develop LNG projects potentially more competitively than other sources, but certainly more quickly than other sources. The increased use of modular designs and modular projects is probably helping to speed up the project development. That's probably the biggest single impact on increasing supply more quickly. Thanks for that, Steve. I think the other couple dimensions playing up at the moment, of course, supply chain is heating up everywhere, so that's going to have an impact. That'll play into the overall picture. Permitting is getting more challenged in certain areas. If you think about East African supply, you also have the security issues that continue there. Multiple considerations, I think, that would impact our ability as a sector, as an industry to be able to scale up to meet that gap. Thank you for the question. Tracy, can we have the next question, please? We will now take our next question from Christopher Kuplent from Bank of America. Please go ahead. Yeah. Thank you, Steve. Well, good to hear from you. I'll start with those two questions and perhaps come back to you in the other section. I'll be very interested in terms of that new demand for term contracts, whatever you can say to us about at what indexation they are occurring. Is Brent indexation as popular as ever? I assume so. Is there a sign most critically that floats are moving up from 10%, 11%, where I believe they've been priced down to? That's question number one. Question number two, Steve, there's lots of one-off factors that you've highlighted that have contributed to this extraordinary spike in 2021, and I wonder whether you feel that relaxed about 2022. I mean, isn't there a case to be made that it could be even worse in terms of shortages? Or in other words, it doesn't take all that much in terms of worst case scenario planning to run into winter 2022-2023, speaking here of Europe, with as a precarious situation that we've just seen in December. I wonder whether you can give us any more detail on your short-term views. Thank you. Thanks, Chris. Sadly, one can envisage a worst-case scenario. Steve, did you wanna touch on those too? Yeah, sure. If we start with the last one. If you look at the forward curve, prices are pretty flat today until the summer of 2023. The market is actually expecting these tight conditions to last for another year and it not to be until the 2023 that we have a rebalancing. Obviously, prices can move significantly in either direction. The forward curve at the moment is pretty volatile. It's moving within a $10 range this year, so it's a lot of uncertainty there. But there absolutely is a scenario where tight markets and high prices continue to last for some time. The biggest factor is the uncertainty regarding what happens next with Russia. What we saw in 2021 was a very, very unusual situation that we shouldn't lose sight of. There were about 15 different factors that caused the situation to occur that we've seen, and they all moved in the same direction. Pricing in the same direction. All the supply issues were tightening, all the demand issues were positive. Normally you get lots of factors that affect a market, and many, many of them offset each other. 2021 was unusual because so many of them all coalesced to push the market in the same direction. We will have to wait to see what happens in 2022. It may stay the same, it may get better, or it could get worse. In terms of the new long-term contracts, there are various different indexes that have happened. Some of them are Brent indexed, as you'd expect from the Middle East being one of the big supply sources. Others are Henry Hub indexed, which is more predictable, seeing as the other big supply source is the U.S. What we've actually seen, though, from the U.S. this year is quite a few of those contracts being signed on netback formulas from the European or the Asian market, which is a new phenomenon. We continue to see more different long-term pricing constructs in the market, which actually from a Shell perspective, is a good thing. Super. Thanks for that, Steve. Tracy, can we have the next question? Chris, thanks again for the question. We will now take our next question from Paul Cheng from Scotiabank. Please go ahead. Hey, good afternoon, guys. Thank you for your time. Just curious that you guys have been selling a number of the net zero LNG cargos. What have you seen in terms of pricing? Have you seen your customer willing to pay for that or that, yeah, that's largely still a service? If that remains as a service, is that what really is profitable for you guys to do? Thanks for that, Paul. I think I'll just kick off and then hand over to you, Steve, on the market. I think the phenomenon of carbon compensated cargos is clearly becoming a bigger and bigger one. Last year, we transacted around 16 carbon compensated cargos, which represents north of 50% of the overall market. What was particularly interesting last year was the PetroChina contract, which was the first term contract for carbon compensated cargo. Young market, but quickly evolving. Steve, do you wanna talk about the pricing of those cargos? It's an important market to raise awareness that decarbonization doesn't come free. You know? The reality is we won't be able to carbon compensate the whole of the LNG industry. There's not gonna be enough trees available for this specific use. What we're doing is creating a mindset and an understanding that decarbonization is important, but it has a cost, and therefore it's important for people who are going on their decarbonization journeys to get used to having to bear that cost in their business. The ideal scenario is that we don't pay the cost, nor our customer pays the cost. It's actually the end user that ultimately pays the cost for the decarbonization. We're seeing some of our customers not just buying carbon neutral LNG from us, but having a lot of success in remarketing carbon neutral natural gas in their downstream gas markets to various customers that they have who have their own decarbonization journeys. Tokyo Gas and CPC in Taiwan are two companies that particularly we need to commend their efforts, not just to buy carbon neutral LNG, but to build a carbon neutral end user market. At the moment, the cost of the carbon neutral cargos will get spread between the various participants in the value chain, and there isn't a standard formula. It's a commercial negotiation that happens in the same way as all aspects of the industry. Thank you, Steve. Paul, thanks for the question. Tracy, can we get the next question, please? We will now take our next question from Martijn Rats from Morgan Stanley. Please go ahead. Yeah. Hi. Hello. Thanks for this presentation. That was pretty comprehensive. So, two questions from me. The first one relates to Europe. I know that you're not policymakers, of course, but given your understanding of the market, I wanted to ask you this question. It seems to me that the whole European electricity and natural gas market is such a mess, and it makes Europe so uncompetitive, particularly versus the United States, where gas prices are so much lower. The volatility is also very high of both gas and power. If you were to decide. Yeah, if you were to have to sort of advise sort of a European policymaker about what is the best course of action to lower and dampen the volatility of gas and electricity prices in Europe, what would you advise Europe to do? What in your view would be the best course of action? I'd be very interested in that. The second one I wanted to ask, perhaps a little bit more straightforward, but I wanted to ask you about the financeability of LNG projects. I mean, it seems these days that oil projects are more and more difficult to get over the line, and the oil projects that are being done seem to only be done at very, very high sort of forward-looking IRRs. I was wondering to what extent the, you know, the capital constraints also are there in gas projects and LNG projects. If you could say a few words about that. Good. All right. Let me take a crack at the first one, and then Steve, if you wanna touch on the second one. Martijn, good to hear from you. I think you characterized it as a messy policy. I think it's fair to say that unfortunately, Europe right now is exposed to significant volatility, and there are multiple dimensions. I think let's start with the domestic supply, domestic gas production. Around a decade ago, Europe and the U.K. had around 35%-40% of the overall gas that they needed was coming from domestic gas production. Today, that's less than 20%. I think one clear policy element is try to attract investment in gas in places like the North Sea and elsewhere, where right now a lot of the rhetoric is moving away from gas investment, which is creating more vulnerability and more dependency on international imports. I think secondly, you move into the space of storage. There's quite a bit of storage for gas in Europe. Of course, you can always do more. The issue isn't just about having infrastructure, it's also making sure that that infrastructure is filled when you most need it. When the injection season started last year, storage was filled to the level of around just north of 30%. The five-year average before that was around 45%. Creating the right incentives to make sure that the storage is filled is another piece of the overall picture. Then I'd say thirdly, trying to be consistent with messages. The EU hasn't been consistent with messages around, does it like or does it favor gas? Does it not favor gas? Of course, what's happening is those who need to invest in the infrastructure associated with gas take that, those mixed messages and walk away from potentially some of those investments. I think a much more coherent policy that starts with the domestic gas production through to storage, through to be able to articulate a clear policy and support clear demand levels can all contribute to a lot less volatility. The final thing I'll add is back to what Steve showed earlier, which is, of course, as you look at the share of divertible cargos coming into Europe, that just keeps growing with time. That's a vulnerability because it means you're more and more exposed to that international volatility. Therefore, if you want to create a much more solid foundation, Europe needs to be able to think about how it can do that. Steve, do you wanna touch on the financeability of any- Yeah. I'll just build on that a little bit as well. Please, go ahead. Yeah. You know, fundamentally, the reason gas is cheaper in the U.S. than in Europe is that the U.S. is fortunate to have abundant shale gas. You know, domestic gas is typically cheaper than pipeline gas, and pipeline gas is typically cheaper than LNG. Geography has a big impact on gas prices around the world. We can't deny that. The issue that we were highlighting in the outlook wasn't so much around the cost of gas in Europe, but the vulnerability and the security of supply challenge that Europe has, and that's the policy issue. Again, it's not necessarily the policies today that are a problem, it's the uncertainty over what future policies will be. There is an expectation that policies in Europe will become more and more unfavorable to the buyer or the importer, and therefore that creates a big risk for European utilities signing long-term LNG purchase contracts to manage the security of supply exposure that they have. The financeability issue is, again, it's the same issue. It's this perception issue. I think that in the presentation that we have delivered a compelling story why gas, and particularly LNG, is a very sustainable business for at least another 20 years, why more LNG will be needed and why more projects will be needed. Therefore, the financeability should be quite straightforward. Again, energy projects, gas projects, as you noted, are facing challenges and uncertainty and additional challenges to bring the financing that's clearly needed because gas can play an important role in this decarbonization journey. Clearly, Qatar is successfully building significant amounts of new LNG export infrastructure at the moment. You know, there's every expectation the money will be found for that. There's lots of people who are keen to participate in those projects. Again, looking at the U.S. will be interesting. You know, a lot of the contracts signed in the last year were by U.S. producers, and we'll be looking very closely at how successful they are at achieving financing because that may prove to be a constraint on the market or not. We'll have to watch that closely. Thanks, Steve, and thanks, Martijn, for the questions. Tracy, if we can go to the next question, please. We will now take our next question from Alastair Syme from Citi. Please go ahead. Thanks to both you for your presentation. Steve, I wonder if maybe you can comment about what price you think that gas users and consumers can bear as you think about your medium-term forecast, you know, bearing in mind there's been so much inflation in prices here in Europe in recent months. Then related, you know, do you think the relationship between gas and oil pricing is now truly broken? That's all I have. Yeah. First of all, I don't believe the relationship is broken. We showed you a chart in the presentation that showed that 30% of the LNG market is sold under spot and short-term contracts, which means that 70% is sold under long-term contracts, and they're typically indexed to other things, and they're typically indexed to oil more so than anything else. Actually one of the impacts of the very high spot prices we've seen in 2021 will probably be a stronger desire for people to sign long-term contracts and actually a continuation of this strange world that the LNG industry exists in, where you have long-term oil index contracts, long-term gas index contracts, and a spot gas market all coexisting. We don't think the oil relationship is gone. Again, because 70% of the LNG market is sold under long-term contracts, most of the LNG that's been sold in the last year hasn't been achieving the very high spot prices that you've seen. Not all customers have had to bear that price level. We have seen as prices have increased when different countries have dropped out of the market. For example, India today is buying very little amounts of spot LNG. India, we've always said, is a price-sensitive market, and we've seen at what price India will buy LNG and at what price it won't. Clearly, companies and countries are prepared to pay the current spot market price for LNG, or else the cargos wouldn't be sold at that price. The market wouldn't be that price. It's not that all customers need to pay that price. Customers have to make decisions on their security of supply needs versus their flexibility needs versus their pricing risk, sovereigns and decide how to structure their portfolios between long-term contracts indexed to other things and relying on the spot market. Thanks, Steve. Thanks, Alastair. Can we go to the next question, please, Tracy? We will now take our next question from Roger Read from Wells Fargo. Please go ahead. Yeah, thank you. Good afternoon to you. Two questions, if I could. One of them just as we think about the supply issues that happened in 2021. I mean, demand, I think, is way too hard to forecast. What you see that could maybe easily reverse there, in other words, you know, the negative surprises that are pretty identifiable that should bring some supply back in the market. My other question, within your overall outlook to 2040, how much coal to gas switching is assumed, coal to, you know, LNG switching is assumed in your 700-ish million tons per annum forecast? Going back to the, you know, sort of the decarbonization goals that are projected for various countries like China and India and so forth, just how that all wraps together. Thanks, Roger. I'll take the first one, and then I'll give Steve the opportunity to address the second one. I think supply issues in 2021, Roger, two key buckets there. One was gas supply challenges in certain markets. I'll come back to that in a moment. Secondly, some operational issues, mechanical, issues related to turbines and the like. I think on the first one, a few markets had some challenges in gas supply issues. A market like Nigeria suffered some of those challenges, partly because of COVID challenges that essentially impacted construction activities and drilling of wells through the 2021 timeframe. Therefore, that had an impact on overall DCQs. Beyond that, it was accentuated further in a place like Nigeria with security challenges that particularly popped up last year. The combination of that meant that gas supply that was meant to be coming in to be able to compensate for some of the decline did not materialize. The other big market was Trinidad and Tobago, where some of those supply issues were experienced. That has been improving over the last quarter and through the fourth quarter and is expected to continue improving as new molecules come through. This is not the beginning or the end of it. I think, you know, the reality is you have more and more mature assets, you have declining fields, and those supply issues are just part and parcel of an industry that is moving into the next phase. All operators continue to try to do what they can to be able to make sure that new supplies are ready to go. Let me hand over to you, Steve, on 2040. Yeah. On the coal to gas switching up, we don't have a single number in terms of exactly how much coal to gas switching there will be. It is one of the three big drivers of increased LNG demand in Asia, along with economic growth and energy demand growth and replacing declining domestic gas production. I think the best way to think about it is if you look at China and India's government targets for the gas share of the overall energy mix. China today has about 8.5% gas in their energy mix, which is very low. In North America and Europe, it's normally a quarter to a third of the overall energy supply mix. China has a plan to increase from 8.5% gas to 15% by 2030. India has a plan to increase from 7% today to 15% by 2030. As gas will increase its share of the energy mix, coal will likely be the fuel that's displaced. In fact, coal will likely come down more because renewables will also displace coal. If you think through China going from 8.5% to 15%, India 7% to. It might not get to 15%, but you basically see gas doubling its share of the energy mix in these two key markets over the next decade. Actually, that means the gas demand more than doubles because not only is gas doubling its market share, the overall energy market, the overall energy demand is growing as well. Coal to gas switching is a very material part of the growth that we see. Thanks, Steve. Maybe the only other thing I'd add there, Roger, is roughly two-thirds or so of the overall market growth there is non-power related. This is not just coal to gas and power. It's also coal to gas in many of the other areas, but not just coal to gas. It's into the hard to electrify sectors. It's a relatively broad demand growth for gas. Thank you for the question. If we can have the next question, please, Tracy. We will now take our next question from Giacomo Romeo from Jefferies. Please go ahead. Yes, good afternoon, and thank you for the very detailed presentation. I just looking at again at the supply demand gap chart you have on slide 28. If I look at the yellow shaded area, looks like compared to the previous charts you had, you pushed to the right some of the- Supply projects from 2025 to 2026. If I look at the left chart on page 25, you can see we have very limited additions of supply in 2025. Just wondering what are the underlying assumptions there because there are quite a few projects that are supposed to come through in 2025. Related to that, if I look at the supply additions in 2022 that you show on page 25, which are about 25 million tons, and then I compare it with those you show on page 23, the total you have on change in supply looks like, I mean, it's. On page 23 you have a lower addition in supply in your chart there for 2022 versus the one on page 25. Just trying to understand what are the moving parts between the two charts that may move from one to the other. Thanks for that. Yeah, thanks. I can't quite reconcile all of the charts in my head. I think the biggest delay behind the shift in the yellow section on the overall supply and demand chart will be related to Mozambique. Clearly, that was a project that was sanctioned and you know, a significant supply project and construction was started and was put on hold. The assumption in the chart is that the project gets completed, but on a later date than we were forecasting previously. Then there'll be various other you know, changed assumptions on other projects, which projects happen and when they happen. In terms of the other reconciliations, I can't go through them all off the top of my head. Yeah, sometimes we are showing new capacity coming to market, and sometimes we are showing the change in actual supply volumes year on year. The two are not necessarily the same, so apologies if that caused any confusion. Thanks for the question, Giacomo. I suggest our investor relations team just comes back to you offline and just explains the background to that. Chris, can we go to the next question, please? We will now take our next question from Bertrand Hodée from Kepler Cheuvreux. Please go ahead. Hi. Thank you for taking my question. I have two, if I may. The first one relates to a little chart shown on page 19, the third one, showing the Russian pipeline supply, obviously, sharply down. Have you made a scenario for 2022 if those Russian pipeline supply stay at current level until year-end? Are we going to have a big issue in Europe? That is the first question. The second question is related to an earlier question from Chris, and I'm not sure I got the answer from you, Steve, on that one. You indicated that on the long-term contracts that were signed, there were a lot of different formulas. More precisely on the one that are still oil price linked, can you give us a flavor of the slope that were used in those new contract being signed? Thank you. Okay. Go ahead. Obviously the amounts of Russian gas that gets delivered to Europe would have a big impact on the European market. It's not the only factor that will affect Europe. The weather has a big impact on the market as well. We are relatively fortunate that we have just been through a relatively warm winter in both Europe and Asia. Had we had a cold winter this last winter, then the market conditions and prices would be at quite a different level to what we're seeing today. We are pretty much through the current winter. If Russia continues to produce at the current level to meet its long-term contractual supplies, then the market should get through the summer fine, but next winter would obviously be very challenging. It will depend on many, many other factors. In terms of long-term price formulas, we don't tend to share specific formulas. I think Chris had a pretty good read of the market. I think we've got to the bottom of the market and seen an inflection points. We're seeing more buyer appetite for long-term contracts. You know, not unsurprisingly as a result of the very high spot prices we've seen recently. Therefore, the current market is probably, you know, at the top end of the range that Chris might have talked about. Thanks, Steve. Bertrand, thank you for the question. Tracy, maybe we can go to the next one. We will now take our next question from Jason Gabelman from Cowen. Please go ahead. Hey, thanks for the presentation and taking my questions. I wanted to ask two. The first on one of the demand drivers you mentioned a couple of times, which is decreasing domestic supply in Asia. Can you just discuss what gives you confidence that Asian countries won't respond to higher gas prices and invest more to arrest some of the declines that you're forecasting in your LNG Outlook? The second question was on gas solving some of the intermittency issues in renewable power. Can you give us a sense of h ow much demand you're assuming that intermittency solving provides for gas over your forecast period? Thanks. I can take the first one, then maybe if you wanna address the second one, Steve. Jason, on the supply side, of course, we have traditionally had a strong position on the supply side in Asia. A lot of it is just driven by the realities of the subsurface. It's less about molecules having been discovered, and that it's the price signal that we're waiting for. It's typically that many of those basins are mature, and that the majority of exploration has happened. There isn't a huge amount of exploration activity at the moment. Actually, a lot less than traditionally we have seen around the world, but exceptionally so also in Asia. Even in a scenario where certain exploration wells are successful, you still have a good 7 years between working the studies to be able to develop the infrastructure and then a good 4 years to construct it, meaning that you are towards the end of the decade before you can get into those opportunities. Having said that, of course, you know, small discoveries that are tieback options to existing infrastructure, that will always be in the money in an environment like this, and you will see some of those play out, but that's a relatively small portion of the whole. I would suspect for the next 5-6 years, it's unlikely to see a material change in the overall supply forecast. Who knows what discoveries happen and therefore can influence the end of the decade. Steve? Yeah, just to build on that. LNG markets that used to be domestic gas markets are actually the lowest risk new LNG markets, the easiest ones to unlock. If you take a country like Japan or Korea, where the gas demand equals the LNG demand, there's a big infrastructure burden, and you have to get over to create a new market. You have to build the LNG import terminal, the pipeline, the power generation, the other gas demand all at the same time. That's an investment of $several billion to create a new LNG market. When you go into an existing domestic gas market that's seeing a decline in domestic production, which happens inevitably in many places, then everything's there. You have existing pipelines, existing customers that have been buying gas for a long time and want to continue to buy gas. You put the LNG regas facility in, and everything else is there and ready to go. The regulations are there, the understanding of the market is there. There is often a price transition that has to be gone through, but that's much, much easier normally than switching a market that's underpinned by gas infrastructure and gas supply onto a completely different fuel. In terms of solving gas intermittency, it's going to be different in different areas. When you look at the Brazil example particularly, but also Europe going forward, you see very much gas being the complementary role for renewables. There are other places that benefit from cheap domestic gas and will use gas in their baseline load generation. Over time, we would expect more and more of this gas demand forecast for the electricity sector to be that intermittency, firming, reliability providing solution. Thank you, Jason. Tracy, can we get the next question, please? If I can please ask the speakers just to mute your line when I'm speaking or when the participants are asking a question. Thank you. We will now take our next question from Paul Sankey from Sankey Research. Please go ahead. Hi, everyone. I really appreciate this presentation every year. I think you've kind of answered this, and I'd ask you to answer it second, but you mentioned that there were 15 or so elements that all went together to conspire to cause 2021 to be such a crazy market in particularly European gas. With these very high price environments, what are the elasticities of demand that perhaps have surprised you in terms of how the market has reacted, you know, to the insanely high prices and the fact that it seems to have sort of kept buying gas regardless globally, as a function, as you mentioned, I guess, of winter? That's part one, if there's anything you'd add or perhaps one of those 15 elements that really surprised you. The second is, you've talked about a supply and demand gap, and this is perhaps the more important of the two questions. How are we seeing changes in financing, for projects, or how are we seeing changes in the way that the supply side is developing, given that, you know, on your forecasts, we have a pretty imminent problem here, given the lead time, and it's a problem that's getting worse versus your outlook last year? Thanks. Steve, I think you've covered that, but do you wanna touch on it again? Yeah. I think your first question actually contained the answer within it. What surprised us most was not that prices went up, but how much they went up and how resilient they were at the current level. Yeah, it's there are lots of different things that have happened and, there's no one that's kinda jumped out. Well, had we seen this coming, then it would have all made sense. It was just so unusual, as we've said, for everything to kind of push us in the same direction. Project financing is interesting because, as you say, the world needs more projects. Typically, Qatar and Russia are places that have. There's an expectation we'll provide a large portion of that new supply that's needed. They're countries or projects that have typically been able to secure funding without necessarily going to the debt market. The U.S. one is probably the most interesting one at the moment, and particularly the projects that are selling using new commercial structures as opposed to a simple Henry Hub cost plus price structure. There is no reason why LNG projects aren't funded based on netback pricing, but it's never been done yet. Whether that happens with the project that's trying to achieve that at the moment, I think that will be a very interesting signpost in how this moves forward. Thanks, Steve. Paul, maybe let me add to your first question from what Steve mentioned. I think what's been striking is that over time, of course, and Steve showed a chart on that, oil capacity in places like Japan has shrunk significantly. Nuclear stoppage of nuclear facilities in Europe has had a big impact. Coal phase out is also having a big impact. The capacity that typically would have been alternative capacity, if one commodity price was increasing, that flexibility is no longer there. Of course, elasticity of demand from a perspective of a home or a business, it's very difficult to walk away from just getting energy. I think we are slowly moving into a place where those alternatives are no longer available or viable, and therefore, I think it's just accentuating that spike when it does happen. Thank you for the question, and if I can go back to you, Tracy, for the next question. We will now take our last question from Paul Cheng from Scotiabank. Please go ahead. Hi. Thank you. Two quick follow-up. One, I think, Steve or you kinda mentioned that, China is going to decarbonize and, part of the LNG increases the reduction in coal. But in the short term, the Chinese government just have the marching orders to boost their, coal production as much as they could. And how, if any, that will change your very short-term outlook for this year, next year, related to the Chinese LNG growth. And secondly, in the LNG, I think in your chart or presentation, you're talking about the LNG shipping. Just curious that, I mean, in the past, I think the construction cost of an LNG ship is about 20%-30% higher than the conventional ship. And so what is the cost difference now? What is the incremental infrastructure cost that you estimate the industry will need in order to really make the LNG become a more viable or in the mainstream for shipping? Thank you for that, Paul. Steve, do you wanna touch on those? Yeah. Shipping is typically a relatively small portion of the full cost of the LNG value chain. We've seen ranges in the cost of a LNG ship, you know, I don't know, between $180 million and $220 million dollars over the last few years. In terms of the actual impact that has on the landed cost of LNG, it's pretty small. You know, what we're seeing today actually is not a particularly tight shipping market because although LNG demand is very, very strong, we're seeing a lot of that demand coming from Europe and actually the shipping requirement reducing overall as the incremental voyages are getting shorter rather than longer. Steve, just to, I think part of the question was for LNG powered vessels, compared to conventional vessels, are you seeing a- Sorry. Significant- I heard the question I heard was the cost of an LNG vessel compared to a conventional vessel. Obviously it depends which conventional vessel you're comparing it against. Right. There's a whole range of additional or different costs for shipping. For an LNG-fueled vessel, if that was the question, then we're maybe talking $5 million-$10 million more than a conventional vessel for, you know, a large tanker or bulker, that kind of order magnitude. In terms of coal demand in China, I think, you know, the gas markets globally are very tight. Coal prices are high. It's not surprising to see more coal production encouraged in China. That said, we still see a long-term trend for continued growth in Chinese gas demand and for LNG to play a ever bigger role of supplying that Chinese gas demand. Super. Thanks, Steve. Paul, thank you for that last question. I think that concludes our LNG Outlook presentation. We'll be back in just over half an hour to give you an update on the IG business in Shell. Look forward to hearing many of you at that session. Thanks and goodbye. This concludes the session. Thank you for your participation. Be reminded there is a further session at 3:30 P.M. GMT, where Wael Sawan will provide an update on Shell's Integrated Gas business. You can find the joining instructions on our website. You may now leave the call.