Hydrocarbons remains our largest customer sector. Global macro trends such as population growth and economic development of underdeveloped nations continue to drive world energy demand.
While long term energy forecasts differ slightly between our major customers, energy agencies and industry bodies, all outlooks forecast growth in core oil and gas markets to 2040. This includes a resurgence in the medium-term LNG market with LNG seen as a key mid-term clean fuel source to fill an expected resource gap caused by the reduced acceptance of coal. A lack of investment in the past four of years has accentuated a growing supply gap expected around 2022 for both gas and liquids. To counter this, final investment decisions (FIDs) on projects within the hydrocarbons market are expected to triple from 2017 levels by 2019.
Although we are seeing increases in our customers’ budgets we expect continued capital discipline, focused on projects in the lower end of the cost curve. This includes an increase in offshore projects following a major rebasing of construction and technology costs in that sector.
Our strategic focus on onshore conventional (including in Saudi Arabia), offshore and MMO will continue while we have added refining and LNG to our key strategic priorities at a global level. MMO reflects our ongoing commitment to the operating phase within the asset life cycle. We will globalize the capabilities gained through the recent acquisition of our UK Integrated Solutions business. Refining will focus on activity in the Middle East and Asia and, in the longer term, changes in the output product mix as gasoline is displaced by electricity as a transport fuel.