MARK GUEST, OilCareers.com
The ongoing skills shortage continues to provide an uncertain outlook for the oil and gas industry, with ever-increasing pressure for energy majors to ensure a constant flow of talent to help keep up with new discoveries, emerging technologies and an overall increase in activity worldwide.
The Global Oil & Gas Workforce Survey: Expectations for hires and pay rates in the oil and gas industry (H1) 2013, the latest joint report from OilCareers.com and Air Energi, reveals that ensuring the right personnel are on the ground in the right place will present a continuing challenge, with 32% of respondents highlighting the ongoing skills shortage as the biggest threat to the sector.¹
This figure represents the need for employers to make the oil and gas industry an attractive proposition to new entrants by highlighting the wide range of possible roles in high-demand disciplines, from engineering and geosciences, to project control, health and safety and drilling positions. Furthermore, it has never been more important for organizations to continue the trend of reaching out to crucial cross-sector transferable skills that can be molded into vital expertise in the industry.
However, oil and gas majors are doing their best to promote the sustainability of pursuing a career in energy against a relatively unstable economic backdrop. For example, the last few months have seen the Obama administration voice the view that U.S. self-sustainability in energy is drawing closer, spearheaded by the natural gas revolution in North America, with the North Sea also being actively publicized as seeing a rise in production and a certainty on decommissioning in years to come.
The skills gap has also inspired an increase in salaries globally, in an attempt to attract young people to the sector. This inflation has been accelerated in regions, such as Africa and the Middle East, where infrastructures are more volatile and salaries must reflect the risks associated with working in such locations. Employers must offer attractive employment packages, to encourage expatriates away from other countries with more stable and secure outlooks.
Figure 1 expands on some of the additional threats facing the oil and gas industry, with perceived economic instability and an overall shortage of skills representing the biggest challenges, according to respondents surveyed in The Global Oil & Gas Workforce Survey. Even with these and other concerns, the industry, as a whole, continues to build toward a positive outlook. Although certain risks are present, companies continue to attempt to mitigate this on two fronts, putting more resources into security efforts, and steadily raising salary rates for positions in less-stable environments.¹
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| Fig. 1. Perceived threats to the oil and gas industry. Source: The Global Oil & Gas Workforce Survey, 2013. |
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While the skills gap is a commonly discussed problem, it is not the only issue providing an uneasy industry forecast, with 20% of respondents also voicing concerns around the lack of skilled trainers.¹ This ultimately provides a major training issue, in terms of ensuring the constant development of new entrants to the industry. While organizations are implementing intense training programs to develop the next generation, there is still a distinct need to capture the peak of the aging workforce. It is vital that those with more than five years of industry experience share their knowledge and understanding, to prevent it being lost to those who are ultimately the future of the industry.
| Table 1. Hiring rates |
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| Table 2. Contract and salary pay rates |
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The joint report from OilCareers.com and Air Energi, now in its fourth year of publication, covers all seven major oil and gas producing regions, and highlights trends in both salary and hiring across the industry, Tables 1 and 2.
AFRICA
The challenge of opening new frontiers for exploration and discovery in countries, including Mozambique, Congo and Gabon, is, to some extent, being overshadowed by security concerns.
The four-day siege at an Algerian gas plant, the recent seizure of an oil tanker off Ivory Coast's main city of Abidjan, and the pirate attack on offshore supply tug Armada Tuah in Nigerian waters, which saw six crew members taken hostage, highlight the heightened security concerns associated with working in Africa. It is not surprising that 69.6% of respondents expect contract and salary pay rates to increase.¹
Angolan projects are continuing on pace with the announcement that BP plans to invest $15 billion in Angola over the next decade, with it being a partner in the Angola LNG development led by U.S. giant Chevron.² The LNG plant is one of the biggest start-ups worldwide this year. In line with this increased investment, Angola is now considered to be in direct competition with Brazil and the North Sea for top expertise, particularly in the subsea and HSE disciplines necessary to access their natural reserves.
The Nigerian Petroleum Industry Bill (PIB), which is more than 12 years in the making, should be passed this year. This complex legislation will result in the Nigerian government receiving increased levels of royalties, but those operating in the area have warned that the significant uplift may make the area unviable, and that exploration and production could suffer dramatically as a result.
While Africa is an exciting prospect in terms of reserves for operators, it is clear that, for the oil and gas industry to continue to encourage investment and continue to expand, security concerns will need to be addressed alongside potential civil, regulatory, technical and environmental challenges.
AMERICAS
Throughout the U.S., 2013 is expected to continue to be a big year for operators, with the rapid development of shale gas and shale oil plays affecting the energy spectrum on a global level, even over the past six months.
Canada and Alaska are also ramping up significantly, as the development of Arctic reserves becomes a reality, while Colombia and Argentina are emerging as major energy players within the Americas.
Offshore E&P is also reaching high levels in the Gulf of Mexico, with technology constantly evolving to allow operators to reach depths greater than ever before. As a result of this, positions most in demand in the area are: qualified designers, engineers (electrical, subsea hardware, petroleum, reservoir, mechanical) and seismic interpreters/geoscientists. This need for candidates experienced in certain disciplines echoes overall demand around the world, as seen in Fig. 2. While primary skill sets of applicants are in line with these roles, it is clear that there is still a genuine need for manpower in the region, according to the survey.¹
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| Fig. 2. Roles in highest demand today. Source: The Global Oil & Gas Workforce Survey, 2013. |
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This year, 56.7% of respondents expect there to be an increase in contract and salary pay rates within the U.S., in line with the uptake in activity. Breakthroughs across the region mean oil and gas majors are more determined than ever to both attract and retain talent, with OilCareers.com recently revealing a shift to staff roles offered by employers across the U.S., which have increased almost sixteen-fold in the last three years.¹
Statistics show that the margin between contract and staff positions, that in 2009, reflected an equal split, now reveal a shift to five times as many staff than contract roles, equating to 80% of job types currently registered on OilCareers.com.¹ This comes as part of a move toward longer-term recruitment strategies, with the aim of encouraging experienced personnel to the area.
Furthermore, comments that the U.S. may be close to energy self-sufficiency by 2030 from Bob Dudley, BP’s CEO, and the Obama administration, help promote the sustainability of pursuing a career in the region. That idea, coupled with company efforts, led to 41.7% of respondents expecting to see an increase in hiring rates.¹
ASIA-PACIFIC
Serving as the worldwide hub for shipbuilding and offshore fabrication, the major yards in Asia-Pacific have been operating at maximum capacity going into 2013, with some of the spillover work even landing in China, Thailand, Indonesia and the Philippines. Project delays are a certainty this year, becoming a question of how many months, rather than weeks in some cases. Besides the physical space required to meet these orders, labor is most certainly becoming scarce, forcing an expected inflation of over 73% in salary and contract pay rates from companies, which are looking further afield for the required workforce, in order to compete with other regions. Increasing demand has been seen in the region for disciplines that include naval architects, subsea engineers and project control specialists.¹
AUSTRALASIA
Major projects in the region are approaching the end of execution, so hiring rates and earnings for construction, commissioning, completion and start-up personnel are expected to increase by 63% in the next two years. Personnel required for the mid-stage of projects can expect relatively stable conditions, with operators and supply chain firms continuing to hire at expected rates.¹
There are currently 15 LNG trains in construction across Australia, with a mean average start-up date (subject to no further schedule delays) of 2015. Heading into 2013, the Australian oil and gas industry continues to feel the pressure of this large suite of LNG projects. The Gorgon project, operated by Chevron Australia, is expected to provide a projected $63.8-billion boost to Australia’s gross domestic product, as well as offer direct and indirect employment to around 10,000 people at peak construction. Gorgon has been the latest to announce a cost blow-out of $8.9 billion, to a total CAPEX of $51.9 billion, owing to labor costs, the strong Australian dollar, logistics and continued local productivity challenges.³
FSU-CASPIAN
Technological advances already in play elsewhere will be necessary to tap the discoveries in this region. Currently, project costs to kick-off the development of these discoveries are seen as being commercially unfeasible. As Russia becomes more open to foreign oil and gas partners and offers project partnerships, technical collaboration and federal investments, it is expected that the entire region will reap the benefit of these initial investments. Despite Russia becoming more open, hiring expectations for the FSU-Caspian region are the lowest throughout The Global Oil & Gas Workforce Survey at just a 17% increase.¹
EUROPE
Europe continues to be an appealing prospect for both nationals and expats. The high standard of living, combined with a broad range of professional opportunities, is an attractive proposition. However, this does not mean that the skills shortage is not being felt; disciplines in short supply include safety, civil/structural and environmental engineers, as well as E&P disciplines, geophysicists and geologists.
Record investments in northern European oil and gas have set a confident tone for 2013, with new engineering, procurement and construction work destined for developments in the North Sea, keeping Norwegian/European design houses and fabrication yards busy. These projects range from enhanced production out of existing fields to the commissioning of new discoveries, and are enabled because of technological advances. It is these advances being made and tested in North Sea waters that will help pave the way for future exploration in the Arctic. In line with new technology comes the need for people. Thousands of jobs are being created, because the technology required to proceed with discoveries requires a distinct level of expertise and knowledge for these assets to fulfill their full potential.
Record-setting investment and strong governmental support are increasing investor confidence in the region into 2013. Decommissioning is seen as a certainty, and the UK government’s move to provide decommissioning tax relief has been welcomed by oil and gas industry leaders, sparking interest from investors. Beyond this, the UK is also keen to maximize efficiency out of its existing developments. The introduction of the Brown Field Allowance for North Sea oil and gas, which was passed in September 2012, will reduce the tax rate from 62% to 30% on profits of up to $766 million from certain new investments on existing North Sea fields. This will ultimately prolong the lifespan of these projects and create thousands of jobs to support this activity. In line with this, contract and salary pay rates are expected to increase by up to 47%, as a means of attracting individuals to the region.¹
In mainland Europe, it is a candidate-driven market, with operators and engineering, procurement and construction companies easily finding themselves in bidding wars for top people, with there being a particular need for FPSO vessel design work.
MIDDLE EAST
With all regions around the globe facing resource challenges, as well as uncertain economic outlooks, the Middle East continues to lure skilled expatriates away from desirable design hubs, such as London and Houston. The offer of an unrivalled quality of life, competitive rates, attractive tax breaks and long-tenured placements is proving too tempting to resist for those professionals being recruited to the region.
However, the Middle East has experienced an uncertain forecast, with experts predicting that talented personnel are set to flock to Australia and Asia-Pacific, with the region expected to overtake Qatar as the leading exporter of LNG by 2020. However, these concerns have been partially allayed with foreign investment dollars and salary rates remaining consistent.
As a whole, hiring rates are expected to increase 45% across the Middle East, with the United Arab Emirates well recognized as a regional hotspot for project activity. Offshore and refining projects are expected to pick up across the year, as the Emirates plan to significantly increase production to fulfill domestic requirements.¹
Saudi Arabia is in close pursuit, with activity set to continue at a steady pace across the year, as multiple downstream and refinery projects come online. Most notably, Saudi Aramco has created a range of projects worth $82 billion, opening up huge employment opportunities in the area. Furthermore, Iraq continues to open its doors to increased investment, sparked by a desire from operators to access its significant reserves, which are estimated to be the third-largest in the world, despite instability caused by unpredictable political tensions.¹
With an increase in activity, however, comes a common problem: a need for senior expertise. A large majority of surveyed companies, 60.4%, expect to see an increase in salaries, with there being significant demand in the region for site construction personnel and senior level engineers. This trend is mimicked worldwide, with employee packages seeing a general upward trend and specific emphasis in geographic and topical areas that are considered to be high-risk.¹ 
REFERENCES
1. OilCareers.com and Air Energi, The Global Oil & Gas Workforce Survey: Expectations for hires and pay rates in the oil and gas industry (H1) 2013, www.oilcareers.com, 2013.
2. The Telegraph, “BP to use Angolan gas to fuel European homes,” http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/10019009/BP-to-use-Angolan-gas-to-fuel-European-homes.html, 2013.
3. Chevron Australia, “Injecting billions of dollars across Australia,” http://www.chevronaustralia.com/ourbusinesses/gorgon.aspx, 2013.
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