Tackling the skills crisis

As energy demand brings the skills shortage to the boil, O&GME looks at how the industry is responding.

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By  Nicholas Wilson Published  October 4, 2006

|~||~||~|The sharp production jolt in the oil and gas industry has caused an employment shortage, which is affecting projects’ costs and deadlines. Companies are adopting different strategies to deal with the crisis, from poaching and doubling salaries to battling workplace discrimination, bringing people back out of retirement and increasing training and career development.

One thing that all firms agree on, however, is that the lack of staff is straining the industry, and the sector needs to attract fresh faces.

Freddy Becker, Shell’s policy, compensation and benefits manager said: “All sub-surface engineering disciplines are strained. You can sense it.”

John Macdonald, Weatherford’s regional HR manager said: “The recruitment market remains buoyant. I’ve never seen it as ferocious and competitive as this. All that’s happening is that the same people are moving around and that’s not helping anyone, we have to open up new, untapped sources of recruitment.”

One line of getting new blood into the industry is universities. Not only are companies actively engaging with colleges to attract their graduates into the industry, they are also trying to shape curricula and even get high school students interested in signing up for a career in oil and gas.

Schlumberger’s Skillpool manager Sudhir Pai said: “There’s a general scarcity in the industry and it’s having an impact on projects, so our primary focus is to recruit fresh people. We maintain strong continuous relationships at the Universities from where we recruit.”

“Hopefully, our working with high schools and universities means that there will be enough people in the pipeline,” Becker said.

Many in the sector say that the industry has a very bad image problem, from its boom and bust cycles creating job insecurity to its ugly pictures of lonely rigs far from civilisation in inhospitable environments, to sludge and oil-covered workers. A quick glance at any newspaper headlines will often reinforce those ideas as the news often focuses on slicks and spills, soaring and plunging prices, global warming…

“We must show the modern, high-tech side of the industry. It’s a dynamic, on the move, industry that uses state-of-the-art technology with a highly skilled workforce that will be here a long, long time,” Pai said.

But while firms sink money into attracting new recruits, who will take time to come through the pipeline, the current crisis is immediate and as all players are fishing in the same skill pool the laws of economics have kicked in: Salaries are rising and many staff are looking for greater financial rewards, assuming that the grass is greener on the other side.

Macdonald said: “Hardly a week goes by without you hearing of people moving around between competitor companies. The shortage caused companies to do all kinds of crazy things to attract people, including very high temporary hikes in wage rates. One major EPC company wanted 900 people, mainly in project controls so they paid two to three times the going rate to get them. In London, contract engineering people were jumping ship for a pound an hour extra.”

The poaching and turnover cause unease in many companies. If someone’s motivation is purely money it often means they lack commitment and are not interested in a career, according to some recruiters.

Pai said: “When the first question is ‘How much will I earn?’ I worry. These are the people who treat the current upswing like a stock market. We offer training and career development and those who take this as a full package are those who interest us.”

And training is an area where all firms are active. In addition to making employees more skilled and productive it becomes a feel-good factor in retaining staff and showing that the firm values them and offers a career path and development.

To develop people Shell has several learning hubs in the region in Qatar, Oman, India and Abu Dhabi. “We expose them to the latest technology, they sense that they are at the front of the skills pool,” Becker said.

Weatherford says it is constantly reviewing its pay and benefits packages and selectively trying to improve them. It also has active programmes in place for training, and career development, which its believes play just as significant a part in retaining people as do competitive pay and benefits.

The firm’s primary strategy is to substantially increase the number of petroleum, mechanical and other engineering graduates it takes on worldwide, especially in the Americas, Europe, China and India, whilst, at the same time, regionalising its workforces as much as possible. Pai said Schlumberger has 20 nationalities in its top 50 global managers. Shell has a diversification programme and offers engineering scholarships to women.

But the strategies still haven’t plugged the gap, which manpower firms like Brunel aim to fill by hiring staff directly for clients in addition to providing its own specialists.

It does any upstream work providing senior and middle level staff and has a contract with Maersk in Qatar. Other major clients include Shell and British Gas in Dubai. Brunel has an agency in Dubai, is being pre-qualified this year by the oil companies and expects to kick off in Abu Dhabi next year.

The firm’s regional director, V. Mohan, said: “Three main resource places for the Middle East are China, the Philipines and India. The problem with China is that it has the very best skilled staff there, but they can’t speak English. And the Philipines has limited infrastructure so Filipinos can only get their experience in the Middle East.

India does have experienced, English-speaking workers. However, the lure of money and improved career prospects in the industry are pulling many Indians back to their country from the Middle East. MacDonald said: “Contractors in India are offering skilled professionals the same take home pay in India that is available in the UAE where the cost of housing has been escalating since 2003. Many Indians and other nationalities are therefore thinking they may as well be at home with their families.”

Mohan said that India, despite a 30% income tax, is putting up stiff competition for workers. “The day will come when senior and middle managers, design and operation guys won’t want to come to the Middle East. Five years ago, I was paying Indians US $200 per day. Today, it’s $350 – 500,” he said.

Salaries are globalising because the global personnel pool isn’t big enough for today’s needs. The result and challenge is a worldwide drive to attract, recruit and retain skilled staff.||**||

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