Upstream Newspaper Oil Skills Special Focus 2006

Upstream, 27 January 2006 25

Glasshalfempty...

...glasshalf full

An industry in need of a makeover

Oil’s global mid-life crisisPages 26&27

Poaching and stalking on theUS oil patch

Students take the plungePages 28&29

Katrina twists the knifePage 30

Call to arms in the oil sands

Alberta newcomers get warm welcome

Pages 32&33

Oil plc on action stations

UK education system gets the blame Pages 34&35

Old Father Time creeps up on Norway

Aker’s TV ad campaigncracks the popularity nut

Pages 36&37

Asia’s revolvingdoor

Lifestyle ‘willsave day DownUnder’

Pages 38&39

China is trainingan oil army

Indian brain drainfollows the money

Pages 40&41

Outsiders in their own land

Every deal cranks updemand for legal eaglesin Africa Pages 42&43

Petrobras magnet forBrazilians Pages 44&45

The living is easy in the Persian Gulf

Libya hopes to lure back its lost talent

Iran’s technical lionsled by donkeys

Pages 46&47

Russian time-warp Page 48

In Focus

ONE HALF of the world can’t findenough skilled workers to man thepumps primed by champagne-poppingcommodity prices. The other half ispouring cash into training but does nothave nearly enough jobs to satisfy avintage crop of petroleum graduates.Upstream brings its unique globalperspective to one of the oil industry’smost intractable problems.

Photo: HELGE HANSEN

THE GLOBAL oil and gas businessis facing an uphill struggle toattract and retain people, often dueto the negative image of itsenvironmental and socialperformance and perceptions of ashort-term cyclical industry thatfails to offer job security.

Jon Glesinger, managingdirector of Energy & NaturalResources at global recruitmentgroup Norman Broadbent, saysone of the biggest issues thatneeds to be addressed to attractthe right kind of people is to makethe industry look more attractive.

“I think we have done a verypoor job of communicating to thepublic in general just what thisindustry is all about,” hecomments. “I think the industry isnot very good at letting peopleknow it is not just about puttingpetrol in your cars.”

A survey carried out by therecruitment group across 1000people in the energy industryshowed that predominantly peoplewithin the business thought it a

great place to work, and a long-term proposition that they savouras it is technically challenging.

However, when the same groupwas asked about what peopleoutside the business thoughtabout the industry they said thecomplete opposite — it is a badplace to go, has a hire-and-firementality, and is dirty anddangerous with a poor safetyrecord.

A major new report looking atthe global issues surroundingrecruitment and leadership in theupstream business, produced byNorman Broadbent together withthe UK’s Energy Institute andDeloitte, is due to be unveiled nextmonth.

Glesinger says with fewer

people coming out of universitieswith first-class degrees it typicallymeans there are less engineers.This applies to every sector, butparticularly in the UK.

“In certain areas, such asgeophysics, there are just very fewpeople around with 10 to 15 yearsof experience,” he claims.

He suggest that if 50% of theUK oil and gas workforce is goingto retire in the next five to 10 yearsto be replaced by people who havegot 10 to 15 years’ experience theindustry will not only have fewerpeople overall but maybe also amassive crisis in leadership.

“This could result in powershifts from big Western oilcompanies to those in Asia, India,Latin America and Africa,” hesuggests.

Franklin Boitier, a manager withTotal in Paris, says one the biggestrecruitment challenges is

overcoming the image problem inwhat is so often perceived to be adirty industry.

“We have to prove what we aredoing all the time. When you goout onto the street and talk topeople you convince a lot of themof the value of our industry. Youhave to go out there and talk tothe teachers and pupils in theclassroom,” he suggests.

Oil companies are beginning torecognise that globally they needto increase the pool of labour, asshuffling around staff within alarge organisation or poachingfrom competitors does nothing tosolve the long-term overallproblem.

The Society of PetroleumEngineers, which has unveiled a

number of initiatives to attract andretain young people in theupstream industry, recognisesthere is an urgent need to attractfresh blood to replace the largenumber of professionals who willbe retiring over the next decade.

In addition to the loss ofpersonnel through retirement, theindustry has recognised the effectsof ‘staff rationalisation’programmes following the mergersamong both major Western oilcompanies and contractors thatcaused the global workforce toshrink from over a million in themid-1980s to about half a milliona couple of decades later.

“Globally there is a marketshortage of skilled personnel andmuch of that is down to the ageingworkforce, which is a key issue atthe moment,” says HowardKewney, Chevron’s humanresources director in Aberdeen.

“As a global oil company we arealways looking at how to meettomorrow’s requirements. Today inChevron our average age is around

46 or 47. However, ifyou went back 20 yearsin the company itwould have been muchless than that.”

Deloitte says theindustry is facing acomplex globalproblem, not so muchcreated by an overallshortage of capablepeople but more thatthey are located in thewrong places.

It suggests that toremedy this oilcompanies in particularshould follow the leadof service companies,which take a muchmore global approach.

Many servicecompanies have taken bold stepsover recent years tointernationalise their operationsand invest heavily in recruitmentand training.

“I think that when you look atwhere the oil price is today andwhere it looks like being in thefuture it will sustain significantlevels of activity on a worldwidebasis,” says Michael Salter, chiefoperating officer of the Aberdeen-based Abbot Group.

“I think we have an industrynow that has got some confidenceto go out and hire people the wayit did in the 1980s. However, itwill still be a cyclical business, butmaybe the cycles will be muchlonger and less steep than in therecent past.”

FEW PEOPLE in oil and gas willbe unaware of the ticking time-bomb created by the industry’scurrent demographics.

An uncomfortably large pro-portion of older professionals willbe retiring over the next decade,at an average age of 55, and thereare far too few experienced “mid-career” people in the 30 to 45-year-old bracket ready to fill theirshoes.

At the entry-point to the indus-try, things could improve rela-tively quickly in terms of num-bers of graduates. But in the mid-dle of the career path there is amissing generation.

This has been caused by morethan a decade of cutback and con-solidation, along with the prevail-ing image of oil and gas amongthe young, especially in the US.

With oil prices rocketing andthe resultant dramatic rise inactivity, this personnel vacuumhas suddenly become of evengreater concern. It looms as abasic pinch-point to hobble pro-ject progress in the immediatefuture.

Precious little informationabout the precise scale of theproblem has been available, letalone much sign of industryreaching a concensus on the wayto solve it. However, a convinc-ingly thorough and unique evalu-ation has just been completedthat could help alter that.

“Everybody has been talkingabout the big crew change butuntil now nobody has quantifiedwhat it actually means,” saysAntoine Rostand, head ofSchlumberger Business Consult-ing in Paris, the business man-agement arm of that company.

What Rostand’s team has doneover the last year is to conduct thefirst real study to quantify theglobal challenge that the industryfaces. They have carried out abenchmarking survey of morethan 30 oil and gas companiesand nearly every universityinvolved in petroleum studiesaround the world.

Their report, Surviving theSkills Shortage, examines globalsupply and demand trends forpetrotechnical professionals,how companies are reacting, andwhat best practices could beimported from other industries.

Much emphasis naturally fellon the sub-surface disciplines ofgeology, geophysics, and petroleum

engineering, where the issue isparticularly acute. But, says Ros-tand, the findings apply acrossthe board of field developmentdisciplines.

Those findings were presentedto participants last month.

“In the room we had seniorpeople from oil companies repre-senting two-thirds of worldwideoil production,” says Rostand.“They came in with an idea thatpoaching was a solution. Theycame out realising it was not.That alone will have an impact onthe industry, I think.”

The basic conclusions are sim-ple. “We need to recruit moreyoung people; we need a large-scale knowledge transfer fromthose close to retirement to accel-erate the development of newrecruits; and current approacheslike mid-career recruitment willnot work.”

Demand for petroleum talentwill increase by around 7% a yearin the next 10 years, and on aglobal basis the supply of techni-cal professionals is enough forthat period, says the report.“However, the balance varies sig-nificantly across the globe.”

The major regions of seriousshortage of graduates will beNorth America, the Middle East(a lot of oil and not a lot of peo-ple) and to some extent Russia.On the other hand, Asia and LatinAmerica have “abundant excess”of technical graduates fromemerging sources such asVenezuela, Mexico, China, Indiaand Indonesia.

This means companies willhave to recruit from new areas —from where the graduates are, notwhere the companies want themto be — and this presents chal-lenges for the established modelscurrently in place at most inter-national operators.

The mid-career problem isclearly the most pressing: “Thereare not enough people between

26 Upstream, 27 January 2006

US students take the plunge : Pages 28&29

Oil’s Schlumberger Business ADRIAN COTTRILLLondon

An industryin need of amakeoverPoor public image damaging recruitment prospectsjust as bulk of the workforce heads for retirement

CHRISTOPHER HOPSONLondon

A matter of perceptions: many outsiders see the industry as dirty and dangerous,with little in the way of job security Photo: BUSINESS WIRE

30 and 45 with the experience tomake autonomous decisions oncritical projects across key areas.”

Inevitably things will get worsebefore they get better. “Withoutany appropriate actions, we seethe mid-career picture improvingonly after 2013,” says Rostand.

The situation can only be

remedied by changing the waytraining and development of peo-ple is currently managed, he con-tinues. “As an industry we arevery conservative. For example, ittakes eight to 10 years to make anautonomous geoscience profes-sional. In other industries such asdefence, automotive or IT, auton-

omy can be reached in less thanhalf that time.

“So we need a new way oflearning where you mix formaland on-the-job training alongwith coaching in a blended learn-ing package.” No matter that thegrey heads are so busy in today’sbusiness climate, he says, “man-

agements have to be convincedthat there is no other way”.

Rostand also reckons compa-nies may need to change theirorganisation from the asset-basedmodels created a decade or moreago in the drive to focus on cost-control at a time of low oil prices.“Now the issue is not so much

cost-control as the right utilisa-tion of people. So I think we willsee more power given back to thecentre, to central drilling depart-ments and the like.”

Coupled with this is the possi-bility of outsourcing. “Companiesshould ask themselves, what isthe core of my business, whatshould I keep in house and whatshould I outsource to leverageoutside people, including my ownretirees.”

Rostand concludes: “The coreof what I am saying is morerecruitment, accelerated develop-ment, better location of people,and an outsourcing strategy.”

Upstream, 27 January 2006 27Demographic time-bomb: the danger isclear in this plot ofage distribution forpeople in theupstream business,especially for NorthAmerica (the redcurve)

Graphic: SCHLUMBERGERBUSINESS CONSULTING

global mid-life crisisConsulting measures the personnel vacuum behind today’s current crop of leaders

THE GRADUATON rate of petrol-eum engineers in the US is stillwell below the peak levelsreached during the oil boom ofthe late 1970s and early 1980s butnumbers are steadily creepinghigher.

For example, the petroleumengineering school at the Col-orado School of Mines (CSM)saw peak numbers of close to 200a year in the early 1980s drop to alow of about 25 the followingdecade.

CSM plans to hand out 45petroleum engineering degreesthis year, up to 70 in 2007, andpossibly 100 by 2008.

“People all over the world forthe past few years have beenfaced every day with the risingprice of gasoline, crude oil andnatural gas,” says Dr Craig VanKirk, CSM’s petroleum engineer-ing department head.

“These stories influence high-school teachers, counsellors andparents who in turn suggest pur-suing petroleum engineering totheir students, and that is one of acombination of several factorsdriving increasing enrolment,” heexplains.

Van Kirk adds that the ease offinding a job, the assurance ofstarting salaries in the $50,000-per-year range and opportunitiesto travel the world while workingare also enticing more students.

Larger petroleum engineeringprogrammes like the one at TexasA&M University in College Sta-tion are also seeing an uphilltrend.

A&M gave out 880 petroleumengineering degrees in 1985. Thatnumber had fallen to a record lowof 162 by 1990. The number rosebriefly after 1990 and fell again to191 in 2001.

However, the graduation ratehas steadily increased since then

with 298 students crossing thestage last year.

The University of Texas inAustin has also seen a sharp risein graduate numbers over thepast four to five years.

UT was producing about 25 to30 graduates by the late 1990s buthas doubled that rate since 2001.The number is expected to reachup to 60 students by the end ofthis year.

UT says the improvement islargely a result of its aggressiverecruiting programme. “We havean external advisory committeemade up of upper-medium tohigh-level executives in the indus-try that meet with us twice a yearto discuss industry issues andneeds,” says John Halton, UT’sassociate dean of college rela-tions.

“About four years ago, theypointed out to us the comingworkforce shortage and asked usto do something about it,” headds.

Halton explains that UT goesabout recruiting petroleum engi-neering students as actively as itrecruits football players.

Recruiters regularly visit highschools to talk with students andparents who have indicated aninterest in petroleum engineer-ing. The university is also in regu-lar contact with alumni who helpidentify potential recruits.

Retention of students enrolledin the petroleum engineering pro-gramme is also a concern at UT.

One of the university’s newestretention tactics is the LonghornTraining Camp.

Held annually in Louisiana,the camp gives students anopportunity to get hands-on

training in production opera-tions, drilling and well controland health, safety and environ-ment practices.

Beyond piquing students’interest in what goes on in thefield, the camp also serves to pre-pare them for the workforce aftergraduation.

“If our students can be produc-tive more quickly we can saveemployers two or three months

worth of money spent on train-ing,” says Halton.

Amid the looming workforceshortage, petroleum engineersfrom all of the nation’s engineer-ing colleges and universities are ahot commodity.

For example, 100% of thepetroleum engineering graduatesfrom UT have been placed in jobswithin three months of leavinguniversity for the past 15 years.


Katrina

ROBUST commodity pricesand a shortage of oil and gasprofessionals have fuelled ahiring frenzy in the US oilpatch.

Operators and contractorsalike are hot on therecruitment trail, stalkinguniversities keen on bringingfresh blood into their oilyranks, but at times having toresult to stripping thecompetition of its managers.

Supermajors like Shell are

on the perpetual prowl fornew talent and this year is noexception, especially withproject economics shiftingwith the higher oil price andmaking once marginalpotential developmentsprofitable ventures.

“We’re hiring everywhere,”says Marvin Odum, executive

vice president of Shell EPAmericas. “We are hiringacross the entire company,certainly across what wehandle here in the Americas,and we have been verysuccessful at that this year.

“We set out some prettytough targets for ourselvesand we beat those targets bothon the experienced side andnew graduate recruitment. Wetend to focus in on thetechnical professional ranks

because it is one of the tighterareas of the market.”

The market is tight in eachsegment of the business due inpart to competition from otherindustries and the black eyegiven the oil patch for itscyclical and sometimesunstable nature.

When recruitment effortsfall short, it is left tocompanies to infiltrate theranks of rivals and plucktalent from inside the

industry. While the practice isa problem across alldisciplines, it has becomemore acute of late in theengineering sector. The endresult is not ideal but it canmean the difference betweenwinning and losing asignificant piece of business.

“There are jobs we could getbut don’t because we don’thave the people to put onthem,” one engineeringmanager complains. “Senior

Poaching and stalking in recruitment BLAKE WRIGHTHouston

Total immersion: a University of Texas student gets a taste of offshorerealities during a session at the annual Longhorn Training Camp. TheShell-sponsored camp (above and right) gives students hands-ontraining in areas such as production operations and HSE

Photo: UNIVERSITY OF TEXAS

Studentstake theplunge

CANDICE COWINHouston

Ample opportunities for well-paid career inspire growing number of petroleum engineering


twists the knife: 0

rush on the US oil patch

Hiring across the board: Marvin Odum, executive vice president ofShell EP Americas Photo: BLAKE WRIGHT

guys are hard to come by andmost (head-hunting)consultancies are just carvingeach other up. All that does inthe end is make the same guy20% more expensive.”

Rig contractors are lookingfor talent to run their growingfleet of drilling units. Theglobal marine drillingcommunity is currentlybuilding more than 60 newrigs with delivery dates slatedfor as early as next month all

the way out to mid-2009.Drillers are keen to get newrecruits on board and trainedahead of this wave ofnewbuildings so that anygreen hands will be up tospeed when the rigs aredelivered.

According to one rig source,drillers, assistant drillers andelectricians top the list of hotpersonnel commodities.

Land drillers findthemselves in a similar

predicament. Though crewsare smaller, the sheer numberof current newbuild projects ismuch greater and is close tooutpacing contractors’abilities to hire new staff.

Late last year, contractorssurveyed in the annual ReedRig Census cited crewavailability as the top concerngoing forward. By comparison,and somewhat ironically, in2004 rig rates were rated thechief worry.

graduates in the US

Katrina twists the knifeHURRICANES Katrina and Ritafurther stretched an already tightlabour market when the stormssurged ashore Louisiana lastAugust and September.

While marine contractorsalong the Gulf Coast fall short ofstamping the word ‘crisis’ on thesituation, there is complete agree-ment that the issue is of growingconcern.

That concern has, of course,been a long time in the making.

The industry was having prob-lems attracting new recruits longbefore drillers and well servicecompanies got busy again in reac-tion to the steep rise in oil prices.

Meanwhile, older, experiencedhands who did not retire of theirown free will fell victim to thecapricious hire-and-fire mentalityamid the sharp peaks and darkvalleys of the business.

Pipe fitters, welders, engineers— you name it, companies areshort of it.

“In my personal opinion, Ithink in the last 10, 15 years thebusiness has demonstrated to theyouth that it’s probably better totake another avenue than tobecome an engineer,” arguesJorge Foglietta, president ofTecna Engineering in Houston.

How will he attract newemployees to his company?

“Blood, sweat and tears, becauseit is not very easy to develop acompetent professional in arushed time,” he replies.

“It’s an ageing workforce; it’san ageing issue,” agrees one NewOrleans-based industry analyst.

The analyst adds that drillers,too, are having a hard time find-ing enough hands to man theirrigs offshore, and the demand forthose crews is coming fromonshore rivals.

“The drilling guys are com-plaining about it,” he says. “Thehistorical deal was that youtrained your drillers onshore andthen moved them offshore andpaid them more.

“But the growth has been in theonshore drilling, not the offshoredrilling, so I think the flow may begoing the other way.”

Diversified well services con-tractor Superior Energy, whichoperates crews both in the USGulf of Mexico and on land, hasalso suffered from fewer peopleinterested in working offshore,according to a companyspokesman.

The problem is exacerbated bySuperior’s customers demanding

that only experienced crews bedeployed on their rigs or plat-forms out of a legitimate fear thatnovices raise the chances for acci-dents to happen.

Superior has managed to keepits liftboats and other jobsmanned, even after the stormspassed, but the hurricanes madean already bad situation worse.

Personnel who lost theirhouses were forced to make otherliving arrangements and in manycases look for employment in thearea of their new home.

With this added shortage, the

industry has taken a more aggres-sive approach to stealing person-nel from the competition withsmall wage increases, the Supe-rior spokesman claims.

In order both to aid and retainits employees, the companyoffered around $2 million infinancial assistance to securehousing and schools for theirchildren.

It also set up the Superior Cat-astrophic Relief Fund, a non-profit charity supported mostlyby employees to assist their co-workers impacted by the

hurricanes or other catastrophicevents.

A spokesman for supply boatowner Tidewater says lack ofmanpower is more of a problemwith its Quality Shipyards sub-sidiary in Houma, Louisiana.

“We’re still able to man ourboats,” he insists, but attractingnew employees to the offshorecrewboat business remains a“continual challenge”.

Tidewater’s crews are “the peo-ple truly in the trenches runningthe boats and we need good qual-ified labour to do that”, he adds.


Call to arms in the oil sands : Pages 32&33

Life-changing experience: personnel who lost houses forced to make other living arrangements and inmany cases look for employment in the area of their new home Photo: GUNNAR BLONDAL

Monster hurricanes making a badsituation worse for Gulf employers

ANTHONY GUEGELHouston


Oil plc on action stations in the UK: Pages 34&35

BONAVISTA Energy Trustpresident and chief executiveKeith MacPhail has put someserious money into addressingCanada’s demand for skilledworkers.

In December he donatedC$10 million (US$8.6 million)to his alma mater, the Calgary-based Southern Alberta Instituteof Technology, to create theMacPhail School of Energy.

This will be Canada’s first-ever energy school and the firsttime a department at SAIT hasbeen named after an individual.

“As an educator, you hopethe classroom experience andcurriculum you provide tostudents brings them success inlife,” says the institute’spresident and chief executiveIrene Lewis.

“It is heartwarming to knowthat Mr MacPhail’s SAITexperience helped bring himsuccess and encouraged him togive back so generously.”

“SAIT was exactly what Ineeded,” says MacPhail. “Theprogramme was focused on theoil industry, which was an area Ihad grown to like over thesummers that I spent working init.

“It was a great experience thatprovided me with an injection

of confidence. Leaving SAIT Iknew I could do anything.”

The Alberta government haspledged to match the C$10million donation when fundscome available from theprovince’s Access to the FutureFund.

“The $20 million investmentwill go towards thedevelopment of a new state-of-the-art Trades and TechnologyComplex,” says Lewis.

“This will help SAIT addmore student spaces to betteraddress skilled labour shortagesin the energy industry.”

MacPhail, who graduatedfrom SAIT’s PetroleumTechnology-Geologyprogramme in 1981, says evenat that time the industry wascalled a ‘sunset business’.However, he believes there arestill 30 to 50 years left,particularly with the oil sands.

“I have had a great careerand am proud to give back,” headds. “I want to see the Tradesand Technology Complex builtand the energy school formed.

“But most of all I want to seethe bottleneck opened up sothat there are more studentsgoing through programmes andultimately coming out with atechnical education.”

SUNCOR Energy is doing its bitto fund solutions to Alberta’slabour shortages. The Calgaryoil sands producer recentlydonated C$3 million (US$2.6million) to the Northern AlbertaInstitute of Technology’s (NAIT)newly unveiled Building onDemand campaign.

The goal is to raise $50million for the construction of11 centres around the provinceto boost the training of skilledapprentices and businessstudents.

The Suncor donation will beused to create the NAIT SuncorEnergy Centre for PipingTechnologies in Edmonton. Itwill also support 10scholarships each year for fiveyears for participating students.

These scholarships will focus onaboriginal, immigrant andfemale students —demographic groups currentlyunder-represented in Alberta’strades workforce.

NAIT president Sam Shawsays the institution will train160,000 skilled workers in theapprenticeship and businessfields from 2010 to 2020.

“There is no question thatwe have got a looming skillsshortage and all of industry isgoing to have to look at anumber of strategies to addressthis,” says Cathy Glover,manager of the Suncor EnergyFoundation. “This is reallyabout the future and ensuringthat we have skilledtradespeople in place.”

THE PROVINCIAL governmentof Alberta believes immigrationfrom overseas could provide atleast some of the answer to theskilled worker shortage in the oilsands arena, writes Dann Rogers.

A new policy has been unveileddesigned to attract and retainimmigrants by helping to supporttheir transition into Alberta’s eco-nomic, social and cultural life.

“While our first priority is toincrease the skills and employ-ment of Albertans, we also recog-nise the importance of immi-grants in building a sustainableAlberta labour force,” says MikeCardinal, the province’s Ministerof Human Resources andEmployment.

“Government will increase itsefforts to let people from othercountries know that Alberta is agreat place to live.”

The province aims to increase

the number of immigrants byspeeding up processing times forforeign-credential recognitionand offering more training toaddress skills and language gaps.

The government plans toenhance existing programmesand services that help immigrantsmake the transition into Albertansociety, and has set up commu-nity based ‘welcoming commit-tees’.

Alberta Economic Develop-ment is marketing the province asthe safest place in the world forpeople to live and work while thegovernment also expects toexpand its provincial nomineeprogramme to recruit foreignskilled workers.

The latter initiative is distinctfrom the Canadian federal gov-ernment’s temporary foreignworkers programme in that it isaimed at convincing immigrants

to settle permanently in theregion. Alberta has set a target ofboosting annual immigration to24,000 people, up from 16,500 in2004.

“The economic prosperity thatAlberta enjoys today was built bygenerations of immigrants andCanadians from other provinceswho seized the opportunities thatAlberta provides,” says Ed Stel-mach, Minister of Internationaland Intergovernmental Rela-tions.

“Alberta’s tradition of welcom-ing newcomers into our economyand communities will lead us tosuccess in our second century.”

THE OIL sands boom under wayin northern Alberta is creatingrecord profits for producers but alack of skilled workers to com-plete the proposed projects isputting continued growth inquestion.

In the coming five years alone,an additional C$48 billion(US$41.5 billion) worth of capitalspending on oil sands projects isexpected in the province.

In addition to the 33,000direct, indirect and induced jobsalready on the books, it is pre-dicted that the oil sands will cre-ate a total of 240,000 new jobsacross Canada by 2008.

Roughly 60% of these will beinside Alberta with the majorityin the manufacturing sector.

Oil sands companies in theWood Buffalo region, whichincludes Fort McMurray, projectthey will be hiring about 6000new, permanent operations posi-tions from 2005 to 2014. Another9000 will be required to replaceworkers lost due to attrition.

The jobs may be available butyoung people are not flocking tothem. This is not some inexplica-ble phenomenon, industry associ-ations have pointed out for thepast 10 years.

It stems from the slash-and-burn tactics of the industry in the1980s and 1990s when low oilprices engendered a corporateefficiency drive that has causedthe shortages of today. There wasnever any job security in theindustry and that lesson waspassed on from the workers of thepast 25 years to their children.

Compounding that is the factthat so many older workers areapproaching retirement age justas these new projects begin.

The Petroleum Human Re-sources Council of Canada wascreated in 2001 in an attempt toaddress these issues.

Its mandate is to define a

human resources plan for theindustry that builds a platformfor future growth and sustain-able, attractive employment. Fiveinitiatives have been identifiedand are at various stages of imple-mentation.

The council has developedinformation packages promotingpetroleum career opportunitiesto traditional workers and isdeveloping an outreach strategyto teach industry how toapproach new workers such aswomen, immigrants and natives.

It is developing competencystandards and assessment mate-rials for occupations in the wellservice sector.

One of its greatest challengeswill be to develop a model to helpindustry understand the factorsof attraction, development andretention for hard-to-recruit loca-tions.

The hub of oil sands activity innorthern Alberta is the town ofFort McMurray, the epitome of agold rush town in which easymoney and easy access to numer-ous vices prevail.

“We need to understand whatthese factors are before we candevelop the model. But once thatis done we will provide the modeland related best practices, tollsand resources to industry, andthey can implement them in theirhuman resources practices,” saysthe council’s executive directorCheryl Knight.

There remains much to do,including better forecasting oflabour supply and demand, andidentifying transferable skills, sheadds

“Most importantly, we need tofind a better way to co-ordinateall the information we create andget it into the right hands.”

Suncor eye to the future

Returning the favour: Keith MacPhail and his wife Kathy unveilthe largest personal gift to a polytechnic in Canada’s history atSAIT last month Photo: SAIT

Bonavista bossputs educationfront and centre

Call to armsCanada goes all out to attract theskilled workers it needs to stokethe energy gravy train’s engine

DANN ROGERSCalgary

Alberta newcomersget warm welcome


OIL SANDS have long played arole in the ancient aboriginal cul-ture of what is now northernAlberta and producers are eagerto tap into that local knowledge tohelp alleviate the industry’sskilled labour shortages.

Syncrude Canada, the biggestemployer of natives in the region,recently recognised the contribu-tion of the region’s First Nationswith the launch of the company’sfifth annual Aboriginal Report.

The report relates stories aboutthe role that aboriginals played inthe development of the regionand how they have helped thecompany to establish itself in theindustry.

“The aboriginal community isa tremendous source of talent,”says Syncrude president andchief operating officer Jim Carter.

The industry, he adds, has agreat need for highly skilled peo-ple and the aboriginal commu-nity is a logical place to look. Cur-rently, Syncrude has 400 aborigi-nal employees and about 370contractors.

The company sees a localworkforce as an immense assetbecause many new arrivals to thecold, bleak region feel the strainsof being in a strange land. Thereis no dislocation shock for thosewho have called the area home alltheir lives.

“When you have the strong tiesto the community, there’s a hugeretention benefit,” says Carter.“They are an amazing and signif-icant labour pool that we can useto meet our very high workforcedemand.

“The oil sands are a veryhuman resource-intense indus-try, so we need a lot of skilled peo-ple. What is more importantbeyond that is we also do a lot ofbusiness with aboriginal firms.”

Jim Boucher, chief of FortMcKay First Nation, thinks thereport is a “good bridge for com-munication”.

He adds Syncrude is importantfor the aboriginal communitiesbecause it provides employmentand business opportunities. “(TheFirst Nations) think Syncrude is afriend of the community and animportant element of the commu-nity’s social structure.

“It contributes a lot to ourregion for the betterment of ourcommunities. They also areinvolved in (providing) educa-tional opportunities.”

Rich poolof nativetalent ondoorstep

in the oil sandsChilly charms:many new arrivalsto northernAlberta’s cold,bleak oil sandsregion feel thestrains of being farfrom home

Photo: AP

BRITAIN’S oil and gas operatorsare all too aware of a skills gapbrought about by an ageing NorthSea workforce and are mobilisingto retain the country’s historicposition as a prime source ofglobal talent for the industry.

A series of complex factorshave combined to create person-nel shortages across the business.

“The shortage of key skills isone of the biggest strategicthreats facing the long-term well-being of the industry and the onlyway to address it is to invest inpeople and training,” saysAndrew MacDonald, managingdirector of Aberdeen-basedsearch and selection specialistsMaxwell Drummond.

Sobering statistics from thefirm show that the average age inthe UK sector is hoveringbetween 48 and 52, roughly 10years older than in other engi-neering industries. It is estimatedthat 50% of oil workers will havethe option to retire over the next10 years.

Across the UK, the offshoresegment is tackling an ageingworkforce, successive waves ofredundancies; and rapid techno-logical advances that require anupgrading of skills.

A recent report by theAberdeen and Grampian Cham-ber of Commerce, produced withDeloitte, points out that as amature region the UK is at acrossroads as it reaches the end ofself-sufficiency in oil and gas.

The skills of future employeesand managers are critical for thehealth of the sector and the widereconomy. The report identifiesthe underlying causes of the gapsas: the cyclical nature of the oilindustry; continual pressures oncosts; international movement ofstaff; and the sector’s new struc-ture created by the entry ofsmaller, specialist operators.

Reforms by Tony Blair’s gov-

ernment of the whole Britishtraining system have promptedthe creation of new Sector SkillsCouncils taking over fromnational training organisations.

A new SSC, called Cogent, hasjoined together Opito, thenational upstream trainingorganisation; Pinto, the equiva-lent downstream body; and CMP-NTO, responsible for chemicalstraining.

Offshore Contractors Associa-tion chief executive Bill Murrayhighlights specific shortages inareas such as instrumentationand electrical trades, and a par-ticular problem within lifting andhandling. “There is a dramaticshortage of riggers at themoment.

“The education system we havein Britain, which focuses on non-mathematical or non-sciencesubjects, produces a relativedearth of suitably qualified andinterested school leavers,” he con-tends.

The Industry Leadership Team(ILT) — whose members includekey operators, contractors, smallto medium enterprises and thetrades unions — has established aspecialist group to look at theskills issue. A major report onworkforce capacity and capabil-ity is due in late March or earlyApril.

“There is an ageing workforcein the UK oil business but thereare encouraging signs as anindustry we are bringing in newpeople,” says Michael Salter,chief operating officer of theAbbot Group and chair of the ILTsteering group dealing with theissue.

“Whether we are bringing inthe right numbers of people andwhether we need to expand on


Old Father Time creeps up on Norway: Pages 36&37

BRITAIN’S fast-growing subseabusiness is a prime example ofan industry sector hampered byan acute shortage of skilledpeople, write ChristopherHopson and Adrian Cottrill.

Its needs have a high profile inthe country at present, largelybecause of the efforts of the two-year-old ginger group SubseaUK.

“One of the biggestchallenges facing us is theshortage of skilled people fornew developments,” emphasisedSubsea UK chief executive DavidPridden at a recent industrymeeting. “If not corrected wewill end up as a net importer ofpeople, pushing up prices andmaking the UK less competitive.

“The root cause of this is oureducation system and the lack ofyoung people studying scienceand engineering. Engineeringneeds to be perceived as anattractive subject and the

industry needs to demonstratethat it has an exciting future,” heargued.

Companies in Aberdeen with aheavy subsea involvement —Technip, Subsea 7 and Stolt (nowAcergy) — met at the start of lastyear to discuss the skillsproblem.

“We are seeing a lot of peoplemove from the main contractorsto the operators who have‘manned up’ either directly orindirectly by taking some staffand contract positions,” says IanStevenson, managing director ofTechnip Offshore UK,responsible for the North Sea andCanada.

Stevenson points to a hugegrowth in subsea activityglobally but particularly in theNorth Sea, which has been a

focal point for such expertiseworldwide.

“Norway can also lay claimwith Stavanger and Oslo havinghuge expertise. However, wehave exported a lot of thisexperience, particularly to placeslike Houston over the years,” hesays.

Stevenson says Technip hascertainly noticed oil companiesemploying a lot more staff on thesubsea side. “Man-to-manmarking, effectively a double-checking mechanism by oilcompanies on contractors, isanother issue,” he says.

Technip human resourcesdirector Kevin Gorman says thatalthough the company iscompetitive on pay it is still aconstant battle to retain staff.

“If we have all got the sameproblem then rather than try tofix it separately we should all tryto do so together,” he suggests.

The subsea employment story

is somewhat different offshorewith no major problems on theradar screen apart from ashortage of divers. TheInternational Marine ContractorsAssociation puts this down in themain to the ageing workforce.

Stevenson says one subjectbeing discussed by the subseacommunity is ‘skills sharing’between companies. Anotherissue being looked at is thepoaching of staff, which hasbecome a problem in some areasof the industry, although notspecifically subsea.

“The fact that the number ofpeople disappearing out of theindustry has grown quite rapidlyof late means we have to try toincrease recruitment and reducethe numbers leaving by makingthe office atmosphere more

attractive,” he says. He warnsthat the UK subsea industrycould come under threat fromother countries with betterresources. “The problem in theUK is we have always been veryshort-sighted in that we haveonly been able to see amaximum of 12 months ahead,”he claims.

However, Stevenson ishopeful the Industry LeadershipTeam’s Skills Group, on which hesits, is developing a goodunderstanding of what needs tobe done. “It will certainly help usin the subsea sector as it isbuilding awareness of the skillsproblem,” he says.

Subsea UK’s Pridden says thesituation “is being exacerbatedby a continual reduction of theUK’s skills base due to an ageingworkforce and a severe shortageof science and technologygraduates coming in to theindustry.

“The sustained success of theUK subsea industry as it operatesin the North Sea and,increasingly, in provincesworldwide will be largelydependent on its ability tocontinue to attract and retainyoung talent. They will after allbe the subsea decision-makers ofthe future,” he says.

Subsea industry guru Ian Ball,recently retired from a longcareer with Shell, certainly feelsthis is a sector where the skillsshortage is being felt particularlyacutely.

“Subsea has never actuallyachieved anything like therecognition it deserves in termsof its importance and influenceon the business bottom line,” hesays.

Now, in a time of skillsshortages in all sectors, thesqueeze on subsea is even morekeenly felt. As to the geographyof all this, Ball reckons that“while the Gulf of Mexico andthe remaining North Seaoperations do seem to haveaccess to people who are happyto work there, it is more difficultto get the right skills to otherareas, such as Africa and the FarEast, where it is very importantto kick things off right”.

Education system gets blameas subsea sector feels pinch

‘Skills sharing’ on table: TechnipOffshore UK managing directorIan Stevenson

Encouraging signs: Michael Salter, Abbot Group chief operating officer and chair o

Oil plc on UK industry leaders get together to tackle

CHRISTOPHER HOPSONAberdeen

TRADES unions in Britain aresharply critical of what they per-ceive as a real lack of commit-ment by many oil companies indealing with the skills crisis,writes Christopher Hopson.

“We have probably failed so farin terms of our focus on this prob-lem,” says Graham Tran, Amicusregional officer, who is theunions’ representative on theindustry-government Pilot forum.

The unions put the blame forthe current malaise squarely onthe boom-and-bust nature of theoil business, citing a lack of fore-sight and investment.

Jake Molloy, general secretaryof the Offshore Industry LiaisonCommittee, contrasts the positiveattitude taken towards recruit-ment in Norway — where Statoilis currently looking for largenumbers of new staff — with theshort-term approach taken bymany oil companies in the UK,which seem to prefer poachingstaff from contractors.

“I am still not convinced thereis a huge skills shortage. Thereare plenty of people waiting tocome into this industry given theopportunity. It is the ‘contractori-sation and casualisation’ thatcontinues apace which is a realturn-off,” he claims.

Molloy suggests the creation ofan offshore contracts pool ofavailable labour that everyonecould dip into when the opportu-nities arise.

Tran believes a partnershipbetween the UK’s Offshore Con-tractors Association and the Ami-cus and GMB unions has put inplace a proper training rate forapprentices working offshore,and praises contractors for theircommitment to the skills agenda.

However, he says not enough isbeing done in the drilling sector,which needs specialised electricaland mechanical skills, and tendsto be neglected.

“Drilling and catering contrac-tors in the UK are increasinglyemploying people out of suchplaces as Barbados, the CaymanIslands, Cyprus and Singapore.Trying to attract people to workfor some far-flung agency thatdoesn’t care about their welfare isvery difficult,” comments Molloy.

He highlights the value of

hands-on experience gainedthrough apprentices workingwith experienced tradesmen,with educational support pro-vided in the classroom. “Theproblem is the lower down thefood chain you are in this indus-try the more difficult it is to getaccess to training,” he adds.

Molloy says there are a vastnumber of the ageing workforcewho would welcome job sharingopportunities with a younger per-son. “Given its stance on suchthings as employment rights I justdon’t think this industry wants tochange the way it has been doingthings all these years,” he says.

While welcoming some of the“good work” being done by theSkills Group of the IndustryLeadership Team, Tran contendsthat some within the industry arestill trying to “water down” its ini-tiatives by maintaining the coun-try does not have a recruitmentproblem but instead should focuson the competence and skills ofthe existing workforce.

Tran claims the time could notbe better for oil companies, sit-ting on massive profits, to followthe lead set by the contractors,which are already paying a levy tothe Engineering ConstructionIndustry Training Board.

He contrasts the commitmentand proactive role on skills takenby Total UK’s managing directorMichel Contie with the attitude ofother operators, which seemhappy to let the few do the work.

“Some oil companies have noshame in claiming that oncetrained they will offer workersbetter terms and conditions totempt them over,” he says.

He suggests the setting up of anoffshore academy into whichoperators would pay a levy toimprove the general standard oftraining in the North Sea.

“I don’t think we would be inthis mess if operators hadn’tstarted to contract out so muchwork a number of years ago.What we need is a long-term planand commitment from the oilcompanies on exploration andproduction so we are in a betterposition to sell the attractivenessof this industry.

“Without it we are probablygoing nowhere,” adds Tran.


Unions round on‘lack of foresight’

of the Industry Leadership Team steering group dealing with the skills issue Photos: CHRISTOPHER HOPSON

action stationsthe challenges of attracting and training future professionals

that are, I think, the answers weare going to get.”

Salter says the study will lookin detail at three main areas: thecurrent state of the workforce interms of its age profile; the cur-rent activity plans of the industryand likely human resourcerequirements; and current capa-bility ‘pinch-points’ and ways toalleviate them.

A team gathering data onfuture activity plans and theirimplications for people and skillsis now assessing the effects ofChancellor Gordon Brown’s lat-est oil tax hike.

“Once we have got all this datawe will then decide how best weare going to focus the efforts ofthe industry going forward. Weare trying to get away from theanecdotal stuff and get ourselvesinto a position where we canfocus resources based on fact and

evidence,” says Salter. Hebelieves there is already plenty ofevidence to reflect the fact theindustry is moving in the rightdirection, and not suffering froman image problem that hebelieves is “a little bit over-stated”.

He points to the success of theindustry’s technician trainingprogramme, which has producedsome 540 new trainees over thepast five years.

“We have to win the cost chal-lenge through an increase of pro-ductivity, meaning being at theforefront of new technology,bringing the best people to thisindustry, bringing more collabo-ration within the industry andalignment with the supply chain,”says Michel Contie, managingdirector of Total E&P UK.

“We also have to win the heartsand minds of the public so they

understand why this industry iscrucial to their own lives, and alsoto attract the young people atschool into the courses that willdevelop our future profession-als,” he adds.

Howard Kewney, Chevron’shuman resources director inAberdeen, says the general skillsshortage is presenting a real chal-lenge to many operators who arestruggling to fill positions. “Theindustry needs to increase itslabour pool because otherwise allthat happens is that you shufflethe pack.

“At this point there is nothingcritical that is going to stop ourNorth Sea business but there areareas where we are having diffi-culty, such as drilling and subsea,and generally in just attractingexperienced professional peopleinto all areas of our operation,”he adds.

Old FatherTime creepsup on NorwayNORWAY’S North Sea playersface some familiar challenges asthey try to bridge the gap in thesupply of skilled labour to replacean ageing offshore workforce.

As in many other parts of theworld, companies are battling tohold on to senior staff and at thesame time attract new, youngprofessionals.

Poaching talent from rivals isrife. Indeed, BP Norway chief GroKielland told industry executivesat a conference last week: “Wemust stop ‘stealing’ skilled work-ers from each other. It serves noother purpose than to push upcosts.”

A hint that the country’s oilindustry association (OLF) couldintervene in some way fell on deafears. Still, the BP country man-ager at least aired a delicate sub-ject and, as she pointed out, play-ing musical chairs will not solvethe problem.

As in other mature oil regionsdeveloped in the 1970s and 1980s,the average age of offshore per-sonnel is around 50. On someinstallations it is even higher.

ConocoPhillips’ Ekofisk, BP’sValhall and Ula fields, and Sta-toil’s Tampen area are just someexamples of where the workforceis ageing to a worrying degree.

Plans are on the drawing boardto extend the operational life ofthese facilities by 20 to 50 years sooperators need to prepare a train-ing strategy that will allow themto replace ageing workers with-out compromising on safety.

The fact that today’s offshoreworker often needs to be skilledin multiple disciplines does notmake the task any easier, makingstaff retention a key issue. Manycompanies are working on activesenior policies to keep their bestpeople.

In defence of mature col-leagues, Federation of NorwegianIndustries director Lars Bergepoints out that older workerstoday generally enjoy betterhealth, are better educated andstarted working later in life thantheir peers a decade or two ago.

Knut Oritsland at head-hunters Futurestep E&P says:“There are three major factorsbehind the oil skills crisis —booming activity, an ageingworkforce and recruitment.”

The growing number of play-ers on Norway’s oil patch hasbuilt up the pressure.

Since 2000, the authoritieshave pre-qualified 11 companiesas licensees on the shelf and 23

have been qualified as operators.Most have opened offices in theStavanger area, adding to theclamour for staff in an alreadytight market, particularly in oper-ational disciplines.

“Despite the high number ofnewcomers, it is still the estab-lished majors that are doing mostof the hiring,” notes Oritsland.

The boom-and-bust nature ofthe industry has done little to fos-ter its appeal to many with jobsecurity seen as a major weakpoint. A typical oil worker in his40s will have lived through threeor four job cuts and many highlyskilled employees, disillusionedby their treatment, have been lostto a sector now desperately seek-ing people.

“The labour market haschanged dramatically, offeringemployees many other opportu-nities. To be a winner, companiesneed to create a strong brandwith a clear identity as anemployer,” Oritsland says, argu-ing the industry will probablyhave to adopt some consumermarketing techniques to rein-force its message to job-seekers.

On the upside, oil and gas inNorway has a good reputationamong the young and graduatestudents.

Applications for petroleum-related studies jumped 30% to

40% last year over the 2004 levelboth at NTNU in Trondheim andat the University of Stavanger.

As a result, applicants target-ing studies in geology or petro-leum technology needed highergrades to make the cut. “With ahigher cut, we also get better stu-dents,” an OLF spokesman notes.

However, Norwegian highschools are frequently criticisedfor turning out students unpre-pared for university level studiesin subjects such as mathematics,physics and chemistry. This prob-lem is currently a hot topic fornational politicians.

Still, “access to graduates inNorway is probably better than inmany other petroleum producingprovinces like the US, whereyoung professionals have manymore opportunities to chooseother careers”, Oritsland says.

The industry is also lookinginto automation, e-operationsand smarter field solutions tohelp mitigate some of the skillscrisis.

Subsea projects need less steeland fabrication work, and sub-sea-to-shore field developmentsolutions like Hydro’s OrmenLange and Statoil’s Snohvitreduce the need for future off-shore workers.

From a safety point of view,however, not every hand can besubstituted with technology and ageneration of offshore personnelon existing installations will soonneed to be replaced.


Asia’s revolving door : Pages 38&39

LEADING companies in theoil sector are expanding theirtrainee programmes in a bidto attract the best youngprofessionals and fast-tracktheir careers, writes KnutEvensen.

Statoil is doubling thenumber of executive traineesfrom 25 to 50, aiming to givearound half that numberinternational experience.

All trainees are assigned tobetween two and fourdifferent jobs, and they musthave at least one assignmentoutside the unit where theywere hired.

The aim is to give newprofessionals both a swiftintroduction to the businessunits where they are workingand at the same time a betterunderstanding of thecompany’s entire value chain.

“The increase from 25 to50 is due to the need forskills and new recruitment,”Statoil says.

Interested professionalsmust submit applicationsbefore 15 February this year.

Industrial holdingcompany Aker, whoseinterests include a majoritystake in oil and gasconstruction and engineeringspecialist Aker Kvaerner, issetting up an internationaltrainee programme.

The company is looking atrecruiting youngprofessionals from around inthe world who can grow intofirst-class internationalproject managers and costcontrollers.

Aker is about to decidewhere to concentrate itsrecruitment effort but is likelyto focus on areas where thecompany is growing itsbusiness like China,Malaysia, Russia and Brazil.

“In order to be successfulin growing our business inthese areas over the next fiveto 10 years we need to havelocal people with the rightskills,” a companyspokesman says.

Aker plans to start with 12trainees in August this yearand gradually build theprogramme to include 45young professionals.

The two-year schemewould ideally be designed sothe trainees are assigned tothree different business units— first a period outsideheadquarters, then a spell atthe Norwegian HQ, andfinally a training periodwhere they will be assignedpermanently.

“We want to give ourtrainees an insight into ourbusiness culture and at thesame time show whatopportunities exist within ourcompany,” the spokesmansays.

Offshore operators desperate for fresh blood asworkers’ average age tops 50 at many installations

KNUT EVENSENOslo

Traineesget earlyglimpseof biggerpicture

Old FatherTime creepsup on Norway

NORWAY’S Aker Group faced a two-pronged challenge in mid-2005: anexpanding recruitment requirement andpolitical ambivalence towards thecountry’s industrial sector.

The group — encompassing oilfieldsupplier Aker Kvaerner and Aker Yards,among others — chose anunconventional path, spending morethan a million dollars on an extended-length, three-minute televisioncommercial in the name of corporatebranding and raising public awareness.

The outcome was a stunninglypopular ad campaign that not only wontop honours in advertising awardscompetitions both in Norway and inEurope, but also was shown to have adirect and immediate impact onrecruitment and on public perceptions.

The ad was set as a well-choreographed music video, mixingscenes of present-day Aker engineers

Aker’s TV


Museum pieces: theNorwegians have been at theoil game so long Stavangernow has a museum dedicatedto the industry

Photo: JAN INGE HAGA

and welders with scenes of industrialworkers from the group’s distant past,filmed in black and white and given agrainy, choppy feel to make it appear tobe actual footage from the 1930s or so.

The only give-away is that theworkers in the video sing and dance tothe catchy tune that conveys themessage that Aker is all about solvingcomplex problems, or “cracking nuts”,which it has been doing since 1841.

“We wanted to promote the attractionof Aker, and of the entire industry, asan employer,” explains Aker executivevice president Geir Arne Drangeid.“Typically, when we in the industryhave a message to convey we end uponly talking with each other. Talk to thepublic, then you’re also talking to

politicians.” After only six weeks inSeptember and October, Aker’scampaign — which also included Web-based promotion of the film — hadattracted 30,000 hits on its Website andabout 1000 applications for 80 vacantpositions in Norway.

That response was “dramaticallygreater” than the group would haveanticipated prior to the campaign,according to Drangeid.

An independent poll conducted byGallup confirmed the successful impactof the ad. Asked whether Aker is acornerstone company in Norwegiansociety, 96% of those who had seen thead answered positively versus only 87%of those who had not seen it.

Asked whether they were proud toread that Aker has created jobs andprofitable operations outside Norway,the split was 80% positive among adviewers versus only 53% among others.

V ad campaign cracks the popularity nut

Costume drama: Aker saw its public approval ratings soar after running the extended TV adPhoto: AKER

ERIK MEANSOslo


MAJOR gas developments underway in Australia, Papua NewGuinea and New Zealand willrequire thousands of workers inthe coming years, yet there is aquiet confidence that projectoperators and main contractorswill find the personnel.

Having said that, all threecountries have tangibleshortages of skilled labour,operational expertise andengineering capability.

Booming mining sectors inAustralia and PNG are alsoplacing extra strain on bothcountries’ upstream industriesbecause they compete forresources.

The Woodside-led North WestShelf Venture had to award themain fabrication contract for itsfifth liquefied natural gas train toJ Ray McDermott Indonesia dueto a number of factors includingthe skills shortage in Australia,incurring the wrath of localcontent proponents.

Alarm bells have been ringingin Australia’s oil and gasbusiness for several years, andhave forced the upstreamindustry including majorcontractors, plus state andfederal governments and theeducation industry to use a rangeof strategies to cope with skillsshortages.

Leading operators Woodside,Apache, Santos and Oil Searchhave taken various steps toaddress the problem.

Woodside is a main player inthe Energy ApprenticeshipsGroup that gives opportunities toyoung and mature-age people . Itis also a major backer in anorganisation that provides oiland gas training, and has its own

in-house operator traineeshipprogramme.

The big independent isbuilding Train 5 for the NorthWest Shelf Venture and has twogreenfield LNG projects inwaiting — Pluto and Browse.Other Australian greenfield LNGprojects for the near futureinclude Gorgon, Ichthys, Pilbara,plus the Blacktip domestic gasproject.

Oil Search, which is theleading upstream operator inPNG, has its own academy thatdevelops the skills andcapabilities of its people.

Overseas recruitment has alsoramped up. Australian oilcompanies are operating onnearly all continents and aretaking the opportunity to recruitforeign staff.

State and federal governmentshave held job expositions inEurope, Asia and the US to sellthe Australian lifestyle andencourage people to emigrate to“the lucky country”.

On the education front, effortsare under way to attract moreyoung people into the business,which has suffered from apreconception of “being dirtyand old and not providing anexciting long-term lifestyle”,according to former AustralianPetroleum Production andExploration Association (APPEA)chief Barry Jones.

Just recently, APPEAwelcomed the federalgovernment’s plans to establishthe Institute of Trades SkillsExcellence, the first of its kind.

“The oil and gas industryprovides enormous opportunitiesfor training and progressionthrough a range of high-tech,trade-based skills and APPEAmember companies are currentlyworking hard to ensure we havea well-trained and highly skilledworkforce ready to operate thesophisticated processing plantsof the future,” it says.

Gary Collins, a director ofWestern Australia’s Chamber ofCommerce and Industry, whichworks closely with the upstreambusiness, believes it is likely thatall major gas projects willprogress on schedule despite theshortages.

“It’s all driven by necessity,”he says. “With the combinationof global recruitment and localtraining, the operators andcontractors will find the peoplethey need, as they always have.”

In PNG, ExxonMobil is lookingto create 1600 jobs during theconstruction phase of the PNGGas Project, and around 400 full-time jobs once the project movesinto the operational phase.

Much of the low-skill labourshould be provided by PNGnationals but the higher-end jobswill be filled by overseas people,say sources.

In New Zealand, the mainshortage of people andequipment is on the explorationfront. The only gas fielddevelopment on the horizon afterthe nearly completed Pohokuraproject is Kupe, which willrequire a new onshoreprocessing plant and offshoreplatform.

At this stage, it is not knownhow much of Kupe will befabricated locally.

Lifestyle ‘will saveday Down Under’

RUSSELL SEARANCKEWellington

Looking after the locals: a boy touches a Petronas logo in Kuala Lumpur. The exception among its peers, managing to retain key staff and investing heavily

Asia’s SKILLS shortages and a shrink-ing talent pool are proving amajor headache for oil compa-nies, shipyards and contractors inAsia, with many struggling torecruit staff even to entry levelpositions with paid training.

Singapore’s Keppel Shipyardand Keppel Offshore & Marinefind it impossible to recruitenough nationals to meet theirworkforce requirements despiteoffering above-average salariesand on-the-job training.

Manual work at a yard isviewed by many Singaporeans asdirty, hot and demeaning, andsome would rather be unem-ployed with no state welfare ben-efits than take up a job in thebooming offshore industry.

This sees Keppel and compa-triot SembCorp Marine having torely increasingly on immigrantworkers, usually from South Asia,for construction work.

Many fabrication yards inSouth-east Asia still bring inWesterners at a senior level, likelyon an expat salary, to work along-side local management althoughthere is a growing move towardsincreasing the number of localstaff in senior positions throughtraining programmes.

Salaries in Asia for experi-enced industry personnel, be theypetrophysicists, reservoir engi-neers or human resource man-agers, on average lag behindthose in the US and Europe, oftencoming in at about 60% or 70% oftheir Western counterparts.

However, the cost of living inmany Asian countries is muchcheaper while oil and gas indus-try salaries in the region are oftensignificant multiples of a coun-try’s average or minimum wage.

Even so, international contrac-tors and engineering companieswith offices and facilities in Asia,sometimes established to meetlocal content requirements onjobs for which they bid, oftenstruggle to hire competent, expe-rienced local personnel.

The dearth of qualified engi-neering staff to work on fabrica-tion projects means that severallarge US contractors are havingto bring in expat personnel toKuala Lumpur, Jakarta and Sin-gapore — and at a total costhigher than if they were workingin the States.

“We have to cost our expatengineers at $250,000 per yearonce we factor in salary, housing,schools for the kids, flights backhome, etcetera,” says a seniorSingapore-based manager withone of the industry’s leading con-tractors.

“It would be better for us andfor our clients if we could recruitqualified engineers from withinthe region.”

There are excellent universitiesand training facilities in Asia,such as Indonesia’s prestigiousBandung Institute of Technology,which offer world-class educa-tion in many industry disciplines.

But many of today’s young

graduate petroleum engineersand geologists are actively chas-ing work outside Asia, whichprobably pays them more andgives them the chance to travel,gaining valuable internationalexperience.

The opportunities available inthe global oil industry mean thatmany engineering and technicalgraduates from Asia, who gener-ally have much better Englishlanguage skills than the previousgeneration, are moving overseas,thereby adding to skill shortagesin their home countries.

Ironically, a significant propor-tion of these nationals could endup returning to the region work-ing for an international oil com-pany or contractor on an expatpackage.

Larsen & Toubro, India’s lead-ing engineering and constructioncompany, has a healthy orderbook of offshore fabrication jobs.However, the company finds itdifficult to hire enough engineers.

Despite boosting salaries forfresh graduates to almost $6000per year, L&T is losing potential

recruits to multinational com-petitors in India and rivals in theMiddle East that pay twice thatamount.

ABB, which had been strug-gling to hire enough engineers forits growing Indian operations,last year embarked on a Web-based recruitment drive thatoffered successful applicants ajob on the spot. It was a success-ful ploy, reportedly doubling to100 the number of engineers thatABB hired in India in 2005.

National oil companies areoften unable to attract the cremede la creme of internationalindustry personnel. Whether thisis due to lower salaries and bene-fits, different business cultureswithin the company and hostcountry, or a combination ofboth, it can stymie expansion,especially in the internationalarena.

Malaysia’s national oil and gascompany Petronas is a notableexception. The governmentdirected at its foundation 32years ago that Petronas shouldrecruit the best available staff andacquire the necessary skills andtechnologies to become a leadingoil company.

Also, and perhaps even more

importantly, Petronas has man-aged to retain its key staff andinvested heavily in training for itsemployees.

“Staff poaching is anotherissue that needs to be addressedby the industry,” a source says.Interestingly, bad management issaid to rate almost as highly asbetter salaries and benefits as rea-sons for switching or looking toswitch jobs.

However, while personnel willjump ship to another oil companyor contractor, very few seem will-ing to move to the industry fromoutside, studies show.

While some youngsters viewthe industry as offering an excit-ing and potentially lucrativecareer path, other potentialrecruits and trainees are be putoff by the apparent lack of jobsecurity.

The consolidation and mergersof oil companies and contractorsover the past two decades haveeffectively halved the globalindustry workforce in 20 yearsand there is a growing trend atsome companies to hire staff on acontract or consultant basis with-out offering the redundancy, pen-sion and medical benefits thatmost salaried workers enjoy.


China training an oil army: Pages 40&41

Malaysian state oil company is a notable in training for its employees Photo: REUTERS

revolving doorExpensive expats fill breach as best E&P brains, educated at highlyrated local universities, chase greater rewards on offer in the West

AMANDA BATTERSBYSingapore

CHINA’S petroleum workforce ismore of an army, numbering overa million people. However, thereare still not enough skilled work-ers to meet the country’s boomingenergy demand.

A major effort is going intotraining new entrants for theindustry, though it still relies onforeign expertise for high-techsectors.

Across the country there areabout 50 petroleum trainingbases, mostly affiliated to themajor oil and gas companies suchas China National Petroleum Cor-poration (CNPC) and ChinaPetrochemical Corporation(Sinopec).

CNPC runs a sophisticatedtraining system, which has fivetiers covering the humble workunit up to senior corporate level.

The company puts about300,000 staff through some formof training every year. Some areplaced on the in-house schemewhile others are sent to renownedhigher education establishmentssuch as Beijing University.

The most promising recruitstake an MBA programme, givingstaff the knowledge they need tooperate and manage the com-pany’s growing internationalportfolio.

In 2004, it spent 270 millionyuan ($34 million) on training,mostly at the grassroots level. Afurther 110 million yuan ($14million) went into building train-ing centres.

The company spends a mini-mum of 1.5% of workers’ salarieson training each year, an officialin charge of tertiary training says.He adds that scholarships for col-lege students, who join the com-pany upon graduation, ensure asteady supply of new people.

China’s recent expansion intothe overseas upstream sector —through the acquisition of stakesin existing fields or exploring newfrontier areas through bidding —has left the country short-handedin skilled technocrats, especiallygeologists and personnel withnegotiation and managementskills.

CNPC, for example, lacks theexperts it needs to tap reservoirs

with low permeability usingenhanced oil recovery technolo-gies.

Domestically, China will stillhave to rely on expatriates to lookafter areas requiring sophisti-cated offshore engineering, espe-cially as top oil operator ChinaNational Offshore Oil Corpora-tion (CNOOC) has kicked offdeep-water drilling in the SouthChina Sea.

China Offshore Oil Engineer-ing Corporation (COOEC), a unitof CNOOC and the country’slargest offshore oil contractor,hires 20 to 30 foreign experts ayear. The expats, working on acontractual basis, provide ser-vices in offshore engineering,project design and management.

Overall the company hasrecruited 500 people already thisyear, mostly college graduates.They will either be put underapprenticeship to senior techni-cians or sent for further traininggeared to their specific job assign-ments.

“We lack all kinds of skilledworkers,” says Chen Wenjin, aCOOEC vice president.

Unlike 15 years ago whenChina first opened its upstreamsector to foreign companies, thegovernment has now scrapped itsdemand that they provide train-ing to local staff as a pre-condi-tion for setting up a joint venture.

A manager with one foreignoilfield service outfit says the Chi-nese are quick to learn and oncethey are familiar with the tech-nology learned in a joint venturethey may do it themselves laterwithout outside help.

Normally in a joint venture, aforeign company provides tech-nology and equipment while theChinese side provides the staff.That way the Chinese get to learnall the tricks employed by the for-eigners.

“This happens especially whenChina starts to develop a newbusiness or in areas where itsown technology has failed,” saysthe manager.


Outsiders in their own land : Pages 42&43

Massed ranks: China’s million-strong petroleum workforce is busy adding to its skills base andassimilating the best that foreign technology can provide Photo: REUTERS

China istraining anoil armyTop companies pour millions intoimproving staff capabilities whilejoint ventures give country aninside look at foreign technology

XU YIHESingapore

INDIA’S E&P flagship Oil andNatural Gas Corporation wantsto break the shackles of nation-ally set pay rates in a bid to stop atraumatic brain drain. It hasasked for government consent tooffer market-determined salariesto its high-skill exploration spe-cialists and technicians.

At the moment all state enter-prises must pay salaries under agrade system fixed by a centralgovernment agency, which can berevised only every five to 10 years.

“We should be allowed to offermarket-determined salaries tostop the exodus of specialists andtechnicians to private and foreignE&P companies. ONGC hasbecome a poaching ground forboth Indian and internationalupstream companies,” complainsa senior human resources execu-tive.

The company plans to create a‘specialist cadre’ of well-trainedE&P engineers and technicians,offering candidates an attractivesalary package and fast-trackcareer progression opportunities.

“We would have to introducesuch measures to prevent ourbest people leaving, lured awaylargely by better money,” says theexecutive.

More than 130 highly skilledworkers jumped ship last year tojoin companies such as CairnEnergy, Reliance Industries,Saudi Aramco and ExxonMobil.“They were offered several timesmore pay than what they were

getting here,” says the ONGC offi-cial.

The company recently con-ducted a survey into industrywages and discovered to its sur-prise that salaries being offeredby private E&P players were nineto 12 times higher.

“I have been offered a packageworth $160,000. Why should I notgo?” asks a senior drilling expertat the company’s deep-water divi-sion. “ONGC is very generous interms of perks and other facilitiesbut we also need more hard cash,which being a government com-pany it is not able to pay.”

The company owns and oper-ates seven training institutes tosharpen the skills of its E&P per-sonnel. The state giant is particu-larly proud of its KDM Instituteof Petroleum Exploration and theInstitute of Drilling Technology,both located in the foothills of theHimalayas at Dehradun, nearNew Delhi.

ONGC is also setting upanother institute in New Delhi ata cost of $100 million to focus onadvanced research along theentire energy value chain.

The Indian School of Mines atDhanbad in the east remains thenation’s most reputed educationcentre for high-quality technicalprofessionals for the oil and gassector, including geologists.

Almost all top petroleum expertsin the country have passedthrough this elite institution.

The Institute of PetroleumEngineering at the Aligarh Mus-lim University near the capitalhas of late emerged as a populardestination for those wanting topursue a career in the industry,but pundits have yet to be con-vinced about the quality of itsgraduates.

A group of individuals recentlylaunched a private university atDehradun dedicated to petrol-eum engineering.

Worries over the exodus of oilspecialists have spurred the coun-

try’s top engineering universitiesto take a look at offering petro-leum-specific education andtraining.

There are reports that the eliteIndian Institute of Technologyplans to set up new specialcourses in the subject at its chainof faculties.

Petroleum ministry officials,however, see an opportunity inthe brain drain, saying the coun-try has the potential to become asa major supplier of highly skilledworkers to the international oiland gas industry.

“The time has probably comefor the government to come up

with a strategy on this along withthe Ministry of Education. Play-ers such as ONGC could also beasked to chip in,” says a ministryjoint secretary.

Right now, however, Indiafaces a shortage of world-classdrilling and exploration staff inthe face of booming energydemand.

While ONGC is busy workingout ways to prevent the exodus,private companies such asReliance Industries are not con-cerned with a candidate’s nation-ality and are more than ready topay the market rate for expertiseit thinks will bring value.


Educational excellence: ONGC is particularly proud of its Institute of Drilling Technology in the foothills ofthe Himalayas at Dehradun near New Delhi Photo: ONGC

Indian brain drain follows the moneyPrivate and foreign E&P companies offersalaries many times higher than ONGC

NARENDRA TANEJANew Delhi

THE IMPACT on sub-SaharanAfrica of the global skills crunchfacing the industry is mixed,depending heavily on how fasteach country is moving to indi-genise its upstream sector.

In addition to maintainingexisting production, this frontierprovince demands the deploy-ment of cutting-edge deep waterand subsea technology with keypersonnel also getting involved intraining local staff.

A constant flow of internation-ally experienced people is needed,highly paid and often loath torelocate to areas they perceive ashigh-risk. Oil companies and con-tractors are faced with having tomeet stringent local content pro-visions insisting on local staff fill-ing both lower level and seniorprofessional positions.

In countries such as Angola,the drive towards indigenisationhas foreign companies con-strained to take local graduatesoverseas for extended periods oftraining and on-the-job experi-ence prior to redeployment athome. In Nigeria, where oil hasbeen produced for 50 years, theemphasis has increasingly beenon in-country training.

Controversy still rages over therole of expatriates in the Nigerianupstream sector and the ability ofhome-grown technical and grad-uate personnel to fill positions.

Dr Felix Njoku, EmeraldEnergy Resources director andmanaging director of VisionResources Management Technol-ogy, says existing post-graduatefacilities can barely satisfy 3% ofindigenous engineering require-ments whereas the country is tar-geting 70% indigenisation by2010.

The majors should commitmore funds to helping Nigeriangraduates sharpen their oilfieldengineering skills and meetindustry standards, he adds.

Even with the success ofChevron’s Agbami project insecuring in-country front-end

engineering (not entirely withNigerian staff), the level ofnational compliance is less than20% local content.

There is still anger at the per-ceived unwillingness of playerssuch as Halliburton and Sclum-berger to hire locally. “I’ve seenseveral generations of skilledgraduates in this country missopportunities and we now haveretirees, many of them hungry,whose skills should be tapped,”says Njoku.

He claims deep-water expertiseis not being passed on. Njokuhimself argues for a measure ofprotectionism. “This free tradeidea encourages the majors andestablished players to work froman assumption that Nigerianscannot perform and then seekingto justify their excuses for notawarding local jobs. It’s veryparalysing.

“Our people need upgrading inthe new technology but as far aspetroleum engineers are con-cerned supply is far outstrippingdemand. We have to change theway we do business in this coun-try.”

Njoku lauds the Chinese sys-tem where graduates can takedrilling, reservoir or flow assur-ance qualifications as their front-end degree.

For now, Nigerians areinducted through Shell’s Inten-sive Training Programme inWarri or the Total-funded Insti-tute of Petroleum Studies at PortHarcourt University, which actu-ally awards degrees affiliated tothe Institute of Petroleum inParis.

Port Harcourt-based indie con-tractor Point Engineering Ltd’schief executive George Okoyoagrees there are serious gaps insubsea engineering and the han-dling of vibration dynamics simu-lations associated with big

offshore pipelines. He knows hecannot dent this even by spending25% of PEL’s earnings on train-ing.

Okoyo has eight petroleumengineers and six mechanicalengineers on the books simplybeing exposed to real-worldmethods. He has just completedan assignment for Shell Explo-ration and Production (Snepco)remodelling the Offshore GasGathering Pipeline platform serv-ing the Bonga Southwest floatingproduction, storage and offload-ing vessel.

“We didn’t have the expertisebut we had a relationship with UScontractor MSL. We asked forone engineer to come and trainthree of ours for six months,including a local lecturer.

“These guys worked weekendsaround the clock and we tied inthe platform from scratch. Stoltproduced the original model but

didn’t give it to Shell so weremodelled and now Shell wantsto buy ours. We’re still negotiat-ing.”

Okoyo says domesticatingskills is one problem, sustainingthem is another. “We have 22,000engineers in Nigeria but withoutdesign engineering experiencethey lack confidence and youhave got to put them in charge toreap dividends.”

The majors take the best of thecrop and neglect the rest. Shelldoes try, he says, but in generalthey are loath to lose control overthe design engineering compo-nent, which in turn influences thechoice of pipeline and systems onthe bigger projects.

“Our institutions are big ontheory but lack practical compo-nents. We should expand theYouth Service Scheme to enforcemandatory placements forgraduates in all engineering

companies.” Okoyo believes thatwith tie-ups like PEL and MSL,Nigeria will be able to compete inproviding deep-water and subseaexpertise within six years.

It is not all gloom. ChevronNigeria’s Special Advisor onExploration and Technology Ade-bayo Akinpelu believes Nigeria isbetter off than most.

“At Chevron, we are able to pullsubstantial numbers of profes-sional staff into the global work-force and one day they will comeback for sure.” Chevron has some160 graduates and their familieson overseas postings and thesame is likely true for othermajors and contractors.

Counting Nigerians on majorprojects at home does not give thefull picture, he argues. “Given thegrowth in opportunities and theattrition rate in the industry, wemust assume these skills willeventually be domesticated.” The

AFRICAN students pursuingoil and gas relatedscholarships in UKinstitutions have been movingaway from petroleum lawover the last couple of yearsin favour of engineeringcourses, according toMargaret Christie, whomanages the Abujagovernment’s PetroleumTraining Development Fund.

However, demand for legalexpertise is growing.Renowned for its engineeringprowess, Robert GordonUniversity now plans toestablish an oil law faculty torival Dundee University’sCentre for Energy, Petroleumand Mineral Law and Policy(CEPMLP).

The Dundee faculty alreadyoperates a broad range ofcourses and is well-patronisedby African students, many ofwhom are now keypractitioners on the

continent. Having directedthe CEPMLP for eight years,Dr Philip Andrews-Speedanticipates high demand fordispute resolution as a legaldiscipline.

“We started a course lastyear and we know it will takeoff. One chief counsel for aCanadian firm told me he hadsome 36 arbitration cases onhis books and the field tsgrowing.”

Growth in demand forenvironmental lawyers hasbeen inevitable but Andrews-Speed points to a increasingbody of community relationslaw that is gradually findingits way into the petroleum

practice. He suggests this wasthe secret behind BP’s successin expediting pipelineconstruction in Georgia andAzerbaijan but that it mightbe too late to apply thelessons in the Niger Delta,where mistrust has had some50 years to fester.

“It’s no good closing thedoor after the horse hasbolted,” he cautions. But heacknowledges the utility ofshifting legal anthropologycomponents into oil lawcourses, just as they have forsome time figured in miningand pipeline disciplines.

Shell began to employ legalanthropologists in China in

pursuit of the East-WestPipeline Project before thecompany pulled out, andExxonMobil made extensiveuse of the discipline whenlaying the Chad-Cameroonpipeline throughenvironmentally sensitivedomains inhabited bymarginalised populations.

In Lagos, Soji Awogbade ofÆlex, west Africa’s largestcommercial and litigation lawfirm, bemoans the lack ofqualified recruits capable ofhandling the welter of farm-ins, tax work and projectfinance deals landing on hisdesk. “I just got throughpractice meeting this week

when I sounded off on exactlythis problem,” he says.

“There’s a real dearth ofexpertise in key skills setsthat must be addressed if weare to support the plethora ofprojects now emerging —rights of way and pipelineprojects and especially gaspurchase accords and gas off-take agreements.”

Awogbadi worries he doesnot have the time to trainpeople, so he seeks job-readycandidates with overseasexposure or poaches from oilcompany legal departments.

“We are the largest outfithere and even we arecomplaining about the skillsshortage. If I got five moretomorrow in my E&P sectionI’d be a very happy man.”

George Mingay, a partner in


Petrobras magnet

Every new deal cranks up demandGrowth in dispute resolution cases and corporatesocial responsibility law driving need for lawyers

Outsiders in their ownNigeria has the engineers but theforeign oil operators are seen astoo slow to hand over the reins

BARRY MORGANLondon

industry will not lower its stan-dards because that implies ahigher training and mentoringcost down the line, says Akinpelu.

Chevron has engaged IbadanUniversity near Lagos to under-take R&D and claims the initia-tive is already paying off. “We willtake the best graduates and sendthem on to customised courses atStamford, MIT, Robert GordonUniversity and the like,” he says.

Akinpelu agrees there is a dis-connect between the industry andNigerian universities. “But as anoil company we cannot createcareer paths for all the necessarydisciplines. Many are beyond ourscope and this is a role for thecontractors.

“Take well-logging, for exam-ple. The technology is progress-ing rapidly and there is no way wecan keep abreast of all this. Weare now in the hands of the spe-cialist companies.”

London law firm KendallFreeman, handles boundarydisputes and his firm hasrepresented Nigeria in theGulf of Guinea.

He has seen corporatesocial responsibility lawmushroom over the last 10years and predicts Africanpractices will have to absorb arange of associated skills tokeep pace with contemporarycontract evolution.

Mingay identifies poordrafting of legislation as thecause of endless headaches forgovernments and companies,not to mention loss of timeand revenue, and believesattention will have to paid tothis in due course.

Similarly, the UnitedNations Convention on theLaw of the Sea treaty

highlighted a lack of skills inpublic international law.

For example, Article 72 ofthe UNCLOS relates to therush to meet upcomingdeadlines for the submissionof claims to extend theexclusive economic zone up to350 nautical miles.

Similarly, Article 82 relatesto negotiations with theSeabed Authority over revenuesharing from deepsea miningand once technology improvesthis will become a hot issue,says Mingay.

Rome-based InternationalDevelopment LawOrganisation director generalWilliam Loris, a former USAIDexecutive, agrees. Some 60%of IDLO’s students hail fromAfrica and a sister institutionoperating in the Arabic arena

will be inaugurated thisquarter in Cairo to meetgrowing demand.

“We may not have an oilfocus but in all thesetransactions you must addressboth business and financialissues within a legalframework while the rest isdeal-making and putting theright structures in place.”

IDLO ran a course lastmonth for some 20 Nigerianoil sector professionals onanti-corruption and Lorisanticipates increasedgovernment interest in thistheme.

Moreover, oil lawyersregularly arrive from Africaand Asia for training indispute resolution andmediation in a multi-disciplinary environment.


for Brazilians : Pages 44&45

Give me more E&P lawyers: Soji Awogbade of Ælex, west Africa’slargest commercial and litigation law firm Photo: BARRY MORGAN

for legal eagles in Africa

land

Numbers game: despite strong localrepresentation in the Bonny Islandgas conversion control room(pictured), there is anger thatindigenous skills have been allowedto go to waste Photo: HALLIBURTON

RECRUITMENT issues facingBrazilian oil giant Petrobras, andother oil and gas companies oper-ating in the country, superficiallyreflect those in the northernhemisphere but with someimportant differences.

Some of the problems are sim-ilar, with demand for qualifiedworkers exceeding supply, butaverage ages are about 12 yearsyounger, and the whole structureof the labour market is affectedby the fact that Petrobras held amonopoly until 1998.

“The ageing workforce in theNorth Sea and the Gulf of Mexicocan be traced to periods of low oilprices and company mergers inthe 1980s and 1990s, whereas thecurrent shortage of qualified per-sonnel in Brazil is explained bythe budget restrictions imposedon Petrobras over about 12 years,when there was a virtual freeze onhiring,” says Andre Raposo, a for-mer Petrobras manager nowworking as a commercial repre-sentative of the British consulatein Rio de Janeiro.

Petrobras was virtually the soledriver of the process that led to

Brazil building up knowledge andexpertise on a par with rivals inmore developed countries, espe-cially in the deep-water sector.

The company responded to thechallenges on an institutionallevel by intensifying its own train-ing and educational facilities,with a highly successful corpo-rate university and heavy invest-ments in its own world-classresearch and development facilitycalled CENPES.

Initiation into the PetrobrasUniversity (UP), with branches inBahia, Rio de Janeiro and SaoPaulo, is the first step for thelucky minority who make thegrade in company admissionexams. New petroleum engineerswill study internally for 12months before starting theircareer in the full sense.

“Petrobras is not short of learn-ing, and their employees gothrough an average 30 courseseach. The challenge facing Brazilis how to transfer this knowledge

into broader action that meetsgrowing demand,” says LuizAugusto Costacurta, a director ofa Sao Paulo-based consultancyfirm called Instituto MVC.

The opening of Brazil’s oil sec-tor greatly increased demand forspecialist workers, and evenPetrobras lost some of its experi-enced specialists to head-hunters.

Unlike the US and Europe,where graduates seem moreinterested in a career in themedia, business or law, the oilsector is viewed as the industry ofchoice for thousands of youngBrazilians who have beenbrought up to see Petrobras as themost competent organisation inthe country.

The company ended its hiringfreeze in 2001 and the number ofemployees rose from almost39,000 in 2000 to 52.000 at theend of 2004.

The most recent Petrobrasrecruitment contest attractedmore than 200,000 applicationsfor 1000 places. Government-backed studies suggest Brazil’s oiland gas sector will need an addi-tional 45,000 qualified profes-

sionals by the end of the decadecompared with 15,000 at present.

Initiatives to prepare thesequalified workers have prolifer-ated, among both sector and stateagencies.

The leading federal govern-ment project is PROMINP, cre-ated within the framework of theMinistry for Mines and Energywith the intention of co-ordinat-ing the expansion and improve-ment of oil and gas-related indus-tries in harmony with the needs

of a Petrobras-dominated indus-try. PROMINP studies have iden-tified demand, focusing on differ-ent regions, and provided theframework for expanding andmodernising national capacitythrough supply and maintenancechains and infrastructure pro-jects.

It is one of entities that havebecome directly involved in fund-ing education and training for thesector, doing so in partnershipwith established specialist


NIGERIA is in the throes ofspending some $70 million onupgrading its Petroleum TrainingCentre in the troubled oil hub ofWarri, much of it with theassistance of Aberdeen-basedRobert Gordon University.

“Companies are nowdemanding job-ready people andare increasingly prepared to staywith them through post-graduatetraining,” says Ian Campbell,managing director of RGU’scommercial arm Univation.

Facilities serving some 4000students are being rehabilitatedwhile Robert Gordon is helpingwith course work, training thetrainers and negotiating the all-important internationalaccreditation.

An average of 200 Nigeriangraduates pass through some 18UK universities each year underNigeria’s Petroleum TechnologyDevelopment Fund to expand theskills base in geosciences,engineering and asset (rig)management.

‘Change management’ is thebuzz phrase. Expanding the skillsbase in subsea, gas processingand gas production technology isan imperative for Abuja, whichnow wants more control of its oil

resources. RGU until last yearparticipated in Shell’s internaltraining programme, inductingsome 900 graduates over a nine-year period.

As in engineering, Nigeriaproduces a surfeit ofgeoscientists. GX Technologymanaging director Mark Walker isinterviewing a clutch of Nigeriangeoscience graduates this monthfor deployment outside theirhome country to help meet hisown shortfall. GXT is in a jointventure with Bulwark Services toprovide advanced seismicimaging.

“The only thing they lack isdata processing exposure and wecan plug that gap,” he says.Walker plans to take Nigeriangraduates, train them internallyand second them to Landmark’ssoftware facility at Leatherheadbefore deploying them anywhereGXT operates.

Graduates from universities atIfe, Port Harcourt, Abuja andAkure are hitting the job marketin substantial numbers. “Anairfare plus $10,000 a week for

two months is a heavycommitment, but it is a cheaperalternative in the long run and if Ikeep just 50% of the intake thatwill benefit both us and theindustry.

“I’m looking for a commercialmindset, very important forservice sector careers, and I don’texpect familiarity with pre-stacked seismic from Nigeriangraduates fresh from university.”

Along with all seismicprocessing, all FEED for small andlarge-scale field developmentprojects must now by law bedone in-country, a policy strictlyenforced by Nigeria’s industrywatchdog Napims. Local skills,once honed, are in great demand.

Starting salaries for greenhornreservoir engineers in the US arenow pegged at $80,000 with a$10,000 sign-on bonus, leavingcontractors enviously eyeingNigerian graduates prepared toget on the first rung for less than$4000.

For example, the US markethas a shortfall of nearly 4000places a year in reservoirengineering but, in common withEuropean countries, thegovernment places severerestrictions on visas. “The

industry has done this to itselfsince they have not hired for fiveyears and have no fresh blood,”says Deirdre O’Donnell,managing director of WorkingSmart, a London-basedrecruitment consultant.

She has 413 Nigerian nationalsregistered for upstream on herbooks, mostly already in work forthe majors outside Nigeria andseeking international positions.

Of the 60 experienced inpetroleum engineering, most ofthese are reservoir and pipelineengineers and only 10% fall intoquality assurance, drilling andmechanical categories.

O’Donnell is hosting aworkshop on 21 February inAberdeen at a special conferencefocusing on declining North Seaskills capacity, but hopes tobroaden the debate to includeAfrica’s potential contribution toresolving the global shortage.

For Glen Jones, Louisiana-based Parker Drilling’s director oftraining, it is not that simple.

“Our training operation inNigeria is now defunct. Wewrapped it up last year andrecalled the last of our rigs, theParker-72 rig-barge, back to theUS, largely for reasons of security

and political risk. We bring ourown guys who have been withParker awhile over here or to theUK for training but we’ve ceasedtraining in Nigeria.”

Jones had problems bringingNigerian personnel up beyondassistant driller level, saying hefound enthusiasm but a dearth oftechnical skills — a slowness inpicking up new technology thathe attributes to a basiceducational deficiency in theNigeria mainstream.

Parker is proud of its safetyrecord in Nigeria, havingindigenised all HSE functions,leaving “very few” expats on siteto conduct on-the-job training.

Chevron’s technology advisorAdebayo Akinpelu acknowledgesimprovements occur slowly butalready notes “a new breed ofemployable Nigerian graduatescoming through the reformedsystem”.

RGU’s Ian Campbell agreesgauging the efficiency andeffectiveness of any skillsexpansion programme is notabout counting heads. Asked if hethinks indigenisation beensuccessful in Nigeria, he replies:“That question is too political forme.”

Aberdeen connection puts Abuja on the high roadBARRY MORGANLondon

The living is easy in the Persian Gulf: Pages 46&47

Petrobrasmagnet forBraziliansThe oil giant needs more qualified staff but has noproblem attracting country’s brightest prospects

GARETH CHETWYNDRio de Janeiro

training networks already presentthroughout Brazil.

Courses are proliferating inareas like safety, processing andautomation, while PROMINP co-ordinator Jose Renato Ferreirasays new university courses willshortly be opened in diverse areasincluding naval architecture, pro-ject engineering and a compre-hensive specialisation inpipelines.

The Brazilian Petroleum Insti-tute (IBP), representing oil com-

panies registered in Brazil, alsoholds short courses catering forclose to 4000 professionals peryear. The scale of demand is alsoattracting interest from foreigncompanies with an eye on busi-ness opportunities and nichemarkets in training and humanresources management.

The most recent of these,launched this week, is a decisionby Britain’s Lancashire Ambu-lance Service to partner a localsupplier of medical services in

setting up a centre for specialisedtraining in offshore rescue andaccident response, based inMacae.

Britain’s Aberdeen Skills &Enterprise Training Ltd (ASET)and software company PISYSrecently forged a partnershipwith Petrobras and local trainingentities to help provide a newsimulation centre for platformoperators.

Petrobras formerly senthundreds of workers to the UK

for training in ballast operationsand the management of majoremergencies, but will now enjoyservices of the same quality onhome soil.

Another growing trend is inter-est from third party countries inpursuing training opportunitiesin Brazil. The strongest interesthas so far come from theAngolans, who value the culturaland linguistic links with Brazil,and are keen to learn about theprocess of building a world-classindustry in a developing country.

Another South American oilgiant, Venezuela’s PDVSA, hashad a very different impact on therecruitment market. PresidentHugo Chavez smashed a strike in2003 by dismissing 18,000PDVSA workers who had taken astance against his regime.

The sacked workers were pre-dominantly from the manage-ment and administrative ranks,and included many of the com-pany’s most experienced andtechnically qualified staff.

Some of these people bandedtogether to form consultancies,but widespread blacklistingmeant employment in theVenezuelan industry becamefraught with difficulty.

Many of the best people have

made their way to Houston andother poles of oil industry activityin the US. “The Venezuelans maylack offshore experience but thereis a general awareness in theindustry that these people offergreat experience and expertise sothat reservoir managers, drillersand others are highly soughtafter,” says Mauricion Sion, man-aging director of SGF Global, acompany specialising in recruit-ment services.

However, tighter restrictionson obtaining US work permitsmean that more of the Venezue-lans have been going to Mexico,where they are highly regarded,and Canada, where many haveexperience that is relevant to theheavy oil shales of Alberta.

Sion says more opportunitiesawait the former PDVSA workersin remote locations like WestAfrica and Indonesia, but hasfound that Venezuelans haveproven reluctant to go so farafield, despite difficulties in theirown country.

“There has been some increasein Venezuelans going to countrieslike Equatorial Guinea andAngola, where there are moresimilarities with the language,and we are working to make moreof these markets,” he adds.


Education drive: both the state and private sectors are building up top-quality training facilities for oil and gas workers, and Petrobras HQ(left) has made heavy investments in its own world-class research anddevelopment centre CENPES (above)

Photos: TRADEWINDS/PETROBRAS

The living is easyTHE REST of the world faces thedaunting challenge of seeking oilin increasingly hostile environ-ments but Persian Gulf producersare relying on the same easy fieldsthat have provided them withenormous wealth for more thanhalf a century.

Production costs in Saudi Ara-bia, Kuwait and the United ArabEmirates are less than one dollarper barrel, reflecting both giantreservoirs and simple develop-ment techniques.

Most of the current producingfields in the region still have bil-lions of barrels left despite pump-ing oil for decades.

According to the US Depart-ment of Energy, the Persian Gulfcontains 715 billion barrels ofproven oil reserves, representing57% of the world’s proven base,and 2462trillion cubicfeet of nat-ural gasreserves or45% of theworld total.

Almost allthe major oiland gas dis-c o v e r i e swere made a long time ago,enabling regional producers toset up specialised universities totrain local manpower.

Saudi Aramco, the world’slargest oil company, now reliesmostly on Saudis to run its key oilindustry.

Gone are the days when for-eign experts dominated the sec-tor’s skilled labour force in thekingdom. This is also the case inneighbouring countries.

Deep pockets mean that com-panies such as Aramco can affordbetter than their peers to hire toptechnicians if needed.

Above all, the region’s enor-mous energy base means that lit-tle exploration activity is neededand high field productivity doesaway with costly production tech-niques or complicated develop-ment wells.

According to industry experts,fewer than 30 new explorationwells were drilled in Saudi Arabiafrom 1995 to 2004, comparedwith more than 15,700 in the US.The numbers are similarthroughout the Persian Gulf.

While in general explorationactivity is relatively dormant, theregion is witnessing an unprece-dented pace of developmentactivities to bring on stream oiland gas fields.

Aramco is looking to add about2 million barrels a day of extracapacity to its oil production by2010.

Qatar, which is on the brink ofbecoming the world’s top pro-ducer of liquefied natural gas, iswitnessing a frenzied pace of gasdevelopment projects.

These have put enormous pres-sure on the ability of engineeringcompanies and manufacturers tocope with building LNG facilitiesin the industrial city of Ras

Laffan. As a result Qatar hasimposed a freeze on new schemesto give manufacturers a breathingspace while it also provides thetiny Gulf state with the opportu-nity to study the impact of its newgas projects on the giant NorthField, which has proven reservesof 1000 Tcf.

Iraq is the only Arab Gulf coun-try where skilled labour may be inshort supply after decades of warand negligence.

Foreign workers are requiredto rehabilitate dormant fields butfew would risk their lives by opt-ing to work in a country where abrutal Sunni Moslem insurgencyshows little signs of easing. For-

eign contrac-tors are fre-quent targetsof the violentcampaign.

The Iraqioil industryrelied almostentirely onlocal expertsunder Sad-

dam Hussein. But top executivesmay have lost their jobs becauseof links with his hated Baathparty.

Further purges of the Baathistsare on the cards once a perma-nent government is in place nextmonth. The new Iraq will in timeneed both foreign skills andinvestment to kick start its oilindustry.


Russian time-warp: Page 48

IRAN, WHICH in two yearswill celebrate the centenaryof its first oil strike, has oneof the strongest skills base inthe Middle East, writes VahePetrossian.

It faces serious problemsdeveloping and expanding itsoil and gas sector, but morebecause of bad managementthan a shortage of technicalknowhow. War and USsanctions since 1980 havehelped Iran’s oil engineersand technicians hone theirskills beyond the alreadyhigh levels that existedbefore the 1979 revolution.

Much of the new expertiseis in the downstream sector,repairing and evenrebuilding, often from near-scratch, refineries and otherfacilities.

But the last decade hasalso seen a rise in Iranianconfidence in tacklingupstream challenges.

In particular, several stateand semi-private engineeringand development companiesclaim to be able to carry outcomplex reservoirengineering and studies, dohorizontal drilling and

implement gas injectionschemes.

The National Iranian OilCompany (NIOC) hopeseventually to tap 30 billion orso barrels of ultra heavycrude in place in the south-west of the country. As aresult, local experts havedeveloped considerableexpertise in this moreesoteric aspect of oilextraction.

Foreign companies fromNorway and Canada havebeen playing a key role in theultra heavy field, as haveother foreign firms in otherspecialities. But there is nowalso a vast pool of localexperts with the necessaryskills.

Many NIOC subsidiariesand private companies havein recent years also taken onWestern engineers aseffectively in-houseemployees. For example,Petroiran DevelopmentCompany (Pedco), an NIOCsubsidiary, has Schlumbergerengineers in its north Tehranoffices helping out withreservoir studies.

At the Research Institute

for Petroleum Industries(RIPI), an NIOC departmentresponsible for accessing thecountry’s ultra heavy crudes,hundreds of engineers andscientists are at work inresearch facilities spreadaround Tehran and othercities.

In the past five years RIPI,which has access to 1% ofNIOC’s budget, has beenfunding various universityactivities and helpingdoctoral students selectrelevant subjects for theirtheses.

Iranian engineers alsomake a notable contributionto international academicliterature, publishing largenumbers of papers everyyear.

The Abadan Institute ofTechnology, which used toprovide the core of Iran’s oilengineering expertise, hasbeen joined by several otherinstitutions of higherlearning, such as the AhwazInstitute of Technology andthe Post-Graduate &Management College.

Iran has lost about 50% ofits pre-revolution crude

production capacity becauseof neglect, lack of financeand war damage.

The Oil Ministry is nowtrying to restore all lostcapacity over the next decadeor so, raising NIOC’s abilityto pump oil back up to the 6million to 7 million barrelsper day level.

This sort of expansion —and the sophisticatedexpertise and technology thatwould be needed — is beyondlocal capabilities, say experts.

“This is a job for the bigboys from outside,” says asource in Tehran.

Local companies, includingstate firms, are tacklingvarious big projects such asthe Ahwaz Bangestan andMansouri upgrades and theAghajari injection scheme.

But the local companies’Achilles heel has long beenand remains the question ofmanagement.

Almost all projectshandled by locals have beenrunning late.

Iranian managers have along way to go to catch upwith their colleagues at thetechnical end.

Iran’s technical lions led by donkeys

Vast reserves, little explorationand a long familiarity with fieldsmakes region envy of the world

NASSIR SHIRKHANIOman

in the Persian GulfUpstream, 27 January 2006 47

LIBYA has embarked on acampaign to halt and reverselosses in the country’s skillspotential, writes Vahe Petrossian.

Official salary restrictions andthe difficulties created by twodecades of international sanctionshave been blamed for the exodus.

About 200 young students arenow being selected to be sentabroad for specialised training thisyear. At least as many will followthem every year, with the firstbatch hopefully returning withinfive years to contribute to the localskills market.

Early this month thegovernment raised the 700 dinar($550) limit set under the so-calledLaw 15 on monthly salaries fordoctors, a move seen as aprecursor of a similar relaxation for

oil engineers and other skilledpeople. A minimum limit for a verybasic standard of living in Libyawould have to be at least twicethat salary level.

As things stand, the country hasbeen suffering a severe skillsshortage in almost every aspect ofthe economy. Many of Libya’s bestoil engineers and technicians are inDubai, Qatar and other PersianGulf countries where they cancommand much higher salariesthan at home.

In their own country, thepositions have for many yearsbeen filled by expats from Europe.

This is particularly true out inthe field, where large numbers offoreign technicians have beenkeeping the oil wells going.

The National Oil Corporation

has recently started looking eastfor Filipino, Indian, Pakistani andother technicians prepared to workfor lower salaries than Europeans.

The Oil Ministry and NOC are,meanwhile, telling foreigncompanies bidding for projects inLibya that local content will be akey element in their assessment.

Of course, as far as manpoweris concerned, the quality and valueof that local content would in theshort term be questionable.

The latest hopes raised by thedispatch abroad of a newgeneration of young people arequalified by those in the knowwho say that everything dependson the selection process.

The fear is that students withthe best social and politicalconnections, not ability, will be

chosen. In that case “the wholeexercise will be useless”, says onesource. One Libyan close to theindustry says officials appear to bemaking an effort to select the 200on merit. The General People’sCommittee is running the post-graduate programme.

With Libya now free ofinternational sanctions and withambitious plans to restore by 2010well over 1 million barrels per dayof capacity lost in the past twodecades, the industry will need allthe new blood it can get.

In the shorter term, a relaxationof salary limits that would begenerous enough to attract back atleast some of the techniciansworking in the Persian Gulf wouldhave a much bigger impact onLibya’s oil and gas sector.

Relying on expats: large numbers of foreign technicians have beenkeeping the oil wells going.out in the field, such as at thisWintershall operation Photo: WINTERSHALL

Libya hopes to lure back its lost talent


RUSSIA’S oil and gas companiesremain mostly isolated from theWest despite more than a decadepassing since the privatisation ofthe former Soviet industry andthe opening of the country to out-side investors.

The industry still lives mostlyon the expertise and technologiesdeveloped in Soviet times, andforeign companies like Shell andBP have to adjust their expecta-tions and practices to staff theirlocal offices.

Perhaps project management,a must to improve the effective-ness of local operations, is themost important of the innova-tions to come from Western com-panies. Managers with experi-ence in this discipline have beenin demand, especially in the earlyphases of developments.

Health, safety and environ-ment skills were low priorities inthe Soviet era and Western com-panies still have to import expertsto fill these positions.

In terms of technology,hydrofracturing has been themajor advance. It was pioneeredby Yukos with the help of inter-national oilfield service contrac-tor Schlumberger at the end of1990s.

Hydrofracing increases flow-rates at west Siberia’s tradition-ally low producing wells and thepractice is now widespread.

The Russians were quick topick up the required skills andWestern managers have nowbeen sent home.

It has been a similar story onSakhalin Island, where partnersShell and ExxonMobil had tostart their project from scratch atthe end of 1990s. Mid-level for-eign personnel were flown in to

run the operation’s headquartersand to man the first offshore plat-form, Molikpaq.

Across Russia, where petrol-eum engineers are always indemand at the oil companies, theoilfield services sector has tradi-tionally been the largest con-sumer of new and existing per-sonnel.

According to Felix Lyuba-shevsky, president of indepen-dent oilfield services outfit Inte-gra, the market is inique in thatabout 90% of all jobs use Soviettechnologies and knowhow.

This has forced even Schlum-berger to turn into a fullylocalised company staffed byRussian nationals with Sovieteducations. It also uses mainlylocally made equipment andmachinery.

There is no shortage in the sup-ply of local labour. Although oilcompanies cut salaries in the late1990s when commodity priceswere at a low point, pay rates arestill high compared with othersectors.

Starting from 2000, salariesbegan to grow quickly, promptingpeople to apply for jobs in oil andoilfield service companies.

Today, the most popularemployers are state-owned oilcompany Rosneft and gasmonopoly Gazprom, which areunderstood to pay the highestsalaries among local oil compa-nies and have a reputation forproviding solid job security.

According to Viktor Martynov,pro-rector of the Gubkin oil andgas university in Moscow, the

leading educational establishmentin the country, oil and gas-relatedschools increased their annualintake to around 9000 in 2004from 3000 back in the 1980s.

Martynov says the institutes inthe oil cities of Tyumen andSamara have quadrupled theirstudent numbers, and adds thatmany regional universities haveadded oil and gas-related pro-grammes to their currucilums.

He quips that even theAstrakhan fish industry schoolnow teaches oil and gas disci-plines.

Martynov estimates that thecountry’s oil and gas industryemploys around 1 million people,or about 1.5% of the total work-force. Competition to join thelucky million is intense.

He says the industry “sucks upthe best people from neighbour-ing sectors” because it can offerfive-fold salary increases. Today,Russia’s vertically integrated oilcompanies like Lukoil, TNK-BP,Surgutneftegaz and others needthe skills of 100 professions, notjust petroleum engineers.

However, the quality of educa-tion has dropped considerably asa majority of students study in theevenings or through distancelearning schemes.

When they graduate, Martynovsays, they may have a tough timefinding a job in the industry asRussian oil companies are gradu-ally cutting back on personnelnumbers to reduce costs andimprove efficiency.

He expects there will be just800 new openings with oil com-panies throughout Russian in2006. This is bad news for the7800 new graduates from the var-ious oil and gas schools.

Blast from the past: the vast majority of Russia’s oil and gascompanies still run on Soviet-era technologies and knowhow

Photo: PER STAALE BUGJERDE

Russian time-warpOil industry sticks with Soviet-era expertise but relatively high salaries bring job-seekers running

VLADIMIR AFANASIEVMoscow

Upstream Newspaper Oil Skills Special Focus 2006

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