Oil and Gas Sector Roundup: Nov 2013

Oil and Gas Sector Roundup: Nov 2013

The world’s crude oil market guzzles 88.8 million barrels per day. Till about 2035 at least, oil is poised to remain the dominant source of energy globally. Increase in supplies of gas and worries about emissions will see gas displace coal as the second biggest source of fuel by as early as 2025-2027.

For these reasons, oil and gas is an evergreen sector, always hungry for fresh talent to take things ahead, in some of the most exciting locations. According to research conducted by PricewaterhouseCoopers, to beat skills shortages, the industry needs an infusion of 120,000 people over the next ten years. As companies fight to recruit and retain the best talent, the demand for skilled professionals is creating a big market for expats and driving salaries up.

Last year, on average, annual salaries in this sector grew by 8.5% – to reach USD $87,300.

Global Hotspots for Skilled Oil & Gas Professionals

Firstly, Russia, Saudi Arabia, United States, Iran and China remain the world’s top five exporters of oil, in that order – but that status quo looks to be changing. Today, there is speculation that the US will outpace Saudi Arabia in the production of oil by 2020. There’s been rapid growth of oil and natural gas production from unconventional shale resources in North America and this is expected to have far-reaching effects on the global distribution of resources as well as on employment opportunities.

Hotspot One: USA and the rising power of Shale

The rise in global oil prices is driving America to drill deep offshore, into hard shale, and in the tar sands. Within the US, North Dakota is the hub of crude oil production while California has two-thirds of American shale oil reserves. According to the Energy Information Administration, US crude oil production is billed to touch 7.47 million barrels per day in 2020 – up from 5.74 million barrels per day in 2012. With the boom in production of shale oil and shale gas, the US is likely to surpass Saudi Arabia as the world’s biggest oil producer within four years, and beat Russia as the world’s largest natural gas producer by as soon as 2015.

Already, the impact is showing. The US cut down on oil imports in recent years, from about 65% of daily requirements to 40%. The enhanced production is set to spark off a cascade of employment opportunities for skilled and qualified workers. This is a good time to be in oil, in the US.

Source: http://online.wsj.com/news/articles/SB10001424127887324105204578382690249436084

Hotspot Two: The Middle East – an urgent need for manpower

Iraq is one of the world’s biggest exporters of oil and is a hotspot for exploration and production. As per the country’s Integrated National Energy Strategy, by 2020, Iraq plans to enhance its oil and natural gas production to 9 million barrels per day. If they achieve this, it would have been the highest sustained growth in the history of the global oil industry.

Iraq has a concentration of giant oil fields around Basrah, in the south. The North too, holds great potential, which can be tapped if issues regarding the governance of the hydrocarbon sector are resolved. As of now, the country is developing several projects that had been put on hold during the recession. But as they do so, they face a major shortage of skilled, experienced workers.

In a statement to Rigzone, Darren Grainger, Middle East regional director at NES Global Talent, said: “The demand for engineers with the necessary expertise and both, industry and region-specific experience is increasing, which means it is an extremely attractive region to work in terms of salaries and benefits – if you have the right skills and have worked in the Middle East previously.”

But labor supply and demand are not balanced. “In the Middle East, 86% of workers are imported,” stated Derek Massie, former senior vice president of Human Resources at Seadrill, adding, “We need about 170 million people with graduate level skills but we have a shortfall of about 80 million…it’s <people for> highly skilled jobs that are in demand.”

Within the Middle East, Majnoon and Rumaila oil fields in Southern Iraq are in urgent need of manpower. If Rumaila’s output triples by 2015, it would make the oil field the world’s second largest. Companies like BP plc, Weatherford International, Schlumberger, Iraqi Drilling Co. and China’s Daqing Oil Field Co. Ltd. are currently engaged in drilling at Rumaila. The number of contractors employed on these projects has grown manifold, in some cases as much as 110% over the past five months alone.

Many companies rely heavily on foreign workers, often attracting candidates with their exciting work culture, open style of communication, high rewards and remuneration. Several national oil companies in the Middle East tailor benefits towards families, providing superior lifestyle facilities to expats who choose to work with them.

Source: http://www.rigzone.com/news/oil_gas/a/128966/Iraq_in_Need_of_Skilled_Workers_to_Finish_Existing_Developments/?all=HG2

Hotspot Three: Booming Brazil

In Brazil, the oil boom is attracting skilled professionals from the world over. New oil fields are slated to create 250,000 new jobs for qualified professionals by 2016. A representative of the National Organization of Petroleum Industry (ONIP) told BBC Brasil: “A company may pay, besides the salary, another $100,000 to maintain a foreign professional and his family in Brazil.”

Over the next four years, Petrobras plans to invest $224 billion in Brazil’s oil industry, which will fuel further demand for skilled manpower for project maintenance and expansion. Currently the company has 59,996 employees and forecasts the need for 76,000 by 2015.

The highest demand is for engineers, project and contract managers, operations and logistics managers. Not surprisingly, 23,000 foreign engineers and technicians made their way to Brazil in 2011, and the number is set to rise even further. Between 2010 and 2012, as many as 49,801 professionals from countries such as United Kingdom, United States, Norway, the Netherlands and France came to Brazil to work in the oil and gas sector. And it isn’t just managers; there is huge demand for skilled workers to deal with the drill rigs, platforms, ships and other offshore and onshore structures.

In April 2013, the Hays Oil & Gas salary guide reported that the average annual salary for foreign professionals in Brazil’s oil sector grew from $106,000 in 2012 to $131,400 in 2013 – an increase of 20%. Typically, Brazilian locals avoid the better paid positions in offshore platforms, thus creating more opportunities for expats. Foreigners are paid up to thrice as much as locals make, with qualified workers – such as engineers – being retained at a premium.

Source: http://www.rigzone.com/news/oil_gas/a/129468/Brazils_Oil_Boom_Attracts_Highly_Paid_Foreign_Professionals

Hotspot Four: UK’s growth of the North Sea Oil Project

The exploration of North Sea oil has put the spotlight on the UK’s oil and gas sector. The country is keenly pushing fracking and the Budget for 2013 has introduced a set of tax breaks, leading companies to invest in North Sea exploration to the tune of US $20.76 billion this year. The amount is set to rise in 2014.

Meanwhile, Stat Oil announced a £4.3bn (US $6.9bn) investment into North Sea Oil creating over 700 jobs, a £1bn (US $1.6bn) project to develop the Harris and Barra oilfields was announced, as well as another £1bn investment by joint venture Canadian-based Talisman Energy and Chinese Company Sinopec.

Where jobs are concerned, those with an education in science – especially engineering – are in demand. Engineers working in the industry say that the sector has not been affected by the credit crunch and the lack of jobs.

Recruitment firm Oilandgaspeople.com surveyed over 2,200 oil and gas companies to report that average wages in the industry will rise by ~15% this year. The industry is grappling with a severe shortage of qualified professionals, causing demand to reach all-time highs and average salaries to rise. Day rates for well supervisors and drill superintendents have gone up by 15% and 17% respectively.

With the growth in the North Sea oil project, it is estimated that up to 50,000 new jobs could be created. Kick-starting shale gas exploration will prove a further incentive in the UK jobs’ market. If you’re in this sector, your average salary would be approx. £63K (US $100K) per year, while starting salaries for the sector are in the range of £35K to £40K (US $56K to $65K) per year.





Other hotspots

A quick glance at emerging opportunities in this sector, around the world.

-       Libya: Produces light sweet crude oil; Eastern Libya is the hub of oil production

-       China: Potentially massive shale gas resources and is in the process of exploring these

-       Saudi Arabia: The Eastern Province is oil-rich and offers plenty of opportunities for qualified expats

-       Mexico, Canada and Venezuela: Producers of crude oil

-       Sudan and Iraq

Drilling money, from oil

In the recent past, even in the face of a global slowdown, oil and gas salaries have risen and risen. Over the past year, the average pay package has grown by 8.5%, up from a 6% increase the year before. Currently, the average global salary is US $87,300 though, of course, expats and those employed in the ‘hotspots’ (see above) are likely to be making much more.

In pure money terms, workers in Australia make an average of US $163K, those in Norway earn US $153K, followed by New Zealand, Canada and the US at $127K, $123K and $121K per year, respectively.

Conducted by  Oil and Gas Job Search, the salary survey also pointed out that 37.3% of employers are worried about skills shortages threatening their businesses, and that few other industries have witnessed such fast-paced salary growth in recent years.

Compensation is rising for foreign workers, especially in terms of ‘hardship allowance’. For instance, Russia has a risky arctic exploration program and exploration in China calls for unconventional skills, and these projects pay higher than others might.

On the topic of China, the country is focused on becoming self-reliant on energy and companies are willing to pay higher salaries to make this happen. Trinidad and Tobago are other hotspots for high salaries in this sector.

Sources: Oil and Gas Job Search


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