The oil and gas industry has had a pretty tough decade and faced a number of challenges, many of which were after-effects from the 2008 financial crisis.
There were other factors, too: oil price volatility as a result of oversupply mid-decade hit the industry hard, while there was also a wider global shift toward renewables in response to the threat of climate change.
2019, though, looks to be far more positive for the industry and puts it on track to end the decade on something of a high point. Part of this upturn is due to the price of oil rebounding, and is set to rise further. Though there are still warnings of a supply crunch, years of deferred investment have given oil and gas companies the opportunity to expand and boost production on an international scale.
Companies with a strong long-term growth strategy can help beat the supply crunch if they acquire the right talent to spearhead new projects and cement their status as industry leaders.
However, oil and gas recruitment is never a walk in the park. Below, we look at some of the top recruitment challenges for oil and gas companies, from skills shortages at home to complex labour laws and regulations in their target markets.
Talent acquisition may be the biggest challenge oil and gas companies face in 2019. With the industry returning to growth post-crisis, many companies are reinvesting in training and apprenticeships programs; however, the decision to reduce them to weather the storm is now resulting in long-term impact.
The industry is facing a very real challenge when it comes to recruitment. That isn’t a prediction – it’s a threat that’s weighing on the minds of the 17,000 professionals within the industry who took the time to contribute to our Global Energy Talent Index (GETI) report this year.
Overall, two-fifths (40%) of oil and gas professionals believe that a skills crisis is already here. Ambitious energy companies looking to grow quickly and expand into new territories will have to navigate this skills gap to ensure their success.
Those job losses and a lack of investment in attracting and training the next generation have hit the industry harder than many may have expected at the start of the decade.
Why is this important? Partly because of an industry crisis that has been on the horizon for years, dubbed the Great Crew Change. This refers to the large number of older workers who are now reaching retirement age after long careers in oil and gas, and whose decades of knowledge and experience will be lost without new recruits to pass it on to.
That’s a problem that’s intricately tied into the economic downturns seen in the ‘80s and 2008. Oil prices were low, jobs were lost, companies closed, engineers flocked to other industries, and training and apprenticeship schemes were cut from necessity.
The present situation, post-2008 crisis especially, looks a lot brighter. As oil prices rise again companies are investing heavily in training and recruitment. GETI data, too, shows that 81% of millennials would consider the industry if their careers were starting now; though good to see, The Great Crew Change is happening right now, and talent needs to be recruited today to help secure the possibility of future projects and long-term company growth.
The skills gap isn’t the only problem facing energy companies this year, though. While chief executives and senior managers will be all too aware of the need for niche skills to drive new projects to success, it’s not the only consideration they need to be aware of when it comes to recruitment.
Companies with a long-term growth strategy will, more likely than not, look to expand into foreign markets and territories. Chief executives with international ambitions can not only look at growing their company’s international presence; it can also represent a key opportunity to work with a local workforce hungry for opportunities to progress their own careers and polish their existing skills.
An energy company locating to a new region can help to create jobs and provide a boost to a local economy. With the right approach and strategy in place, an oil and gas operator can make positive long-term connections with local workers, investing in training to upskill their talents and properly utilising the experience of older workers; perhaps recruiting them as trainers to help address the skills gap.
That in itself that can provide another significant challenge though in balancing compliance with local labour laws, while needing to hire quickly and in mass quantities for various stages of long-term projects. If done well, the result is growing a business into new territories, but an uneven distribution of weight on either side could result in both serious financial penalties and lasting damage to the company’s reputation.
Some labour laws, for instance, require that a set number of workers for a project need to be hired locally. Take Brazil’s Labour Code, which states (as a general rule) that a company can employ foreign workers if the compensation paid to Brazilian employees is equivalent to at least two-thirds of its payroll.
In Indonesia, fixed-term and foreign employees need their contracts to be outlined to explicitly say so, otherwise a fixed-term employee automatically becomes a permanent employee, which could cause serious problems for an energy company that fails to fill out its paperwork correctly.
All in all, oil and gas companies need to continually update new compliance procedures in their recruitment efforts – not only to protect themselves against legal and regulatory challenges, but to ensure projects see minimal setbacks and maximum returns.
Every country has its own talent laws, immigration rules and geopolitical pressures. The regulations energy companies must adhere to can be akin to walking a tightrope. Not only can missteps attract financial and regulatory repercussions, but also negative PR attention, which can affect a company’s reputation too.
This was an issue that was raised in July 2018 in Nigeria, when the Minister of Labour and Employment, Chris Ngige, said that oil and gas companies that promoted unfair labour practices risked having their licences revoked.
“Any recruiters found abusing expatriate quotas will have his license revoked or not renewed,” he said at the time. Six months later and numerous oil firms including Forte Oil, Seplat, AITEO and NIPCO were named by The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) as energy companies that were flouting local labour laws.
Those companies and others associated with them now find themselves tarred with the same brush. Chief executives in this position not only have to look out for their employees back home, but also deal with accusations of exploitation. How do you recruit local talent which is seen to have a people problem?
Respect the local laws, though, and your energy company can be seen as a leading light in the marketplace, giving your brand greater leverage as an employer both at home and further afield.
Working with a recruitment specialist that knows how the oil and gas industry works can help chief executives to bridge the skills gap, better navigate different regions’ labour laws and maintain a strong reputation for their brand in front of the candidates they want to attract.
Airswift’s global network not only gives us access to the world’s top engineering talent, but also gives us a strong understanding of cultural and geopolitical considerations across the many regions where our clients work and where the best candidates can be found.
We have an extensive number of employees across different global markets with in-depth knowledge of local labour laws, rules and regulations. We’re compliant recruiters in every country where we operate and can also act on a consultancy basis to help you navigate any regulatory grey areas.
The international presence we have built in the energy industry over the past 40 years has also helped us to get a solid grounding in various emerging international markets. Not only does that help us stay on top of any changes to energy recruitment regulation, but it also puts us in front of premier local engineering talent, acting as an extension to your company to help it win the hearts and minds of the local populace.
This post was written by Charles Pfauwadel, Regional Director – Asia Pacific at Airswift