Currently, a wave of advanced technologies has dominated the oil and gas sector around the world, primarily to address the surging global demand through enhancing hydrocarbon recovery.
Human capital remains to be the pivotal tool in achieving the industry’s goals. Therefore, enriching the sector by investments will help generate many jobs, according to a paper published by International Labor Office at Geneva, entitled ‘Current and future skills, human resources development and safety training for contractors in the oil and gas industry.’
According to the paper, the sector faces a skill shortage, including technical, soft, and managerial skills. This is in addition to a severe lack in technical professions, such as petrochemical engineers, petroleum engineers and geologists. Having such a shortage imposes acute obstacle for international oil companies (IOCs), national oil companies (NOCs), and governments. “I think we are facing this situation because companies have felt pressured, for a variety of reasons, to take a short-term approach in hiring experienced personnel rather than hiring new graduates who require trainings and months of-on-the job experience,” Colby Fuser, Halliburton Vice President Egypt and Libya said.
Moreover, in some cases, the sector faces that shortage because of the demographic challenge through having many experienced aged workers and fewer young skilled workers entering the industry, which increases the percentage of the aging workforce in the sector and creates a skills gap. “I believe an aging workforce is not specific to any one market or region, it is a global issue,” Fuser added. That is why, the sector has to adapt coherent human resources development policies to attract the talents needed to be part of the industry and operate current investments.
Skills Shortage and Aging Workforce
Globally, skills shortage is the era’s dilemma for the oil and gas sector. It occurs through two ways; either a reduction in production caused by a shortage of workers supply or a reduction in productivity because of an aging workforce or having less experienced workers.
It could also occur because “local employees do not return to Egypt due to salary requirements. Generationally, new skilled workers demand quick movement through positions. Therefore, it is crucial we invest in training for our new employees as well as take the time to map out careers for each individual worker and reward them along the way,” Fuser explained.
According to the paper, nearly four out of five oil and gas companies reported that technical skills were the main shortage. Furthermore, data from 37 international exploration and production (E&P) companies, covering 40% of the world’s oil and gas production, showed that there could be a global shortage of more than 3,200 petrochemical professionals and petroleum engineers (PTPs) in the E&P sector in 2015.
The demographic challenge represents a core reason for deepening the skills shortage problem. The paper cited Schlumberger Business Consulting study which estimated that the E&P sector suffers from a net loss of around 5,500 experienced PTPs aged over 35 years as the proportion of these experienced workers will decrease from 60% in 2011 to 52% of total PTPs in 2015.
In addition, a survey on skills in the North Sea led by the Offshore Petroleum Industry Training Organization (OPITO) and the Engineering Construction Industry Training Board (ECITB) revealed the existence of skills shortage in operators and contractors, especially as “the need for contractors is expected to grow in the coming years, with short-term growth most likely in companies employing fewer than 500 people and medium-term growth in those employing more than 500 people,” according to the paper. Moreover, OPITO and ECITB research showed that over 50% of oil and gas companies consider the skills shortage their number one challenge.
The paper cited another study conducted by Boston Consulting Group which revealed that by 2050 the global population aged 60 or more will exceed the population segment aged 15 or less, therefore, the majority of the countries worldwide will suffer from the skills shortage dilemma. In addition, the paper stated that more than half of oilfield professionals will reach retirement age in the next decade. In Saudi Arabia, more than 60% of engineers will have less than 10 years of experience in the next few years based on the Cambridge Energy Research Associates (CERA) study.
It is worth mentioning that the US Bureau of Labor Statistics (BLS) predicted that by 2022 more than one-quarter of US labor force will be aged 55 or more, according to a research report by the Society for Human Resource Management (SHRM),
entitled ‘Preparing for an Aging Workforce Oil, Gas and Mining Industry.’ Furthermore, based on the BLS, many sectors including the oil and gas one will witness a boom in the employment opportunities with an average of around 1.4% each year during the period from 2012 to 2022.
Supporting Young Professionals is the Way Out
It has been proven that to overcome the oil and gas sector’s concern of having the larger segment of aged workers, the sector has to support young professionals who recently started working in the industry without previous experience.
Supporting them can be through “the accessibility of data and speed of knowledge transfer between the various generations within our workforce, and I feel that the industry in Egypt is taking smart steps to address this challenge through the Modernization Project,” Fuser said, mentioning that “at Halliburton, we continue to diversify our talents with multiple generations and genders to support the changing environment.” Therefore, supporting young professionals will always represent the sector’s way out.
Moreover, generating job opportunities for the young professionals has become a necessity to enable them to enter the sector. According to the paper, a study by Wood Mackenzie showed that by 2020, the oil and gas industry will create more than 1.4 million job opportunities in the US and by 2035, the shale gas industry will generate over 1.6 million job opportunities, comprising more than 360,000 direct jobs, over 547,000 indirect jobs, and over 752,000 induced jobs.
In addition, another method can be used to support young professionals in gaining experience is to encourage governments, IOCs, and NOCs to rely heavily on the local workforce where they are operating, especially under the expansion plans to new and more remote areas. Therefore, it will be better for companies to build local workforce that they can rely on and depend less on expatriate services which can help form a base of experienced young workers.
On the other hand, the oil and gas sector has to increase the awareness of the changing demographic of the workers. It was found by SHRM report that 17% of the human resources (HR) professionals did not know that the share of aged workers will form around 26% of the total workforce by 2022. Moreover, 43% of HR professionals considered the possible loss of talents due to the aging workforce is a problem for the industry in the next six to ten years.
From an organizational point of view, the organizations have to be aware of that change as well. According to SHRM report, 31% showed that their organizations were preparing for that increase in the proportion of older workers in the labor force by examining their internal policies to address this change, yet almost 17% reported that their organizations will resist with no necessary changes in their policies and practices.
In Egypt, under the umbrella of the Modernization Project, “I do not believe we have a skills shortage in our industry. Egypt is a hub for talent where our employees are highly sought because of their knowledge and skill level. The experience they gain by working with the customers in Egypt prepares them for challenges across our industry,” Fuser pointed out. The Egyptian Ministry of Petroleum has established a single database that connects all employees in the oil and gas sector to the ministry. The database will provide a clear vision that supports decision making to identify the strengths and weaknesses and to recognize opportunities and risks to prepare efficient plans for all companies and boost their performance accordingly.
Consequently, to avoid the skills shortage concern and achieve the desired growth, the oil and gas sector needs to improve the human resources development policies in a way that will provide the young professionals with the needed support to shape the future of the sector successfully. These policies will combine different strategies and training programs that will enhance the collaboration between industry employers, workers, organizations, and other stakeholders to create a skilled workforce base for strong, sustainable, and balanced sector.
“It is going to be a collaborative effort to improve workforce diversity across our industry and for the global workforce as a whole but I believe, together, we will succeed,” Fuser stressed. To this end, governments, IOCs, and NOCs need to cooperate to create a global training strategy for young professionals. This strategy “must include respect for rights at work, non-discrimination, equal opportunities and treatment for women and men (including youth), good governance, transparency and accountability,” the paper stated. The successful collaboration and commitment between the sector’s entities will guarantee the implementation of such a strategy.
“I believe investing in training for our new employees is crucial as well providing a clear direction on the opportunities available. Compensating employees with rewards throughout their career is also very important,” Fuser said.
Fuser pointed out to Halliburton’s initiatives to help bridge the skills gap, “one initiative that has worked well is our formal mentoring program where our product service lines pair an experienced employee with one who may have just joined the workforce. The results we are seeing in the transfer of knowledge is amazing and ultimately crucial to our company’s success. We believe greater diversity improves the quality of our Company and products we deliver to the customer.”
Understanding the generation that the sector is dealing with is important, therefore, enhanced and coherent recruitment policies are crucial to attract young workers. Equality perceptions is one of the main attracting points to the young. A climate of diversity needs to be established, by promoting equal policies for both women and men, equal pay for work of equal value, equal opportunities and equal treatment for promotion, and non-discrimination. In addition, social dialogue is a vital factor in reinforcing continuous improvement in putting into practice the regulations agreed by authorities. Furthermore, ensuring providing young professionals with safe work environment conditions will promote the work agenda of the industry.
EOG Launches Young Professionals Day
Egypt Oil & Gas is one of the supporting entities to young professionals in the oil and gas sector. During the Upstream Operational Excellence Convention, its third and final day in December , 2018 was fully dedicated to the oil and gas young professionals.
There were many discussions about developing young professionals and the new strategies needed to improve their skills and career paths as they represent the success key for having a brighter future in the oil and gas sector. On this matter, Sameh Sabry, Senior Vice President, Managing Director Wintershall Dea stressed that young professionals should have more than just technical skills as one of the most important soft skills in his opinion is communication to be able to express yourself in a structuring and convincing way.
Moreover, The Ministry of Petroleum and Mineral Resources pays a great attention to the young professionals under the Modernization Project as one of the most important pillars is the HR pillar, according to Maha Attia, Vice Head of the Technical Office at the Ministry of Petroleum. The Modernization Project tackles HR in three different ways; first, through the institutionalization of human capital; second, through HR development; and third, through improving HR systems.
For the HR institutionalization, the program has started developing a data bank that includes all employees in the sector which will allow to have a better view of human resources and will ease having the right people in the right place. Furthermore, in order to build a sustainable growth for the sector, HR development must focus on youth as in the Modernization Project itself about 60% of the teams are youth.