The industry’s human dimension

OPEC Bulletin Commentary June 2008

What drives the oil industry? Some might suggest it is the exploration, development, production and delivery of oil in an economic and environmentally sound manner. And there is certainly nothing wrong in this response. However, to find a more succinct answer it is important to dig a little deeper. What is the one thing the industry cannot be without?

Oil for one, but we know there are sufficient resources for the foreseeable future. So, the remaining answer is the human resource. It is what founded the oil business and what continues to drive it today. Where would any company be without versatile and flexible employees? The human dimension is the fulcrum: a central element on which the often disparate parts of the oil industry hang.

Yet, over the past decade, concerns have emerged over shortages of skilled labour, particularly in construction and operations. In turn, this has also led to an increase in wages. The reasons for this shortage are varied.

On the demand side, the energy industry’s recent considerable expansion has led to calls for more skilled personnel, especially geoscientists, drillers and engineers. Coupled with this is the increasing number of companies searching for new talent, not only in the oil industry, but in the expanding service and emerging knowledge economies. And additionally, the industry’s age profile fairly heavily leans towards the retirement end. Over the next ten years or so, many businesses are expected to have to replace a sizable percentage of their workforce.

On the supply side, a shortfall in qualified talent from educational institutions around the world is a hindrance. In some respects, the origins of this can be found in universities reining in the number of people they took in for energy-related courses during the final 20 years or so of the last century, because at the time the industry did not need graduates in such numbers. Today, the numbers are believed to be increasing, but their entry into the workforce, assuming they join the industry, may not be fully felt for some time.

The current situation is one that deserves much thought; and following quickly on from this, significant action. So just what can be done?

Firstly, it is important to make the industry an attractive career choice, in areas such as employment policies, tailored training to combat areas where there is a scarcity of skills, remuneration packages and, overall, making sure there are efficient processes in place to ensure the industry fosters an environment that can find, hire, train and keep talented people.

And secondly, there is the relationship between the industry and universities. There needs to be strong links between the two to develop and nurture graduates at an early stage. For example, by making sure industry-focused courses are attractive, by highlighting that the industry will play a major global role for generations to come, and by making it easier for students to enroll in universities across national borders. Students in the classrooms today are the key to the industry’s future.

It is clear the industry is making strides in helping alleviate the skilled human resource shortage, but more still needs to be done. It requires concerted efforts from all stakeholders, such as international oil companies, national oil companies, service companies, regulators and academia, to restore this essential capacity. The benefits of this are readily apparent.
(An in-depth article covering this issue can be found on page 14).

This Commentary is taken from the June 2008 edition of the OPEC Bulletin which can be downloaded free of charge in PDF format from the OPEC website.

OPEC Bulletin (June 2008)

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