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Page added on March 15, 2007
Labour crisis could stall oil and gas boom
Management consultants, Booz Allen Hamilton says the oil and gas industry has stretched its resources to breaking point, creating the potential to stall the oil and gas boom that is currently occurring. From the industrial platforms of oil rigs to air-conditioned design offices, the oil and gas industry is confronted with a shortage of brawn and brains so severe that it threatens to stall exploration and production growth around the world. In an interview with Oil & Gas Middle East, Raed Kombargi from Booz Allen Hamilton explains the situation. Why have skills and equipment shortages become so acute in the last few years?
Analysis shows that investment in equipment, skills, services and exploration in the oil and gas industry follow the oil price trend, but lag behind it by one to three years. So with a low oil price for a while (up to late 2004), it is only normal that there was no interest in investing in equipment, skills and services during that period. But with high oil prices over the last two years, and a renewed flurry of activities, equipment and service providers are rushing to meet demand from normal shortages as well as from independent new smaller scale players which have entered the oil and gas activity chain and are eating away at the already thin supply. These new entrants are usually less HSE stringent and willing to pay premium prices on equipment, services and skills that big international oil companies and national oil companies may not be able to agree to, given their often rigid processes.
What are the main threats the skills and labour crisis is posing to the oil and gas sector?
Inability to deliver expansion programs, slowing down of oil & gas exploration programs, missing the boat on knowledge transfer to the new generation of workers and/or from expatriates to indigenous workers and the migration of talent to other industries. More competition will lead to a bit more volatility in the industry as a whole. There will also be less rigour on development of the technical side leading to future leaders that are technically less capable than the current generation.
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