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Oilfield Technology
September 2016
In the past, the MENA region (particularly the Gulf) was perceived
as having low taxes and high salaries – the reality is somewhat
more nuanced. While the total package – including perks such as
accommodation and travel – may be higher, base salaries are often
lower than in North America or Europe.
There are of course variations within this. Engineers, for
instance, often find that they can earn a base salary that is broadly
in line with what is on offer in other parts of the world. Furthermore,
salaries have always been higher in markets with an elevated
security risk, such as Iraq, or where there are cultural and social
restrictions in place, such as Saudi Arabia. On the other hand, when
it comes to disciplines such as drilling and sub-surface – where good
managerial candidates or drilling experts are traditionally more
expensive – the salary on offer can be less than expected.
Remuneration packages are also allocated according to strict
grading systems and salary scales and – in contrast to European and
US firms – there is no deviation from these, even for the very best
candidates.
Salariesandperksslashed
What the current market situation has done is put downward
pressure on salaries across the board. Some contractor day rates
have been cut by almost 50%, with contractors who used to be on
US$1200 per day now making US$650. In a reflection of the state of
the market, contractors are willing to work at these reduced rates
just to maintain their professional development.
Alongside base pay, the perks that previously made the region
an attractive one to relocate to – such as accommodation, schooling
and travel – have also been cut back. As a result, the competition
between oil and gas companies to offer the best package has also
dwindled.
When companies win a major project in the region, they are
now far more likely to transfer staff internally from other parts of the
world than previously.
Permanentandcontractwork– thebalanceshifts
The ratio of permanent to contract roles has also reversed over the
past year. Previously, contracts in major hubs such as Saudi Arabia
and the UAE were usually offered on a permanent and residential
basis, since employers preferred to have someone committed to
the company for many years. While this could mean a lower base
salary as previously mentioned, it also provided a sense of job
security and longevity.
In the past year however, the permanent recruitment business
has taken a significant hit. Having shed contractors who were on
high day rates and recruited permanent staff, companies realised
that there were insufficient projects around for permanent
staff to work on, and have reverted to hiring contractors on a
project-by-project basis. The roles Petroplan is currently recruiting
for are now predominantly on a contract basis, usually for three or
six months.
While this is good for recruiters in the long-term, it is bad for the
bottom line in the short term, and has been a contributory factor
in driving a number of more generalist recruiters out of oil and gas
recruitment in the region.
Thebright spots
Doom and gloom does not extend across the entire region however
– there are some notable bright spots. The recruitment situation
in Oman is buoyant and companies are investing heavily there.
Business also remains strong in Egypt, in contrast to the rest of
North Africa, which is very quiet from a recruitment standpoint.
Iran
A lot has been written about Iran’s re-entry to the global oil and gas
scene. With the largest combined oil and gas reserves in the world,
there is definitely a window of opportunity for international oil and
gas companies in Iran. If Iranian output is to reach 5 million bpd by
2020, as predicted in some quarters, these companies will need to
ramp up recruitment.
The Iranian government is now looking to increase production
as quickly as possible, rehabilitating fields that have been denied
investment or the latest production technology. For that they
will need money, access to more advanced technology such as
EOR, and good project management. To touch on one example,
Iran shares the world’s largest gas asset with Qatar and has the
potential to become a leading LNG exporter – if it can access the
necessary technology.
Domestic capability notwithstanding, this is where the early
opportunity will lie for Western oil and gas companies. In seizing the
opportunity, however, they will need to accommodate Iran’s market
specificities.
The market for oil and gas workers in Iran is huge, but
staffing is likely to pose a particular challenge for foreign firms.
Iranian workers bring language skills, cultural understanding and
willingness to the table, but have not been exposed to some of the
management methods and technical skills developed outside of
the country during the period of sanctions. This gap will need to be
filled by expatriate workers, if not in the long run then certainly for
an initial period.
Iranian government policy, however, states that 51% of the
projects have to utilise Iranian content, and this is likely to become
even tighter going forward. The Labour Law in Iran separately states
that only one in five workers can be foreigners. So the opportunity
for workers from other parts of the world is likely to be finite, before
knowledge needs to be transferred to the local workforce.
As international companies re-enter Iran, pay may well be
another point to address. Major oil companies have back office
overheads to cover, which is factored into contracts and passed on.
Iranians will only expect to pay workers for hours worked however,
and not the support infrastructure sitting behind that worker or for
apprentice training.
Whatdoes the futurehold?
With oil prices unlikely to return to the heights of US$110/bbl,
recruiters must consider a two-pronged strategy.
With recruitment activity down in core disciplines such as
engineering or drilling, recruiters are moving into specialisms
including subsurface, trading and even renewables, and activity in
these areas looks set to continue expanding.
Given the job market in other oil and gas hubs around the
world, the supply of candidates is not a problem at the moment –
quite the opposite in fact. Any IOC or NOC looking to recruit directly
in the MENA region is likely to get hundreds, if not thousands, of
applications.
It is recruitment firms – rather than the companies themselves
– that are ideally positioned to manage this volume, bringing
their insight and expertise to bear in checking the suitability
of candidates and ensuring that only the best candidates get
shortlisted. In a challenging marketplace, this frees up companies
across the oil and gas industry to focus on core business, safe in
the knowledge that only the best global talent is being identified
and put in front of them.
Through innovation and added value, recruiters can navigate
through the current challenges into calmer waters in 2017/18.
