With continuous development in energy policies across many countries, the great crew change, and increased international oil and gas trade, the hydrocarbon sector has reached a crossroads. On the one hand, the demand for oil and gas is constantly increasing; on the other hand, issues such as greenhouse gas emissions and climate change, pricing, security of supply, and constantly increasing exploration and production budgets are pressing the industry severely.
To meet continued increasing demand and offset the challenges, skilled human resources are key. The challenge for companies is to develop rigorous talent management systems to help ensure availability of the most-experienced, best-trained, best-educated, most-flexible, and most-adaptable people for the industry and then find meaningful and creative ways of retaining them while also using them to truly enhance the company’s productivity and profitability.
In the last 10 years, the oil and gas industry has seen major changes in trading practices throughout the value chain. Deregulation of petroleum products in India led to increased competition mainly in the downstream sector. This, in turn, forced companies to change hiring patterns to better cope with the higher standards and requirements that became prevalent in the market. Retirement rates are still increasing, giving rise to the industry’s current talent crunch.
In response, the industry’s recruitment focus has shifted toward young professionals and graduates.
The upstream sector clearly requires specialized technical expertise—but at a very demanding level—to tackle major technical challenges, such as figuring out how to turn around reserves on the verge of depletion. Thus, hiring is aimed toward engineers and highly specialized recruits who have the knowledge and skill to create effective solutions.
The sector now demands such high levels of investment, that companies focus on hiring the best-of-the-best talent—with experienced candidates highly valued—so companies enjoy immediate return on investment.
Companies are now building detailed plans into their budget processes to fortify their talent pools and improve their capabilities. Specialist skills are more valued today than at any other time in the past 2 decades. Industry leaders have re-envisioned their upstream operating models: These models are technically thematic organizations, with the focus on asset-based models in an attempt to get a better handle on costs, identify specific technical needs, and build effective solutions. The purpose is to allow the development of strong, differentiated core capabilities—an important ingredient for sustainable growth.
These changes call for rigorous and focused recruitment, training and development, and retention programs. The hiring pattern now is to seek out fresh and talented recruits who can learn and grow to fulfill the longer-term need to sustain the industry—learning the industry’s old arts while bringing in creative and innovative ideas.
Global Outlook
Energy, key to achieving high growth rates in all sectors, is considered the lifeline of any country. It has helped fuel India’s growth since independence in 1947 and will remain the key driver of economic growth in years to come.
The Indian oil and gas sector is likely to require around 25,000 additional professionals—almost 50% more than the sector’s total employment now—in the next 5 years due to business growth and retirement or attrition in the sector.
In this part of the world, awareness of the oil and gas industry is rising, with more and more academic institutions emerging that cater to the energy sector. The focus here is definitely on the extraction of hydrocarbons— and even more on the exploitation of mature fields—as we look to rise as an economy,. Asian countries are looking towards African and Middle Eastern oil-rich areas to boost their production capacity. China, in addition to India, is acquiring stakes and blocks abroad to add to their existing capacity. Even Indian downstream companies have started participating in acquiring blocks abroad. This has given rise to new projects and has generated new job opportunities.
Changing Approach Towards Talent Management
Companies will have to deploy some kind of rotational program that includes international assignments to ensure a constant and uninterrupted talent pipeline for leadership roles. Besides the focused and intense in-house training system, companies will also have to look for alliances to gain new capabilities and access to resources. Partnerships between companies with different priorities and areas of expertise are essential.
Today, firms need to have a geocentric approach to hiring because finding appropriate local talent in some localities is almost impossible. Previously, people received on-the-job skill training, and that worked out to a great extent. Now however, with advancements on the technological front at their peak, the demand for specialized talent is on the rise, which in turn is reflected by several planned specialized academic courses coming up. Although it is always an option to train new recruits, those already with required skill sets could help the employer eliminate the necessity of elaborate training and can utilize the talent from day one. In my opinion, companies can eventually employ a fair mix of both general management skills and specialized skills instead of focusing on just one stratum.
Future Recruitment Trends
Since the advent of fierce competition, share cannibalization along with the talent crunch scenario, employers are having to figure out the right mix of general and specialized skill sets. The scenario would require hiring patterns to take into account the need for strategy building, brand enhancement, value generation to cope with the competition along with the technical challenges and advancement to be undertaken.
Earlier, the trend was to hire from domain-specific universities in the energy sector. But increasing competition led to focusing on the premier institutes to get the best workforce. There should exist a balance between the two to best adapt to the existing challenges. The pattern of recruiting in the coming years will be to increase hiring so as to bridge the gap of the crew change. With more potential employees to choose from, the hiring will definitely be more competitive. With innovative, creative and fresh talent on the rise due to the increased awareness about the energy sector, the dearth of talent is definitely coming to an end.
Shale Gas Discoveries and Increasing Production Worldwide
With the shale boom, those specializing in unconventional resource exploration and production have an edge over others. Today, many upstream players in India are keen on recruiting individuals with specialized knowledge and training.
With shale gas discoveries and production worldwide, particularly in the US, Canada, Australia, Finland, and China, there is a real incentive to acquire new skill sets. This is possible only through exchange programs and tie-ins with the corporate sector. For example, oil and gas companies in India such as Reliance Industries and Gas Authority of India have already acquired shale gas assets in North America and deputed its petroleum engineers for on-the-job training.
Graduates with Specialized Oil and Gas Education/Training
Until now, having previous industry work experience was valued more than having fresh talent unsullied by the real world. But as the older “crew” moves into retirement and the younger “crew” joins the industry and matures with more and more experience, those wanting to be recruited will now also need to gain prior experience.
More emphasis is placed on the midstream and downstream in this part of the world because underexploited reservoirs are maturing yet still hold respectable quantities of unrecovered oil. That said, some companies also engage in vigorous exploration campaigns. Currently, many jobs have been created that concentrate on an individual’s technical capabilities. In India, a majority of the upstream sector consists of private players, whereas downstream is dominated by government-owned public-sector undertakings (PSUs). Upstream players hire based on technical expertise and experience profiles. PSUs recruit employees both through the national level exam process and campus visits.
Joining the Oil and Gas Industry
All who want to be part of the energy sector must first focus on building their basic skill set, because this industry requires solid understanding across several disciplines due the interdisciplinary, team-based nature of the work. After honing their technical acumen via the most suitable university courses, programs, and degree curricula, they can then specialize in specific subdomains of interest, as specialization is also required in this swiftly progressing, technologically savvy sector. Institutes with degree programs that concentrate mainly on the energy sector should also include managerial-skill development and broad general-industry topics in the curriculum.
In a sector so different from other sectors in each and every way, a strong basic skill set across many disciplines, an intense focus on one or two specialized subjects, a well-developed managerial skill set, and an understanding of broad industry topics—all are needed to excel in the energy sector.
P.C. Bahuguna teaches strategic human resource management, organizational behavior, and economics at the College of Management and Economics Studies, University of Petroleum and Energy Studies, India. He is an experienced trainer, consultant, and administrator for companies in the consultancy services, hospitality, and printing industries, among others. Bahuguna’s academic papers have appeared in several international journals. Besides organizing and conducting in-house training programs, he facilitates sessions on people skills and performance management for organizations from different industries, including the oil and gas and power sectors. He holds a bachelor’s degree in science, an MA in economics, an MBA, and a PhD in management.