Is the Industry Still Attracting the Talent It Needs?

Carole Nakhle

For this issue, we have PerSPEctives from Carole Nakhle and John MacArthur. In her article, Nakhle discusses attracting talent to the oil industry to ensure that future human resource requirements are met. In addition to improving the image of the oil and gas industry among students, part of the equation is to ensure that women are equally drawn into the industry. MacArthur shares his thoughts on leadership. Recognizing that young leaders will be key to the survival of the industry, he presents a model of high-octane leadership that provides several tips on becoming a good leader. Remember that building leadership skills is crucially important in your career, so you should start early. So read on!

Léon Beugelsdijk, TWA PerSPEctive Editor

Nearly a decade ago, interest in energy issues diminished. The price of oil reached historically low levels, while worries about the abundance of oil supply were virtually nonexistent. Today, the world is being reshaped by changes in the international energy scene, and energy issues involving oil and other resources are eliciting concerns again. The increase in oil prices, from U.S. $10/bbl in 1998 to above U.S. $60/bbl in 2005, has led many oil experts—from industry and governments alike—to declare that high oil prices are here to stay. Specialists refer to a “new era of oil” and call for a re-evaluation of the world’s energy situation.

In light of developments like these, one should question whether the oil and gas industry workplace also will become an arena of constant change as new processes are introduced, technology becomes more advanced, and new forms of organizations emerge.

Shortage of Engineers

Today, the oil and gas industry faces a serious shortage of engineers, as well as other specialists, and major oil and gas producers are competing fiercely for the available pool. In the Middle East, which sits on approximately 63% of the world’s oil reserves, the oil and gas industry suffers a significant shortage of qualified engineers, as it is struggling both to attract young engineers and to develop a local supply of qualified engineers. A recent study by Middle East Strategy Advisors warned about widespread concerns in the industry regarding the difficulties of filling vacant positions and particularly about the quality of applicants. This applies not just to engineering but also to other jobs, such as economic analyst and scientist.

At a time when the oil price is booming and more money than ever is flowing into the oil and gas industry worldwide, it seems strange that this is so. Yet the plain fact is that too many graduates regard oil and gas as yesterday’s energy sectors and want to concentrate instead on trendy areas such as wind power, solar power, and other green alternatives. So strong is this tendency that one estimate puts the number of energy graduates studying green alternatives at 85%, with only 10% applying their minds to oil and gas and, of the remainder, scarcely 1 or 2% looking at civil nuclear issues. With a future that is going to depend heavily for years to come on oil and gas and on the revival of nuclear power, this seems a dangerous position, and one which no policy maker should regard with complacency.

Women Must Play Their Part

Both the increased oil demand and the resulting pressure to boost oil production already have a direct impact on the demand for additional production resources, in particular the brainpower to deploy those resources efficiently. The oil and gas industry can ill afford to be influenced by gender consideration. It is going to need all the talent it can find.

The dominant overall picture one sees is of a huge world industry that is not just finding difficulty attracting the best brains but which, in addition, is seriously deficient in the woman’s perspective in its higher echelons—and is likely in due course to pay a large price for being so. According to one American study, the representation of women in crude-oil production and mining companies is less than 6.5%. This should not be surprising in this traditionally male-dominated world, as a European survey last year found that, on a wider scale, women accounted for only 8% of directors in Europe’s 200 largest companies.

However, there are signs of change. All round the globe, women are at last beginning to break through the glass ceiling in industry and the major corporations. This even seems to be true now in the world of oil and gas, traditionally seen as a male preserve of hard-bitten oil executives and tough wellhead operatives.

Today, what the oil and gas industry needs is the best brainpower, the finest minds with the right background knowledge, a feel for the industry, and the essential analytical skills. Never mind about the gender.

New Challenge for the Majors

Big oil companies may be rolling in money today, but that disguises the fact that their longer-term prospects are rather austere. A problem challenging all of the majors is replacing their declining reserves.

The situation is not being helped by the attitude of some of the great companies themselves. Some of them seem to believe that resorting to public appeals is the best way to solve the major problems of the energy future. Perhaps resources spent on this would be far better used attracting and motivating the best brains in the industry.

If they are to survive in the long term, the big oil companies must embrace new strategies. There is no doubt that the majors still have a clear competitive edge; they are capital rich, and they do possess the most-advanced technology. In fact, as many would argue, any survival strategy for the majors must center on technology. However, while technology and innovation can be used to help to improve production, in the short to medium term, the key to success for these companies will depend on the supply of well-educated and experienced employees—both male and female. The majors may also need to reconsider their traditional response of threatening to cut jobs at the slightest sign that the government might increase petroleum taxes.

A Goodbye: Not Yet!

The whole energy scene is changing and creating huge challenges to both oil producers and consumers. Such changes, although causing anxiety and fear, can create jobs and opportunities. It is not goodbye to oil and gas; ahead lies a fantastic new series of products and services growing out of the oil industry.

Far from oil and gas being seen as yesterday’s sector, the path is opening for the industry to be the true gateway to a new energy landscape. The sooner the oil companies project this positive vista, the sooner they will attract the talent they need to meet the new challenges.

Carole Nakhle is an independent petroleum analyst based in London specializing in international petroleum fiscal regimes and the geopolitics of oil and gas. She also works as adviser in the British Parliament on energy issues and is a senior consultant to Middle East Consultants Intl. Ltd. Nakhle earned a PhD in energy economics from the U. of Surrey-U.K. and will shortly be taking up a university fellowship in oil and Middle East issues.