Canada

By Graeme Edge, General Manager, Canada, Maxwell Drummond

As Canada’s oil and gas industry continues to expand, competition for skilled labour in the energy sector is likely to intensify.Although this is a trend common in the oil and gas industry globally, HR leaders in Canada are facing even greater challenges to manage seasonal demand, cope with high employee turnover and continue to attract and retain workers in harsh locations. Further growth in the industry could be impeded if the country fails to overcome these hurdles.

Currently the oil and gas industry employs over 500,000 people and the Canadian Energy Research Institute forecast that this figure will nearly double to over 900,000 people by 2035. This is based on the large oil sands projects around Fort McMurray, due to come on stream in the next five to 10 years, and the associated pipeline projects to transport the bitumen to the west coast. Ernst and Young’s, Human Resources in Canada’s Oil and Gas Sector, report predicts that as the talent shortage intensifies, Alberta will be 77,000 workers short in the coming decade.

Therefore, competition for skilled employees is critical. There is already high labour demand for drilling and service supervisors, all disciplines of engineers, geologists, geophysicists, production managers, land men and purchasing agents. As a result, companies are becoming a lot more aggressive in how they recruit and retain staff. Ernst and Young’s report also revealed many companies in Canada have had success in attracting workers by partnering with executive search firms.

Much has been said about the transferring of skills and many workers with experience in other natural resource sectors such as mining have applied to work in Canada’s oil sands. We would encourage this trend to continue but also urge caution.Some skills are less transferable such as those of petroleum or reservoir engineers or people working in drilling and completions. Therefore, it’s important for the industry to attract the young qualified engineers into the sector and into Canada. The country is now competing on a global stage with other active regions such as Australia, Southeast Asia, Brazil and West Africa. However, as it won’t be possible to satisfy demand domestically, Canada needs to address the challenges in terms of bringing in workers from abroad. The immigration process is slow and cumbersome and in order to provide the numbers of people required for the growth predicted, this process needs to be streamlined.

Once companies have succeeded in getting workers into the region, the next step is keeping them. In Calgary alone, there are approximately 500 oil and gas company’s offices within a square mile. Close proximity makes it very easy for companies to recruit from other each other creating two problems. The overall workforce is not increasing and the competition is creating an upward pressure on wages.

Overall, a number of strategies need to be adopted to address the skills gap. Canada needs to make it easier for international talent to work here and companies need to be more flexible to create the right culture and opportunities in order to retain staff.With these points addressed, Canada can take advantage of its vast natural resources and become a world energy leader.

About the author
Graeme Edge joined Maxwell Drummond in 2007 as a Senior Consultant in our Calgary office. In 2011 Graeme was promoted to General Manager, Canada. Graeme has worked in most sectors of the upstream oil and gas industry including major independent operators, EPC contractors, oilfield service companies, subsea and the SME technology sector.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Africa

By Sean Buchan, Vice President Europe, Middle East and Africa, Maxwell Drummond

For years, Exploration and Production activity in Africa has been primarily focused in West Africa. In recent years, the landscape of this activity has changed, and East Africa and is now emerging as a new hotspot for oil and gas exploration. Exploration and Production expenditure in Africa is expected to increase by 14% in 2012 with a substantial amount coming from emerging developments such as those in the deep East African waters. The continent as a whole has long been tainted by above ground risks and lack of regulatory framework but as companies are gaining an understanding of how to deal with the local political environment, more attention is being drawn to the newfound oil reserves.

As the region continues to boom, more Exploration and Production are shifting their focus to the discoveries being made offshore on the eastern side of the continent. Significant reserves have already been found offshore Mozambique and Tanzania and Kenya has recently announced an auction of 18 offshore blocks that is sure to attract a number of operators looking to enter the local market. Morgan Stanley has predicted that the number of new offshore drilling sites will double in these countries this year.

As Maxwell Drummond would expect in an emerging market, new activity is leading to a talent shortage in the region. However, African countries are already making a significant attempt to attract top managerial talent to the region. There has already been a rise in both permanent and contract salaries and it is expected the increase in average executive compensation will continue. In a recent study, data has confirmed that country managers appointed to positions in Nigeria are among those earning the top bonuses in the world. Expatriates looking to broaden their international management experience in emerging markets should take a serious look at the opportunities the region is offering.

Operational challenges in Africa are not limited to geopolitical risk. Many companies face a number of challenges including high labor litigation risk, stringently enforced government requirements to localize the workforce, cost pressure and difficulties in obtaining work and housing permits. In order to avoid FCPA and Bribery Act compliance issues, companies must remain transparent in their operations and develop sound relationships with their suppliers. This can be done by ensuring local talent is being utilized as much as possible. While senior and middle management typically comprises expats, technical and technical specialist roles are more commonly being filled by local citizens, and indication that developments in training the regional workforce are gaining pace. We have seen a flurry of activity coming from companies looking to recruit senior and middle management for their East African operations, particularly in our London and Aberdeen offices. UK based companies have a significant presence in Africa due to their proximity and good relations with African governments, but with the upcoming block auctions looming, more and more international companies will gain a presence in the region, opening up even more opportunities for the Exploration and Production workforce.

About the author

Sean Buchan joined Maxwell Drummond as a Research Consultant in 2006 and was quickly promoted to Consultant where he worked on a range of senior projects across the Oil and Gas value chain for positions in Europe, the Middle East, West Africa, Southeast Asia and the Americas. In January 2009 Sean was promoted to General Manager for the UK and in 2011 became Vice President Europe, Middle East and Africa. He is now responsible for leading these regional teams and driving the consistent delivery of the firm's executive search projects.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Singapore

By Philip de Waal, Vice President Asia Pacific, Maxwell Drummond International

Singapore is continuing to evolve as a key market in the international energy industry. Already the undisputed oil hub of Asia and one of the world’s top export refining cities after Houston and Rotterdam, it is predicted to become a major international LNG trading centre. By 2015, Singapore will account for 3.87 percent of Asia Pacific’s regional oil demand despite having no natural resources in the form of oil or gas.

In 2006, the Singapore Government announced its plan to import LNG and build the nation’s first LNG receiving terminal to fulfil the rising demand and to diversify its sources of natural gas. The LNG receiving terminal will have an initial capacity of 3.5 million tonnes per annum (Mtpa), with provision for expansion to 6 Mtpa or more if required. Operations are to begin in the second quarter of 2012 and a second and third terminal are set to be developed in 2014. The terminals will further establish the city-state as a trading hub and will drive the creation of job opportunities for Singaporeans. The investments going into supplying LNG demand in Asia, which include prospective unconventional gas projects in places like China, Indonesia, Malaysia and Australia, are enormous. Skills in this part of the industry are still scarce globally and the right recruitment partner will be able to help companies tap into resources to staff these projects.

In a recent study, the International Energy Agency predicted that the global energy demand would increase 30 percent by 2035, with Asia as the clear leader in driving this demand. Production activities in Brazil, the Gulf of Mexico and elsewhere in the Asia-Pacific region will supply much of the demand. This growth is reflected in Singapore in the buoyant turnover of the offshore marine industry. The Singaporean Ministry of Manpower has created the Strategic and Skills-in-Demand list to outline the occupations key to continued economic growth.Energy sector roles include: petroleum engineer, project engineer, reservoir engineer and well engineer. These skills gaps are echoed by leadership teams within Singapore-based companies who stress the need for technical talent in exploration, drilling, business consulting and construction. All of these individuals must have the ability to apply their knowledge to international projects. A rise in global investments in this sector will also drive demand on the contractor side. This demand will affect contract companies in Asia, regardless of the operators’ locations. For example, contractors based in Asia are expected, in places like Brazil, to provide local content which adds to the complexity of executing projects from your home base. Continued international success will be determined by the quality of their delivery model, which relies on the people they hire.

The net effect is likely to be increased demand for individuals who are able to execute large projects and for experienced staff that could move internationally within the region. Companies are faced with recruitment challenges and those with the best strategies to secure top talent will come out on top. Contact Singapore has been developed by the local government to entice talented Singaporeans overseas to return home. The number of Singaporeans studying overseas who signed up for Contact Singapore's career sessions in 2011 has more than tripled compared to 2010’s figures, indicating heightened interest in returning home to work. The most effective strategies combine the recruitment of local talent with outsourced recruitment to firms with the capability of locating international talent in specialty roles. People with the right skills become a valuable commodity in a global market and Maxwell Drummond’s global network and local expertise allows us contribute to clients’ projects and business aims across the Asia Pacific region and beyond.

About the author
Philip de Waal was appointed as Vice President Asia Pacific for Maxwell Drummond in September 2011. He joined the Houston office of Maxwell Drummond in 2007 as Business Development Manager. From September 2007 until August 2011 he established a presence for Maxwell Drummond in Africa by opening an office in Johannesburg.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Brazil

By Augusto Carneiro, Brazil country manager, Maxwell Drummond International

Brazil is now the sixth largest economy in the world according to figures published by economic think tank the Centre for Economics and Business Research.The country’s rapid economic growth of 2.7% in 2011 coupled with the current boom in Exploration and Production activity, particularly offshore in deep water, means that companies in Brazil’s Exploration and Production sector often struggle to recruit key workers. For instance, the Brazilian government estimates that 250,000 workers will be needed for the development of new oil fields over the next four years until at least 2016.

In Brazil, from 1953 to 1997, the state-owned oil company Petrobras had the monopoly on upstream development and was only employer available to Brazilians looking to work in the energy sector. Although Petrobras is now a semi-public multi-energy corporation, it is still very much in charge of local recruitment, hiring workers via publically announced written examinations. As a result, many young people unwilling to work for the Government are focusing their education and careers on other sectors, resulting in a severe shortage of technical engineers and leaders. Indeed, with Petrobras predicting investments of US$224 billion from 2011-2015, qualified workers are a hot commodity in Brazil.

Consequently, many companies based in Brazil are looking to recruit outside the region to avoid taking people from competitors which only serves to inflate salaries. The stringent local labor practices, laws governing the importation of workers and an extensive work visa program all contribute to the pressures on recruitment. Thankfully, visa issues in Brazil are now much simpler. Previously, a company wanting to bring an expatriate had to prove that the talent they were looking for was unavailable in Brazil and that personnel with the necessary work experience could only be found in the parent company abroad.

Nowadays, although a company wanting to bring in foreign talent will still face significant red tape with the Brazilian authorities, a work visa will be granted in 60-90 days if all the proper procedures are carried out. In the Exploration and Production sector, virtually every position can be filled by an expatriate. However, in our experience in Brazil, there are two important exceptions to ease cultural differences: the logistics and supplies team must be Brazilian otherwise there is a risk of not understanding how to deal with local suppliers when it comes to clearing equipment through customs and the Petrobras-liaison leader, although they don’t necessarily have to be Brazilian, they must speak the language and know the culture almost as well as a native.

In countries like Portugal and Spain, a sizeable percentage of new hires are said to be Brazil-bound. One local newspaper recently stated that four out of five new hires in Portugal will be working in Brazil. Hiring in Portugal is simpler because the languages are very similar, and there´s a long-standing agreement between Portugal and its former colony to give preferred treatment to people coming to Brazil from Portugal. This rule was never reciprocal, nor was it ever meant to be, despite much local protest during Brazil´s crisis of the 1980s when many locals wanted to immigrate to Portugal and further afield in Europe.

As a retained executive search company specializing in the upstream energy industry, Maxwell Drummond is seeing a rise in activity as Exploration and Production companies operating in the region are looking to supplement their local talent with external expatriates with the technical and leadership experience needed.

Overcoming these challenges is key to the continued growth of Exploration and Production in Brazil. The country must attract young people to the industry to avoid threatening future growth. Local companies must continue to attract foreign workers to the region and put pressure on the Brazilian government to ease up on policies, taxes and regulations that are hindering their ability to bring these workers into the region. Once these challenges are overcome, I am confident Brazil will continue its accelerated route onto the global energy stage.

About the author

Augusto Carneiro is the founder of Zaitech, Maxwell Drummond International's partner in Rio de Janeiro. He has fourteen years experience in the executive search industry, working as a partner at Korn/Ferry for six years before founding Zaitech in 2004. Zaitech specializes in executive search in the oil, gas, energy and mining sectors as well as executive coaching.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.