There are too few experienced people across the the Oil and Gas industry to support existing operations, or to support the future growth plans, says a study.

The study by Booz Allen Hamilton into the skills crisis in the Oil and Gas industry has uncovered both causes of the gap and opportunities for improving the talent challenge in the industry.

According to the study, four major factors contribute to the skills crisis - ageing workforce, the need for specialised skills, an increasing workload and escalating costs.

“From the study, we concluded that capability building is a long term approach achievable by pursuing demand side and supply side strategies,” said Dr Raed Kombargi, Booz Allen Hamilton.

“Oil and gas organisations that proactively manage their capability will enjoy a significant advantage in the industry. There are clear signs that those with a strong response to the capability challenge will have a far higher probability of being able to deliver on the potential of their asset portfolio,” he added.

The major factors that contribute to the skills crisis in the oil & gas industry are:

* Ageing Workforce: The study found that around 50 per cent of professional staff in the industry are between 40 and 50 years old, while barely 15 per cent are junior recruits. This is compounded by the fact that up to half of the current workforce is likely to retire within the next ten years.

“Within the industry, it takes up to three years for staff to develop basic industry operating competence and up to 10 years plus for many professional disciplines. Therefore, the gap is easily noticeable,” commented Dr Kombargi.

* Specialised skills needed: Of the companies that were reviewed during the study, it was found that in 22 leading US oil and gas companies, there are significant shortages in sub-surface engineering as well as in other technical disciplines.

In addition, an estimated 40 per cent of industry employers worldwide report difficulties in filling skilled-worker positions.

* Increased workload: The nature of the oil industry has changed, with ‘more difficult oil’ needing to be extracted, requiring customised technology and project management expertise.

The geology of reservoirs is also an issue, with more complex formations and physical access more challenging than ever (e.g. deep water), requiring different technology applications.

* Escalating Costs: The costs to organisations for skilled workers are increasing. The salary of a geologist with 10 years experience increased more than 25 per cent between 2003-2006. Salaries for oil drilling rig jobs increased by 60 per cent during the same period. Companies have also been driven to hire retirees as contractors - at twice the price.

Skills gap impacts

The impact of the skills gap is already being felt across organisations around the world and particularly within the GCC and Mena region, where skilled labour is limited.

“What the industry is in fact witnessing is a huge decline in job capability coupled with a lack of proper remuneration for the skilled workforce. The ageing workforce combines with the lack of job-ready skills among undergraduate recruits, where rising salary costs also play a role. We are also seeing increased competition for skilled workers, meaning workers are quick to resign for a position with greater remuneration,” Dr Kombargi said.

The study additionally highlighted that effective management of ‘People Issues’ is now a strategic business challenge, and that short term gains will not deliver long term solutions to the problem. “Short term fixes are inadequate to cope with the magnitude of the challenge. HR must be allowed to take a more strategic role for closing the skills gap – and in organizations where this happens - people issues are successfully, jointly owned by technical, operational, and HR managers.”