Skills drought looms large in oil sector

An increase in exploration and production activity, coinciding with an exit of critical skills, bodes ill for India.

In view of a likely boom in India's oil and gas exploration and production (E&P) sector, the oil industry may struggle to maintain the required level of E&P due to the lack of trained manpower, warns a new study by PetroFed and Pricewaterhouse Coopers (PwC).

The study quotes the Society of Petroleum Engineers (SPE) as estimating the current global E&P petrotechnical workforce strength at around 375,000. With rising E&P activity, it says, the overall shortfall for petro-professionals will be about 30,000 by the year 2012.

In India, already a facing manpower crunch in critical skills, the demand-supply mismatch may get aggravated by the exit of critical skills from the domestic E&P industry due to the pull of international requirements, the report warns.

Significant oil and gas discoveries globally in the last five years will lead to enhanced E&P activity. In 2006 alone, more than 26 countries have announced lease sales, all of which will increase requirements of geologists, geophysicists, loggers, toolpushers, petro-physicists, petroleum engineers, production engineers and drilling crews.

India has also seen an increase in E&P activity. The government awarded over 110 blocks in five previous rounds of bidding. The area opened up in NELP-VI is more than twice the area opened for exploration in NELP-V, demonstrating the government's intentions to step up hydrocarbon exploration, the study points out.

On the assumption that by 2014, 88 per cent of India's sedimentary basin will be offered for exploration (as of 2005 less than 20 per cent had been well explored), the study estimates the peak demand-supply gap for geoscientists at 2,267 (in 2010), and the peak shortfall across all key skills at 8,777 (in 2016), if remedial action is not taken immediately.

The E&P sector faces a critical challenge in attracting young talent. The Indian education sector prepares around 400 students in E&P-related geo-science courses. Of the students passing out of petro-technical streams, only 56 per cent join E&P companies, with 12 per cent of these being recruited for overseas positions.

The entry into the E&P sector is limited to 56 per cent due to low awarenness of job opportunities in the sector at the entry level and the perceived higher attractiveness of other sectors, namely IT and telecoms.

India's E&P industry will need an additional 800 petro-technical graduates by 2017 (600 of them by 2012), which will require an increase in the number of students taking up appropriate courses.

However, there are two hurdles in attracting young talent: Students are not aware of the career paths and opportunities available in the E&P sector and how they compare with other career paths in other sectors; and the generally tougher working conditions and low attractiveness of field jobs in E&P make jobs in other sectors relatively more attractive.

Retention of mid-career talent will be a severe challenge, the study warns, particularly because key skills command far higher compensation outside of India and because the critical global shortage of talent (and particularly in the Middle East and Russia) will continue to draw Indian talent overseas.

Moreover, as senior-level skilled personnel retire in the next 10 years, the resulting exit of skills honed on the job will cause a talent vacuum and erode the competitiveness of India's E&P sector, the study warns. Government companies, which hold the highest number of trained people, will be the biggest losers, it says.

The PetroFed-PwC report recommends the setting up of new educational institutions as well as the expansion of existing ones, to increase the output of qualified graduates with the appropriate technical knowledge and skills, so that both Indian and part of the global demand can be met.

It has also recommended that a publicity campaign be implemented to communicate the attractiveness of the oil and gas industry to students.