Oil and Gas - A Positive Viewpoint
A quick scan through news articles and industry press relating to “Oil and Gas” this year can be a depressing task. With the oil price continuing to remain low as we head into December everyone that works in the industry, no matter where you are based in the world, is keenly aware of how difficult a year 2015 has been. In my role as Head of Drilling within Subsurface Global I speak with hundreds of people every week and the majority of conversations are centered on the uncertainty over the future. It appears that few people feel confident about what 2016 will bring.
Part of my job is remaining positive during these difficult times as we have to encourage both our clients and candidates to continue engaging with each other as we look to provide solutions that will satisfy both sides. It is not always easy but in this article I was keen to document 6 reasons to be positive about the Oil & Gas Industry as we head into 2016.
1. Profitable UKNS
Starting off at home in the UK, there are reports suggesting that the North Sea is adapting to the current low oil price and improving efficiencies that will lead to more profitable assets over the coming years. Mike Tholen, Oil & Gas UK’s economic director, detailed the improvements: “Strong investment in asset integrity over the last four years, coupled with measures being taken to improve the efficiency of assets offshore, have resulted in better output from many existing fields and we expect the rate of decline in production from those fields to slow significantly over the next two years”. While this may not be too much of a comfort for industry professionals needing a job tomorrow, it nevertheless shows that oil companies have been making measured decisions in reaction to the oil crisis and these decisions are already showing signs that they will positively impact the industry in the future. Beyond 2016 when the oil price has hopefully stabilised the UKNS may once again be competitive as an Oil and Gas hub and the anticipated knock-on effect will be more job opportunities for oil and gas professionals to work and remain in the UK.
2. Production in Iran
The viewpoint of people that I speak with day to day has been quite mixed on the subject of Iran. The country’s agreement with the US in July that has lifted sanctions and normalised international relations will obviously have an effect into next year on the Oil and Gas industry, but whether this will turn out to be positive or negative in the long-term remains to be seen. For me I feel that it will ultimately be positive. In terms of providing opportunities for a saturated candidate market it was exciting to read that Iran has produced a list of fifty oil & gas projects worth an estimated $185 billion that it intends to develop and the government will be presenting on these projects next year in a bid to attract significant international investment. Surely a positive first step. In addition the Iranian government has also overhauled the way in which it offers contracts to foreign energy companies with the terms being more favorable to foreign investors, who will be allowed a greater stake in long-term profits. Already this has attracted the attention of the world’s major energy companies, including BP, Shell, Total, Statoil and Sinopec. I am also encouraged by the majority of professionals that I speak with who have previous experience in Iran and are excited about the potential opportunities that will be on offer. In particular the experience of French Nationals working previously in Iran, prior to the period of Economic Sanctions, on the South Pars Project was entirely positive. The Iranians are found to be very advanced culturally, well-read, open, interested, and engaged to work. Plus, a safe place to work, which equates to a very favorable location for expatriates. Many of these French Oil & Gas workers are planning to return, and clearly other international workers will have opportunities to work in Iran.
3. Payments made in Kurdistan
Subsurface Global have been heavily invested in Kurdistan for the past 4 years and I have previously written an article charting our history in the region which you can read here. It is no understatement to say that 2015 has been an extremely challenging year for the oil rich region and one which may set back their ascension to one of the world’s major oil and gas producers. I don’t want to linger on some of the deeper socio-economic issues that the country has faced but instead focus on a positive outcome over the past few months. The Ministry of Natural Resources (MNR), a department within the Kurdistan Regional Government (KRG) has recently agreed to pay the production costs for a number of its more established operators. The payments began in September with the November payments being made along with a statement which read “The KRG continues to adhere to its payment policy to allow for the exporting companies to cover their ongoing costs and maintain production,” “The amounts of monthly payments will improve when export increases and/or the oil prices recover from their present level”. The hope is that the continued payments will renew confidence in the region and oil operators will again look at investing and exploring the vast reserves that lie in Northern Iraq. The knock on effect being an increase in the number of opportunities for oil and gas professionals. At Subsurface Global we hope to see a steady increase in activity during 2016 and we have already been asked to tender on a large exploration project scheduled for Q1 next year. Please keep regularly checking our jobs page for updates.
4. Continued Investment in Offshore UAE
Similarly to Kurdistan, the UAE is a very important international hub for Subsurface Global. At certain stages this year the continued investment by foreign oil companies in the United Arab Emirates provided us with a regular stream of opportunities that we could take to the market and try to attract professionals to an expat life in the Middle East. This seems set to continue with the CEO of the Abu Dhabi Marine Operating Company (ADMA-OPCO), Ali Rashid Al Jarwan, saying that “Abu Dhabi will continue its multi-billion dollar investments into offshore oil and gas exploration activities in the next five years, ignoring the low oil price situation”. He went on to say “It’s a win-win situation for us, for contractors, sub-contractors and for the market in Abu Dhabi. It is a healthy situation, but we have to help each other to develop very strong partnerships and foster innovation.” Subsurface Global are already seeing the effects of this investment as we support a number of the JV’s in Abu Dhabi and are seeing a higher demand for consultants with a background in offshore exploration. Naturally, offshore experience tends to come from the larger offshore oil and gas hubs. With the UKNS continuing to make staffing and headcount cuts we may see a larger number of people considering the UAE as a potential place to live and work.
5. Cleansing of the Recruitment / Contracting industry
An immediate knock on effect of the low oil price is the lack of opportunities for service companies. Whether it’s drilling fluids, engineering project management or recruitment, all oil and gas service companies will have been struggling in 2015 compared with previous years. In our sector of recruitment and consultancy services you can see clearly the effect the low oil is having. For the past 5 years our market had become saturated with companies popping up, seemingly overnight, offering opportunities for work across the globe. It is hard not to have a biased opinion on this point but it was clear that certain companies where employing dubious tactics to entice candidates into passing on their CV’s and providing bloated shortlists for jobs in the hope that one might be the right fit for the client and they can then claim a fee for it. Very little thought was given to gaining an understanding of the industry and building lasting working relationships. The positive in this point I suppose is that a large number of these agencies appear to be moving on to the next buoyant industry in the hopes of applying the same working practices and leaving oil and gas behind. No doubt they will return when the oil price picks up but hopefully those that have stayed and continued to strengthen their relationships within the market will make it that much more difficult for the “pop up agencies” to get a foothold again.
6. The opportunity for “Constructive Tie-Ups” in the industry
Recently in Abu Dhabi, Total were awarded the 1st of the new generation of ADCO Concessions: Reports in Abu Dhabi’s leading English Language Business Newspaper, the National, have stated Total would take their time to look at possible targets for Industry tie-ups. What this effectively signals is that there will be commercial tie-ups and the industry will come out of this period of lower prices stronger, and more agile, and in the long-term that will be good for the Oil & Gas Industry. These tie-ups could be in a number of forms, and we will look at the possibilities in a future article on the Subsurface Global website in Q1 2016.
Hopefully you found the above list a positive read in an otherwise difficult time. The oil price may not rebound next year to the same high levels we have seen recently, but there are signs that things will pick up in certain areas and Subsurface Global will remain active in sourcing opportunities for oil and gas professionals.
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