The oil and gas industry could be likened to a roller coaster over the last five years. As an industry, we reached record peaks in 2014 with oil trading at an average of $96 before the ‘big dip’ to below $36 followed by the ‘loop the loop’ where the market traded anywhere between $36 and $60 bbl combined with uncertainty around the environment, economics and oversupply that created further volatility. As we began 2019, it seems that the ‘oil and gas roller coaster’ has slowed, the market has stabilised and optimism has returned to the sector. With that in mind, the coming year is set to be another interesting one, Find out what’s in store:
Market volatility or stability?
As with 2018, ‘volatility’ is a term never far from the lips of those working in the industry. Global political uncertainty and a continued public push towards eco-friendly energy have a very real impact on the supply and demand of oil.
There is effectively a two-speed oil market taking place. While newer, more dynamic sources (such as shale oil) are generating interest, supply levels are not yet up to full speed. However, that’s where the investment is heading rather than the more conventional sources of output which are creaking due to years of underinvestment.
What does offer investors resilience is a drive towards lower cost-of-supply models. Companies across the sector are embracing technology and efficiency to gain investor interest. Returns of 10% are possible in spite of current oil prices, with dramatic reductions in development costs by as much as 30% over the past five years.
Industry movement to be aware of includes:
A drive towards stabilisation from OPEC - There’s a clear goal to return prices to US$70 a barrel in the latter half of 2019. Cuts to daily production levels from members and allies are made to counteract several years of oversupply, but there’s no knowing whether production discipline will be maintained. The industry is on tenterhooks to see what moves Saudi Arabia and Russia will make at the end of June when the current agreement expires.
North Sea Exploration - There’s clear confidence in the UKCS with more than 60 exploration wells expected to be drilled, up 25% on 2018. This confidence is a reaffirmation of bigger budgets and prospects that have matured during the downturn. Along with this, there will likely be continued, further engagement with technology and revised engineering principals to unlock the full potential in the North Sea.
Impact of Brexit - With the great unknown as to what Brexit will look like for the entire UK, let alone the Oil and Gas Industry, it is impossible to predict the impact it will have. It is largely acknowledged that due to the criticality of the industry, there will unlikely be major Fiscal or Tax changes, however, the industry may be operating in a vastly different economic landscape within the UK.
What does that mean for companies?
What’s often forgotten when talking about bigger picture developments in the oil industry is the knock-on effect that has on the day-to-day operations of companies in the sector. It’s all very well estimating what oil prices may hit in 2050, but what about the immediate need to attract and retain top talent?
The biggest challenges facing those at the coalface are balancing staff levels and plotting project resource roadmaps.
Recruitment will continue to be a challenge. Notwithstanding various global industry and economic factors, we will see changes in the makeup of the workforce with legislative changes such as IR35.
Highly Skilled workforce- As the industry has had its challenges over the years, certain themes remain consistent, how does the industry attract, retain and develop talent.
There will always be a need for technical staff in engineering roles, however many of the efficiencies within the industry are being driven by data scientists and software specialists. With this progression in industry, many of these ‘new’ industry roles will be filled by 'millennials' that represent a step-change in the transition of the workforce in Oil and Gas.
The current industry average between project sanctioning and actually coming into fruition is three to six years, which is a long life-cycle for any sector. That puts talent retention right at the top of the list as even a few percentage point increases in staff turnover rates during that period could severely impact delivery timescales.
What does that mean for candidates?
Whether as a candidate you are settled in employment or you are coming onto the recruitment market, it is key to understand what clients are looking for in order to best position yourself.
Plan for IR35- As a candidate who works on various contracts, it is critical that you are prepared for the changes in IR35. These changes will deem whether an individual is in or out of the legislation.
Transferable Skills- Take a wider view of your CV and consider and highlight where there are key transferable skills that can be applied to other roles in the industry. It is widely acknowledged the Oil and Gas industry has an ageing workforce and organisations are working on tighter margins and delivering ‘more for less’. As such, multi-skilled, flexible employees will be in demand in the recruitment market.
Developing New Skills- As the industry adapts and develops, new trends emerge such as the engagement of data analysis in Oil and Gas. Whilst there is a restricted talent pool in this area, it can often be a good opportunity to develop skills that recruiters and businesses are looking for. Often new skills will be complementary to existing and past experiences and skills.
As the use of technology permeates almost every sector imaginable, understanding the latest digital insights and technologies used in the oil and gas sector will only play in your favour as you continue your career.
At Primat Recruitment, we match the best candidates to clients across various industries, including the Oil and Gas industry. Our team of recruitment consultants are committed to supporting our candidates and clients achieve their goals. Find out more about what we do in the energy sector, or have a look at our current oil and gas jobs on our careers section.