While the decline in oil prices continues to weigh on companies operating in the petroleum industry, whether as producers, oilfield services firms or rig contractors, skilled manpower shortage has continued to be a long-term issue facing the sector. Now, firms hiring may benefit as they have a larger pool of experienced candidates to select from and who may be available at more competitive salaries in the present market, Kevin Gibson, Asia Pacific Managing Director of specialist recruitment company EarthStream Global told.
“There has been an extraordinary increases in salary expectations to unsustainable levels (in recent years when oil prices were at $100 a barrel) so this will rebalance the supply demand curve. We have seen people very quickly lower their expectations to secure work,” he added.
Despite the present low oil price environment, there are still a number of firms in Asia Pacific hiring, leading EarthStream to expand in Malaysia, where it noted that competition for such roles will become much tighter.
“As such the firms who are in a position to hire will experience some relief from the extreme skilled shortages that were a feature of $100 a barrel oil and get well-qualified candidates at reasonable salaries,” Gibson said.
EarthStream observed that major oil and gas operators are reducing bonus, while many independent and smaller players will be paying very low bonuses, if any.
“Typically the bonuses are roughly evenly split between company and individual performance. Overall bonus will be reduced on average by 50 to 60 percent which reflects the drop in oil price.”
In the construction and subsea sector, the amount of bonus available depends on whether the companies have long term contracts signed prior to the oil price collapse or those that are still trying to close the deal.
Bonuses at firms that already have existing contracts “will not be greatly affected as they will have multiyear projects to deliver. Firms who were in the process of closing deals will be cutting bonuses back to the bone and will most likely lay off people as those projects will be inevitably be delayed or cancelled outright,” Gibson explained.
EarthStream noted that lucrative bonuses were offered as part of an aggressive retention strategy in a highly competitive market for staff when oil price was above $100 a barrel.
But with $45 a barrel oil, “project are delayed or cancelled and exploration activities under review which lead to lower bonuses due the lack of aggressive hiring from competitors. The most notable exceptions will be retention bonuses off the back of increased merger and acquisition activity expected due to the large number of distressed companies,” EarthStream Asia Pacific Managing Director commented.
“Any businesses who have built oil related assets (oil rigs & floating production, storage and offloading vessels) with no contracted buyers are the most exposed … also drilling contractors who own their own rigs will be hit hard.”
Prices of U.S. West Texas Intermediate (WTI) crude oil dipped below $100 a barrel in late July 2014, while Brent futures broke that level in early September 2014. WTI and Brent oil futures settled Friday at $45.59 a barrel and $48.79 a barrel, respectively.