Global Quarterly Report

I have always felt that the level of work in the run up to Christmas is a great indicator on the year ahead and I'm very pleased to say we were run off our feet! It's never easy trying to complete the tender submission or package up a job, when you're also under pressure to make sure Santa's presents are bought, wrapped and ready! (The thing about Christmas is that it just won't move, it's a 'hard stop' as they say, indeed it's probably the hardest stop of them all!)

This said I'd much rather be burning the midnight oil to get everything done than scrabbling around to fill in the time. Last year we reported that Christmas came early, indeed at the end of November the Christmas lights went up and everyone went home to ponder whether Europe was about to implode. Happily we've hardly had time to think about Christmas this year so for the market at least it's an encouraging sign for 2013.

There is still concern around Europe (although it changes each month) and the lack of growth in China is taking its toll in the commodities markets in general. However, business conditions are such that there is profit around in the industry needing to be re-invested and with this activity there is plenty of strategic hiring to be done.

Non-conventional plays are creating a good deal of activity in various parts of the world, particularly in North America and Asia. The LNG projects in Australia are now mostly in full swing, and reports are of the development focus to move west to Canada, and then to East Africa if the smart money is to be believed.

Whilst the project market continues to grow, we have experienced exploration activity coming off its highs of a year ago (at least from a hiring perspective) with more of a focus on maximising production. This would be in line with market sentiment and the oil price easing. The mining downturn has also taken the edge of some of the skill shortages this quarter, particularly in Australia, South America, Canada and some parts of Asia, although in general we have found this is predominantly within the EPCM companies and engineering contractors.

Despite these hurdles in the market, we are still very positive for 2013. There is a solid pipeline of projects coming on line and most clients are already initiating recruitment campaigns to ensure they stay ahead of a budgeted growth in head count.

This quarter we are finishing off the 2013 release of our Global Salary Guide and the response has been overwhelming. More than 25,000 people took part in the survey and once again the data has thrown up a fascinating set of trends. The guide is going to be launched in late January, so watch this space!

Matt Underhill
Managing Director
Hays Oil & Gas

Regional News:

APAC

AUSTRALIA

There are several major projects in construction which has maintained the high levels of demand in the industry across most disciplines. Specifically we have seen an increase in demand for HSE Advisors and Contracts Specialists. Subsea Engineers, Subsea Fitters and Flow Assurance Engineers also remain in high demand due to their specialist and niche skill sets. The operations and maintenance sector is steadily getting busier, and employment in the OEM industry continues to rise. The end of year is time for shutdowns in some regions, with a number of assets about to go offline for a few weeks driving recruitment for technical contractors for short-term contracts. As major projects shift from the design to construction and operational phases, there will be an increased demand for Operators, Technicians and Engineers, particularly for those with LNG experience.

SINGAPORE

Singapore's recruitment market remains steady. Exploration throughout the APAC region is likely to continue with a particular interest in shale gas and shale oil deposits. The local liquefied natural gas (LNG) market continues to grow strongly. This is largely attributable to additional gas demand from emerging markets driven by urbanisation, industrialisation and energy substitution in Asia. In the short term there is pressure on increasing production from existing assets to bridge the gap until several new large scale facilities come on line. There is a strong demand for Project Managers and SURF Engineers to drive design and construction phases of offshore production facilities. Likewise, exploration and production of local natural gas and oil fields is driving the demand for Geophysicists, Geoscientists and Reservoir Engineers. Additionally, Senior Drilling Engineers are also in need, especially Malaysian and Indonesian Nationals to maintain local content requirements for both countries. APAC continues to be targeted by global multinationals to achieve growth. There is still a strong drive to recruit returning APAC nationals ahead of expatriates. This said, where expatriates are hired the trend is away from traditional expatriate allowances towards more local packages. Recently there has been an increasing trend for European candidates wanting to move to South East Asia (SEA). Equally the demand from employers has been for SEA Nationals to return home. This said such candidates are not easily enticed and will only move back if they are able to maintain salary levels they can achieve in other regions.

MALAYSIA

The Malaysian region has several major projects underway which have impacted recruitment for the sector. In the most part this is led by PETRONAS with activity in the Berantai field, and the first well at the Balai Cluster. In addition to these two positive developments, Petronas also announced the discovery of gas in Block PM307. Also, the Gumusut-Kakap field (Malaysia's second deepwater development) has achieved first oil production on 18 November 2012. EPCMs have won some prestigious projects fuelling the need for technical roles such as Project Managers in Subsea, Pre-Commissionining/Commissioning Managers, Offshore HSE Manager and Deputy Project Managers. Subsea companies are expanding due to business demands in SEA, which are influencing the requirement for senior commercial roles. The roles include Head of Business Development Managers, Country Manager and Sales Managers. Unlike the EPCM companies the operators in the country are not particularly busy in hiring new skills at this point of time. Contractors are expecting engineers to have flexibility in day rates (as per their client' standing instructions) during offshore rotational basis. This becomes one of the major issues in finalising offer proposals. Candidates are seeking longer term contracts and better offshore rotation day rates.

CHINA

China's oil and gas market has remained relatively buoyant over the last quarter with increasing capital investment being pumped into the industry. Shale gas has climbed higher on the agenda for China's Ministry of Land and Resources Department with 20 blocks up for bidding, and 17 bidders are already confirmed. Also, local energy consumption and demand has driven NOC's and the IOC's to increase Capital Expenditure on Refinery and Petrochemical plants. There is increased demand for those experienced in environmental impact assessment, government relations, project management and niche expertise of drilling and geosciences for unconventional exploration and production. Candidates from engineering and construction backgrounds tend to be more interested in crossing over to client side opportunities a trend mirrored in other regions around the world. Employers are still reliant on third party recruiters for niche skills in highly technical areas. To compliment their local recruitment drive, IOCs are also encouraging foreign based Chinese nationals to return home, however, with a limited skill pool and in many cases a significant financial differential to overcome, this is increasingly difficult to achieve.

EMEA

INDIA

The oil and gas industry conditions remain quite stable in India with buoyant hiring continuing through the quarter. Local NOC's report that 14 oil and gas discoveries will occur in the first half of the 2013 financial year, and many IOC's are starting to view India as a location for global skills, innovation and support. The opening of Shell's third global hub for projects and technology is just one example of this. ONGC have also commissioned a platform in Mumbai which will generate many permanent positions for the local professionals. Such activity is forecast to generate a wave of new hiring in 2013 and add to a burgeoning oil and gas industry in the country.

UNITED ARAB EMIRATES

The region is largely led by the oil price and with prices approaching $100 bbl the environment is a positive one. Most believe the good times will continue into 2013 and investment in upgrading assets to boost production is continuing. At this stage and from a recruitment perspective there is more focus on developing existing downstream/midstream assets, and this is reflected in many of the GCC countries reporting increasing capacities in petrochemical processing along with storage and distribution infrastructure. This said the key players in the region are continuing to invest in their exploration capabilities, with particular emphasis on developing conventional and non conventional gas fields. The use of gas to produce local power is seen as a double win, with the unused oil production being either exported at premium prices, or stored for future sales. The main driver for recruitment on new projects is coming out of Iraq at the moment and we have seen significant movement in salary packages reflecting this demand. The country is struggling to meet the skills demand and the import of professionals into the region continues to increase. The whole region continues to suffer from delays in visa processing, and in some cases the delays break down the recruitment process completely. Many clients are now dedicating more resources to the process to ensure that vital hires are not jeopardised.

DENMARK, NORWAY, NETHERLANDS

Although the industry is at its peak, the subsurface market had a tough quarter in Denmark. Maersk Oil was the only operator hiring as they look to invest heavily in their oil and gas business. The market situation has been different in Norway and Netherlands, but the competition in the recruitment market remains fierce. There is a need for Reservoir Engineers and Geoscientists to work in some of the major fields are Hejre (HPHT), Halfdan, Dan and Tyra. Candidates especially find the Halfdan field very interesting due to its challenging environment. Other upcoming major projects are TOTAL's extraction of shale gas in Northern Jutland and ExxonMobil's projects in Greenland. Finally, there is also high demand for piping and subsea engineers. There is a growing trend to use agencies to headhunt the best talent. In terms of alternative ways of recruiting, we have seen more and more companies utilising LinkedIn. Although the majority of the jobs in Denmark at a senior level are expat positions, the high tax rates represent a barrier for some candidates. The majority of candidates find the challenging environment of the North Sea more appealing than the countries themselves. In Norway, the candidate pool is much larger and consequentially many companies are restricting their serch for local staff. Candidates have several options, and thus the salary and benefits are the differentiator.

POLAND

The industry has remained static over the last period. Companies are reluctant to make investment decisions despite the good condition of the Polish economy, but there is hope for 2013. Exploration and Production (E&P) companies are still waiting for the government to release guidelines for new tax regulations on exploration. Service companies on the other hand are quite optimistic about their future in Poland. New opportunities have emerged in regards to the offshore market where these businesses, once very strong in Poland, are beginning to see new life with some overhaul and assembly contracts for platforms. Shipyards are hiring again and their desire for naval architects and other designers has significantly risen over the last quarter. Also, designers in the petrochemical sector are in high demand. Polish Processes Engineers and Piping Designers are very attractive for Norway-based companies which also fuels demand for the Polish market. The market has become more employer-driven as the year progressed with employers negotiating hard to keep remuneration down.

UNITED KINGDOM

Changes to the UK tax legislation have helped to boost confidence in the North Sea market. London continues to emerge as the global centre of private equity investment in exploration and production (E&P). This has created a substantial demand for skilled expertise in exploration and appraisal which is set to continue as several large operators look to reduce their exploration activities and instead look to acquire small and start-up businesses who have appraised assets of interest. There continues to be a trend to build skilled internal recruitment functions to respond to baseline recruitment requirements with specialist agencies making up the difference. Those companies using agencies are being highly selective with which suppliers they use. Employers are tending to seek partners who can match their own capabilities in terms of geographic locations. Aberdeen remains a candidate-driven market. Any candidate, with a good level of experience who is actively seeking a new role will generally have the choice of at least two positions. Not only do good candidates have more than one new offer, they are likely to also face a counter offer. Passive candidates are exploring the market with a little bit more confidence than they were six months ago as the industry continues to heat up. Candidates are starting to be more selective with who they speak to when looking for alternative career opportunities. They tend to seek personal recommendations from peers or friends of which agencies to use or how best to approach specific employers. Most candidates secure multiple offers when they do decide to look for a new role leading to a record numbers of offers being made and consequently more offers being declined. Operators have the main say in recruitment, with the majority of candidates keen on gaining operator experience. Subsea is going to be a significantly larger industry over the next five to ten years and we have found this means candidates are keen to make the transition into the subsea sector Senior Planners who are happy to work on a permanent basis are in demand as there is a serious shortage - the vast majority want to work on a contract rate. Also Contract Managers with experience managing major contacts.

AMERICAS

CANADA

The Canadian industry continues to hold strong, with several ongoing projects. A high number of steam-assisted gravity drainage (SAGD) projects mean that there are high levels of demand for all disciplines with experience specific to SAGD. The end of the US election has left an expectation for a number of major midstream projects, most notably the Keystone pipeline. Also in demand are Project Controls Managers and Engineers, Planners, Estimators, Project Managers, Construction Managers and Project Engineers due to the high volume of projects in the development stages. There are high volumes of both contract and permanent recruitment going on. Some are holding back on decision making and interviewing due to the holiday season at the beginning of this quarter. With the end of the financial year just around the corner, many candidates are delaying new career decisions due to expected bonuses in the New Year.

UNITED STATES OF AMERICA

The recent election slowed down what was beginning to be a very fast-paced market. However, business is now already back to full strength with companies continuing to invest heavily. Recent events and tradeshows for the offshore events late this year highlighted the risks involved in drilling for oil. However, this did not prevent a number of good news stories announcing several new discoveries for the Gulf. Across the market the whole range of skilled professionals are in demand, particularly those with either offshore or exploration backgrounds. Sign-on bonuses are still the major subject of discussion and it is rare for anyone to be hired without one at present. We are also seeing most employers moving towards flexible working schemes such as the 980s.

MEXICO

Currently the local focus is to maintain production in declining fields, discover more efficient exploitation methods of proven reserves, move towards deep-water production and to increase security and minimise environmental impacts. Mexico's natural gas consumption has risen due to greater use of the fuel in power generation. Natural gas is replacing oil more frequently as a feedstock for power generation in Mexico - the country is a net importer of natural gas. Higher levels of gas consumption will likely depend upon higher imports. In 2011, ex-President Felipe Calderón announced a structural change to improve the natural gas infrastructure, which includes an ambitious six-year infrastructure pipeline project with a 10.5 billion dollar investment. This is expected to be ready for 2018. Mexico faces challenges like many countries with declining reserves. There is a need to maintain energy outputs and a social drive to increase protection of the environment. Mexico plans to invest USD 20 billion per year up to 2025 through the State oil company PEMEX. These projects and investments have seen an increase in the need for professionals working on brown field projects with back grounds in production, design, maintenance, seismic surveys, environmental restoration/studies and infrastructure works. Moreover, PEMEX is actively seeking new technology and is promoting research and development projects through the Mexican Petroleum Institute to tackle the heavy oil and deepwater challenges.

COLOMBIA

In October the ANH (the national hydrocarbon agency) presented the official auction of 49 exploration blocks of which six are offshore. This is therefore an excellent time for new exploration in Colombia with the initial development cost expected to lead to an increase in production of two million barrels per day. This development opens the economy, and facilitates further investment in oil field services, infrastructure and construction. With the increase in activity we have seen an increase in the need for technical positions of exploration such as those working in Geosciences, Petroleum Engineering and QHSE. Recruitment trends moving into next year would focus on the outsourcing of recruitment processes, utilizing head hunters to improve optimal response times, assertiveness and expertise in the selection of candidates. The movement of candidates is increasing faster than ever. Candidates are seeking support, to improve their working conditions in terms of career-growth, development and salary.

BRAZIL

The industry remains very cautious with the main player in the Brazilian market, Petrobras, exerting its dominance over suppliers, shortening deadlines and seeking greater returns. Despite a general slowdown in activity with the operators, we still see a lot of start-ups coming to the region including both international companies expanding their operations and local companies wanting to take on a new market. As a consequence, business development positions are in high demand, both for the start ups and for existing companies. We also see some positions for projects and planning, as this is an area which the industry will be focusing during the next months. Recruitment processes are taking longer than they used to as employers are being more careful about hiring. Interviews are generally going through several rounds before candidates are approved for hire. The oil and gas market is still known for its generous compensation packages and we have noticed that most candidates continue to seek improvements in their existing packages, despite being happy in their current role.