Black gold’s dramatic decline is pushing many global oil and gas companies into the red – and recruitment in the industry has been hit hard, writes Ben Flanagan.
But what the oil price crash means for jobseekers in the Arabian Gulf’s multibillion-dollar energy business is not such a black-and-white issue.
Layoffs, salary declines and recruitment freezes have been common across many global energy companies since oil prices went into freefall about 18 months ago.
The oilfield services giant Schlumberger, for example, cut around 10,000 jobs in the last three months of 2015, when it suffered a $1 billion quarterly loss, adding to the 20,000 redundancies the company announced earlier in 2015.
Across the global industry, salaries were down by an average of 1.4 percent in the year to November, according to the annual salary survey produced by recruitment firm Hays Oil & Gas. Almost a third of the respondents to the Hays survey said they had been laid off or made redundant, while 93 per cent of employers said they had made some level of headcount reductions.
Gulf recruitment ‘plunge’
In the UAE, there was a 9 percent decline in the expat workforce in the year to November as oil and gas companies were forced to reduce costs, the Hays survey found. A separate survey by jobs website Monster.com found that employer activity in the Gulf oil and gas sector “plunged” over the last year, the only sector to witness such a trend.
Exploration is one area that has been most affected by the crash in oil prices, with recruitment in the field having “fallen off a cliff”, said Gary Ward, operations director at Hays Oil & Gas in the Middle East, Europe and Africa.
“It’s pointless exploring when everyone is complaining that everyone should be cutting back. And the money is not there to go drilling lots and lots of holes,” he said.
Some big global energy companies are suffering elsewhere in the world, and that has had a knock-on effect on recruitment in this region, Mr Ward added.
Examples of big global employers aborting projects here include Royal Dutch Shell, which said in January it is pulling out of an $11 billion gas project in Abu Dhabi.
So far, so bleak.
But the good news is that some recruitment is still going on in the Gulf’s energy sector, with parts of the industry faring better than others, said Mr Ward.
“If you splice the industry up into its component parts, some have been decimated. But others are continuing, and there is recruitment continuing to go on,” he said.
‘Recruitment drive’ in UAE
While there has been a decline in employment across the Middle East oil and gas industry as a whole – both in terms of redundancies and new job opportunities – not all areas have been hit. There is “still a recruitment drive” going on in the UAE, said Mr Ward. Hays Oil & Gas even announced in January that it has opened a new office in Abu Dhabi, offering recruitment services for permanent and temporary oil and gas contracts.
“The UAE actually hasn’t felt the impact too much,” said Mr Ward. “Exploration… has suffered. However, like a lot of the GCC countries, they are investing still in infrastructure projects. And then you’ve got the operators’ production holding reasonably steady.”
Mr Ward pointed to other regional markets such as Kuwait, which is about to launch a massive new refinery, and Saudi Arabia, where he says the national oil company is both still pumping oil, and hiring.
“You’ve got major projects for the operating companies – as in [Saudi] Aramco – still going ahead. Some projects that were due to come online, or due to be awarded, they’ve been mothballed, and there’s been a couple of projects cancelled. However… there is recruitment going on.”
And Gulf countries are still pressing ahead in other areas of the broader energy industry, such as renewables and nuclear, said Mr Ward. “Renewable energy was the long-term plan in the region anyway. Investment in nuclear power stations, wind farms, solar energy, etcetera – those projects still seem to be going ahead,” he said.
Industry salaries offered by local companies are not seeing increases, but are still “holding steady”, Mr Ward said. But he added that the picture is different for some of the large global operating companies active in the region, which have made changes to their salary scales due to the oil crash.
“The impact of what is going on outside the GCC is impacting on the global operators, more than the national operators within the GCC,” said Mr Ward. “The national [operators] are very bullish – obviously; Opec is very bullish about continuing to pump at record levels. It may come to an end, we don’t know. It’s almost changing weekly at the moment, what the market is doing.”
Factors influencing the wider market include the US shale output, the outlook for large but troubled economies such as China, and the future oil production from Iran in the post-sanctions era.
Mr Ward sees a lot of activity in Iran, but says it is unlikely to require the “wholesale recruitment” of expatriate workers.
“It is the industry’s understanding that at the moment, with labour law the way it is in Iran, it would be difficult for any foreign companies that might want to go in there to actually walk in with thousands of their own people. I think they would be forced to go down the line of local [recruitment] first.”
Returning to the topic of the Gulf region, Mr Ward said it remains to be seen if and when the level of recruitment will return to that seen when oil was above $100 a barrel. Making such a predication would require “a very big crystal ball,” he said.
For now, there is a least some recruitment activity taking place. But, as Mr Ward points out, anything could change – and change quickly – given the volatility of the energy markets.
“A lot of companies are holding steady. The operating companies are still pushing forward with some of their new projects,” he said. “It’s definitely not doom and gloom here within the Middle East. Now, next week, that could be completely different…”