Outside the Gulf petroleum graduate numbers increase



While recruiting technical talent is a new worry for national oil companies in the Gulf region, oil producers based in Europe and North America have been grappling with a skills shortage for years.
Universities in those regions have responded, turning out higher numbers of graduates from their petroleum engineering programmes as oil-patch employers offered tempting starting salaries.
Not every engineering student was swayed by growing public disdain for companies pumping "dirty" oil and government policies promoting renewable energy.
"Over the past five years, petroleum engineering programmes have been successful in increasing the number of graduates in response to widely discussed concerns about the ageing of the workforce and the massive retirements of experienced professionals who will need to be replaced in the next decade," wrote the US-based Society of Petroleum Engineers (SPE) in a report last January. "The shortage of human assets has been listed among the top priorities for the industry for several years."
The number of freshly graduated petroleum engineers seeking entry to the oil and gas industry hit a 20-year high this year, just as many experienced professionals had postponed retirement plans because of the global economic downturn. As a result, the SPE expected only 70 per cent of the available petroleum engineering graduates this year to find jobs in the oil and gas industry, down from 90 per cent last year.
It urged oil companies not to scale back recruitment this year, warning that such a move could lead to "a permanent loss of this talent from the industry, and chill the interest of future engineering students in pursuing careers in the oil and gas industry".
Oil companies should treat the recession-driven delay in the expected "big crew change" as a "window of opportunity" for seasoned professionals to transfer knowledge to new entrants, the SPE said.
A 2008 study by the consulting arm of the international oil services company Schlumberger showed that even the fastest-moving companies took six to seven years to train newly hired petroleum engineers to perform without supervision, because of the complexity of decisions and the level of mastery of advanced technology their jobs required. The long lead time to develop human capital could leave many oil and gas producers high and dry when global energy consumption inevitably picks up.
"The recession will end, and energy demand will rebound. The 'baby boomers' in the industry will retire, and the forecast 'big crew change' will occur," the SPE said.
"There is a significant downside to not taking advantage of this opportunity to recruit the expanded class of new graduates in 2010 and over the next several years - the potential loss of these engineering graduates to other industries," it said.
The organisation also noted that emerging oil and gas areas had significant needs for engineering staff. So, it appears, does the Gulf region.
The sudden and unexpected surplus of western petroleum engineering graduates combined with insufficient home-grown talent could, from necessity, lead some GCC national oil companies to extend their targets for workforce nationalisation.
 
tcarlisle@thenational.ae

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Quick pearls of wisdom

Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”

Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.” 

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”