Mohd Anas Asalem

Regional Strategic Partnerships Manager @ NrgEdge
Last Updated: March 13, 2017
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Human Resources
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Human Resource (HR) professionals play an important role for the company as an organization is not able to build a good team of working professionals without its own powerful human resources. Their key functions include recruiting people, training them, performance appraisals, motivating employees as well as ensuring workplace safety and etc. As the oil and gas industry is suffering, their decisions will eventually put an ink to one’s future in the company.

It’s a challenging time for all HR in Oil & Gas. The price per barrel is fluctuating, companies are going through re-structuring and people keep going out and rarely coming in. This is the current scenario in the world of oil. Realizing on this matter, the Malaysian Oil & Gas Services Council or known as MOGSC has organized a special and meaningful session of Oil & Gas HR Forum to discuss on how HR Professionals to step up and prepare their organizations for the turbulent journey ahead.

The session was beautifully engaged as they managed to have the honorable Ybhg. Dato’ Raiha Azni Abd Rahman, the Senior Vice President of Human Resource Management of PETRONAS on the 23rd of February 2017 in Impiana Hotel, Kuala Lumpur along with more than 150 attendees. Dato’ Raiha in her keynote speech highlighted that as the industry is now at its low, companies should focus on the training & development for the talent which should be a continuous investment as PETRONAS starts as soon as secondary school. She also mentioned that Malaysia has Top Talents around the world, and the industry should not lose it as they might be the right leaders in future. PRODIGY is one of the programs that PETRONAS did with the collaborations of service providers in Malaysia to train good graduates to cater expectation and demands from the industry, she added.

The session was then continued by the Vice President of MOGSC & also Mentor of Competency & Training Working Group (CTWG), Ir. Megat Zariman Abdul Rahim by giving an overview on how MOGSC’s progress on its 14 years serving the industry. MOGSC is the leading non-profit association and the most-proactive in the mission to promote the development of the Malaysian Oil & Gas Service Sector and also as a regional hub. This year, MOGSC introduced the Oil & Gas Competency Development ROADMAP with the objective to establish MOGSC as oil & gas center of reference for competency and training, and with the hope to fill up the skills gap of talents in Malaysia.

The highlight of this session was the Panel Session: Skills Shortage in Malaysia – A Myth or Reality, chaired by Ir. Megat Zariman Abdul Rahim. The line of impressive panels that we had the other day was Mdm. Shareen Shariza Dato’ Abdul Ghani, CEO, TalentCorp, Mdm. Kartina Abdul Latif, Senior Executive Director, PwC, Mdm. Nelly Francis, General Manager of Education & Learning, PETRONAS, Mr. Syed Azlan Syed Ibrahim, Senior Vice President, MPRC and Mdm. Sharifah Zaida Nurlisha, MOGSC President. It’s the most highlight topic as we encountered a lot of retrenched people and fresh graduates who struggle to find jobs, and surprisingly based on PwC, 350 000 jobs cut happened globally in the Oil & Gas industry as of end 2016.

Are they incompetent to the industry? Previously, Dato’ Raiha also highlighted that Asia has the younger workforce in Oil & Gas as compared to Europe & United States. Unfortunately, because of the skill gap and the downturn, many of the groups as mentioned above left the industry and only very low percentage of them returning. This is an alarming issue to the industry.

During the forum, the chair questioned each of the panels on the main question itself, is it a myth or reality? Mdm. Kartina was the first one to answer and she said it depends on the adaptability of the business. She highlighted that based on PwC research battle for talent –talents & skills shortage, they find out there is need to develop and attract STEM (science, technology, engineering, math) and vocational talent to support business demand. Businesses need to understand talent expectations of the talent segments which include both parties in order to build the talent pipeline. Her response was also supported by Mdm. Nelly Francis of PETRONAS and she advised that the industry first need to understand the supply and demand. Employers need to see on the specific details to do the assessment and reliability of their workforce skills. That is where organizations like PETRONAS Leadership Center & MOGSC could play an important role.

Mdm. Sharifah of MOGSC, however had different perspectives; she didn’t see the shortage of skills among Malaysian talents. We have many talents with impressive skills in the industry and there are many training providers and technical training centers which can cater to the industry needs, for example Institut Teknologi PETRONAS (INSTEP). Earlier, the CEO, Mr. Chandramohan also shared the capabilities of INSTEP on simulating the real plant scenarios in a safe environment and not to forget their strong partnerships, alliance with the industry and clients. Mdm. Sharifah also mentioned that, maybe because of the financial restriction of the company limits the skills learning these days. Mr. Syed Azlan from MPRC also claimed that there is no skills shortage in industry. Perhaps, in discussing this matter, he did clarify to put in-depth on what shortage you mean? Surprisingly, there is no one in Malaysia who has specific data on the skills shortage.

On the other hand, the CEO of TalentCorp Malaysia, Mdm. Shareen Shariza coming strong as yes, there is skills shortage in Malaysia especially the high skilled ones. Most of the high-skilled individuals or baby boomers are leaving the industry because they are offered an early retirement package and unfortunately, the middle layers are left hanging as there are no transferring and retention of knowledge and skills. HR will need to understand the availability of talents and significant differences when planning for replacement hires and training requirements. This decisive group will need to understand the succession of business in five, ten, and fifteen years ahead. PwC also highlighted earlier that the most difficult skill to find in Oil & Gas Industry is leadership according to 71% of the CEO’s interviewed. Probably the industry’s top priorities now are the pipeline of leaders of tomorrow and workplace culture to nurture talents.

This alarming issue should be encountered by the HR Group as we go along the hardship journey of Oil & Gas Industry. HR plays a bigger role now more than ever. Organizations need to change their business strategies and modify their human capital strategy accordingly. The talents we have should not be wasted. These newer technologies and the new landscape are causing shifts in skills needed by companies. Perhaps an organization like MOGSC should address to this issues and be a pipeline through a round table and drives the plans with the Government, Industry and Academic Institution. Each of those bodies should understand the framework and demands of this exciting unstable industry of Oil & Gas. Plan ahead for crises and be ready to adapt when you need to.

Oil Gas HR Skills MOGSC Malaysia MPRC PwC TalentCorp
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Your Weekly Update: 24 - 28 February 2020

Market Watch   

Headline crude prices for the week beginning 24 February 2020 – Brent: US$56/b; WTI: US$51/b

  • The Covid-19 outbreak continues to be the main headline – and the main driver – behind crude oil price trends, as the virus’ global spread continues
  • While the virus appears to be increasingly contained in its country of origin, the last week has seen major outbreaks in other parts of the world, including South Korea, Italy and Iran; this is approaching the level of a global pandemic – where the outbreak spreads in multiple locations independently
  • There is major concern that the virus outbreak in Iran could spread in the Middle East, impacting oil supply as Afghanistan, Bahrain and Kuwait all reported their first cases; the virus is now confirmed to be present in 55 countries (and suspected in at least 10 more), with over 83,000 cases globally
  • The new intensification of the outbreak might force OPEC+’s hand to act in March, after Russia scuppered a planned emergency meeting in mid-February meant to coordinate a response to the outbreak
  • With the economic meltdown in Venezuela continuing, President Nicolas Maduro has declared an ‘energy emergency’ and announced plans to revamp PDVSA in order to produce more crude; meanwhile the US sanctioned Russia’s Rosneft over maintaining ties with the Maduro regime and PDVSA
  • The US active rig count inched up last week with net gains coming from a single new oil rig, while gas rigs were flat for a new weekly total of 791
  • Fears the contagion widening its footprint outside of China has already sent global stock and commodity prices down sharply, with the Dow Jones reporting its single largest point drop in a day; unlike signs of global containment show, crude will remain in the red with Brent at US$51-54/b and WTI at US$46-49/b

Headlines of the week

Upstream

  • Equinor has dropped plans to drill for oil in the Great Australian Bight, abandoning a well in the offshore Ceduna basin after facing environmental protests; officially, Equinor’s reason is that the plans – already been abandoned several times by other players – did not ‘measure up commercially’
  • Eni announced a new discovery in Mexico, with the Saasken prospect in the offshore Sureste Basin estimated to contain up to 300 million barrels of oil
  • Africa Oil SA will take a 20% stake in South Africa’s Block 3B/4B in the Orange Basin from Namibian E&P player Azinam; Azinam has also taken a 50% stake (and operatorship) of Block 2B from Africa Energy Corp

Midstream/Downstream

  • Amid the ongoing Wuhan Covid-19 outbreak, China has slashed ceiling prices for gasoline and diesel for the second time in 2020, reducing gasoline prices by 5% and diesel by 5.7%, bringing the cumulative reduction to some 10%
  • A series of outages at key refineries on the US Gulf Coast and East Coast saw American retail prices rise by an average 5% y-o-y, triggering tight supplies
  • PetroChina has exported its first batch of Very Low Sulphur Fuel Oil (VLSFO) from its Liaohe refinery, after China waived consumption taxes and applied rebates of value-added taxes on clean marine fuels; more cargoes should follow
  • PetroChina has also resumed construction of its US$10 billion refinery project in Jieyang, Guangdong, after halting work following the Covid-19 outbreak
  • Malaysia is aiming to implement a B30 biodiesel mandate, up from the current B10 national level, following in the footsteps of Indonesia in an effort to reduce gasoil consumption and increase domestic demand for palm oil

Natural Gas/LNG

  • The USA, under Donald Trump, continues its campaign to prevent the completion of the Russia-Germany Nord Stream 2 pipeline, ratcheting up sanctions on key service providers like subsea pipeline provider Allseas Group
  • The government of Papua New Guinea and the natural gas/LNG joint venture led by ExxonMobil have informally resumed talks on the P’nyang Gas Agreement, with hopes to restart formal talks as soon as possible
  • Neptune Energy announced first gas from its new L5a-D4 well in the Dutch North Sea, tying the deepest field in the area back to the L5a-D platform
  • Hit by a mild winter and the Wuhan Covid-19 outbreak, China’s natural gas consumption declined for the first time in two years, with demand down by some 1 % y-o-y in January, mainly from industrial and power usage
  • Ramp-up at Eni’s Zohr field in Egypt continues, expected to rise to its peak plateau rate of 3 bcf/d in March 2020, confirming Egypt as a gas power
  • India’s AG&P has broken ground on the Karaikal Port LNG import facility in Puducherry, India, with operations expected to start by Q4 2021
  • Shell is ‘evaluating development options’ for its Manatee field in Trinidad & Tobago, after the government gave a go-ahead with first gas planned for 2025
  • ConocoPhillips has pushed its FID on the Barossa gas development in Northern Australia until Q2 2020, but first gas is still on track to hit the market in 2024
  • As the Abadi gas project in Indonesia takes off after a long period of gestation, operator Inpex has signed MoUs for takeoff with with PT PLN and PT Pupuk
  • The US FERC has given clearance for Cameron LNG Train 2 in Louisiana to go ahead, adding to a huge swathe of new US LNG capacity coming onstream
February, 28 2020
Wind has surpassed hydro as most-used renewable electricity generation source in U.S.

annual electricity generation from wind and hydroelectric sources

Source: U.S. Energy Information Administration, Electric Power Monthly

In 2019, U.S. annual wind generation exceeded hydroelectric generation for the first time, according to the U.S. Energy Information Administration’s Electric Power Monthly. Wind is now the top renewable source of electricity generation in the country, a position previously held by hydroelectricity.

Annual wind generation totaled 300 million megawatthours (MWh) in 2019, exceeding hydroelectric generation by 26 million MWh. Wind generation has increased steadily during the past decade, in part, because the Production Tax Credit (PTC), which drove wind capacity additions, was extended. Annual hydroelectric generation has fluctuated between 250 million MWh and 320 million MWh in the past decade, reflecting a stable capacity base and variable annual precipitation.

U.S. electricity generation from hydroelectric and wind

Source: U.S. Energy Information Administration, Electric Power Monthly

Annual changes in hydroelectric generation are primarily the result of variations in annual precipitation patterns and water runoff. Although weather patterns also affect wind generation in different regions, capacity growth has been the predominant driver of annual changes in wind generation.

Both hydroelectric and wind generation follow seasonal patterns. Hydroelectric generation is typically greatest in the spring when precipitation and melting snowpack increase water runoff. Seasonal patterns in wind generation vary across the country, but wind generation is usually greatest in the spring and fall.

operating capacity of hydroelectric and wind generators

Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory

Wind capacity additions tend to come online during the fourth quarter of the year, most likely because of tax benefits. Wind capacity additions totaled 10 gigawatts in 2019 (3.8 GW installed in the fourth quarter), making 2019 the second-largest year for wind capacity additions, second only to 2012.

As of the end of 2019, the United States had 103 GW of wind capacity, nearly all of which (77%) were installed in the past decade. The United States has 80 GW of hydroelectric capacity, most of which has been operating for several decades. Only 2 GW of hydroelectric capacity has been added in the past decade, and some of those additions involved converting previously nonpowered dams.

Although total installed wind capacity surpassed total installed hydroelectric capacity in 2016, it wasn’t until 2019 that wind generation surpassed hydroelectric generation. The average annual capacity factors for the hydroelectric fleet between 2009 and 2019 ranged from 35% to 43%. The average annual capacity factors for the U.S. wind fleet were lower, ranging from 28% to 35%. Capacity factors are the ratio of the electrical energy produced by a generating unit for a specified period of time to the electrical energy that could have been produced at continuous full power operation during the same period.

hydroelectric and wind capacity factors

Source: U.S. Energy Information Administration, Electric Power Monthly

February, 28 2020
EIA forecasts natural gas inventories will reach record levels later this year

In the U.S. Energy Information Administration’s (EIA) February Short-Term Energy Outlook (STEO), EIA forecasts that the Lower 48 states’ working natural gas in storage will end the 2019–20 winter heating season (November 1–March 31) at 1,935 billion cubic feet (Bcf), with 12% more inventory than the previous five-year average. This increase is the result of mild winter temperatures and continuing strong production. EIA forecasts that net injections during the refill season (April 1–October 31) will bring the total working gas in storage to 4,029 Bcf, which, if realized, would be the largest monthly inventory level on record.

Mild winter temperatures for the current winter have put downward pressure on natural gas prices and led to smaller withdrawals from natural gas into storage. Year-over-year growth in dry natural gas production and natural gas exports—especially liquefied natural gas (LNG)—throughout 2019 also affected natural gas storage levels. On October 11, 2019, the total natural gas in storage surpassed the previous five-year average—an indicator of typical storage levels—for the first time since mid-2017.

lower 48 states working natural gas in storage

Source: U.S. Energy Information Administration, Natural Gas Monthly, Weekly Natural Gas Storage Report, and Short-Term Energy Outlook

The total natural gas in storage at the start of this heating season was 3,725 Bcf on October 31, 2019. EIA expects withdrawals from working natural gas storage to total 1,790 Bcf at the end of March 2020. If realized, this would be the least natural gas withdrawn during a heating season since the winter of 2015–16, when temperatures were also mild.

Injections into and withdrawals from natural gas storage balance seasonal and other fluctuations in consumption. Natural gas demand is greatest in the winter months, when residential and commercial demand for natural gas for space heating increases. Natural gas consumption in the power sector is greatest in summer months, when overall electricity demand is relatively high because of air conditioning.

monthly U.S. natural gas supply and disposition

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

In the latest STEO, EIA expects the total working natural gas in storage will exceed the previous five-year average for the remainder of 2020, despite declines in dry natural gas production, increases in natural gas consumption in the electric power sector, and increases in natural gas exports. EIA expects monthly natural gas production to decline from last year’s record levels in 2020 as lower natural gas prices reduce incentives for natural gas-directed drilling and as lower crude oil prices reduce incentives for oil-directed drilling and associated gas production.

February, 25 2020