Advanced technologies like digitization, big data, automation, artificial intelligence, IoT will shape the future of the Oil and Gas industry making it more profitable and stable.
The trepidation for the industry is that the working style, skill requirements, and operation will all be different for the new age of oil and gas industry. The current system of operation will turn obsolete and numerous technological advancements will replace and challenge the traditional setup. The bigger question here is: Is oil and industry equipped to meet the changing needs of the industry? Do they have the required skillset and expertise? The answer is NO.
That’s where the relevance of millennials play a vital role. To bridge this knowledge and skill gap, the industry needs to hire and retain a fair mix of professionals from other industries including software engineers, data scientists, analysts, and other digital savvy staff.
The mindset of millennials towards oil and gas industry
Deloitte surveyed 10,000 millennials born in the year 1983 to1994 and around 2000 Gen Z were surveyed who were born from 1995 to 1999 from across the world. Here are the key findings of the report:
Millennials seek opportunities beyond eventual leadership positions and a fat paycheck. They have immense untapped potential and are ready to contribute more for the greater good. With their tech-savvy mind, they can bring in innovation and advancement at every step.
Amy Chronis, Houston managing partner for Deloitte, draws a conclusion on the survey by stating that, “I think the younger generation represents the New World Order … they represent the viewpoint of today,” “I think [diversity and inclusion] is an acute issue in terms of attracting, fostering and retaining talent. The oil and gas industry is already doing a lot of things talent-wise, but I think the survey illustrates that it needs to find better ways to communicate and engage talent in their efforts.”
How to attract and retain Millennials?
Here are a few initiatives that recruiters can take up to hire and retain millennial workforce:
Studies show that millennials look beyond paychecks. They prefer challenging new age roles and oil and gas industry can provide them the right platform. As every function of oil and gas industry is getting automated today with rapid digitization there is a need for employees who can operate in the dynamic environment. Changing the job description according to the changing needs of the industry is a way to attract the young generation.
The current perception of the oil and gas industry amongst millennials is turning off the interest of the new generation. The recruiters must work on rebranding the image of the industry. Although it is a time-taking process it’s high time the industry starts working on it. Collaboration with community colleges can play a key role in the process by developing a curriculum and imparting the right information about the industry. Additionally, social media can be leveraged to rebrand the industry. The new developments, job roles, benefits, and work expectations can be highlighted along with employee testimonials to improve the perception. The new age job roles like a data scientist, software engineers, analysts can also be advertised. Additionally, the companies can highlight their initiatives that have been taken to reduce environmental footprint to enhance its social appeal.
In a recent survey conducted by EY, millennials and generation Z rank salary, work-life balance and on-the-job happiness as the top 3 priorities in any job. The oil and gas industry ranks well in terms of compensation however it is important to understand what monetary benefits the current generation is seeking? The millennials are more interested in stock options than pensions because millennials do not believe in sticking to one job for long period to avail pension benefit, so they prefer stock options.
Other intangible needs like work-life balance and on-the-job happiness are crucial too. Some companies have recognized this need and have started offering benefits like flexible work hours, relaxed leave policy, work-from-home options and so on. Most of the oil and gas companies are still conservative in this regard but the sign of changes are evident. For instance, beginning 1 January 2018, Shell has announced a global standard of 16 weeks paid maternity leaves for its employees. Additionally, to enhance the job environment, the oil companies are following the trend of healthy dining options, green space, public transportations and even gyms.
Make clear and transparent career growth trajectory so that the millennials are aware of their career progression. When the vision is clear, reliability increases which will eventually lead to talent retention. Companies like Saudi Aramco who have 50% workforce under 30 years of age, has invested handsomely in training and development of the employee. This increases the job satisfaction level. The company also sponsors its top performers for an advanced degree at universities across the world to increase loyalty among employees. Similarly, other oil and gas companies can show clear career progression, skill development, and benefits.
It can be safely concluded that the millennials are seeking opportunities to challenge the status quo and develop innovative solutions in the traditional setup. Their inherent curiosity and initiative will fuel the oil and gas industry with breakthroughs and innovation.
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Now that Occidental Petroleum has beaten Chevron to the acquisition of Anadarko Petroleum – and the strategic assets it holds in the prolific Permian Basin – one would think that the deal is cut-and-dry. Not so. The fallout of the massive US$57 billion deal has begun, and it pits one legendary billionaire against another legendary billionaire.
The Occidental purchase of Anadarko had all the signs of a classic takeover battle, swooping in after Chevron and Anadarko’s boards had approved their own US$48 billion deal. It was made only possible by Oxy CEO Vicki Hollub making a quick private plane trip that resulted in a last-minute US$10 billion capital injection from Warren Buffet’s Berkshire Hathaway that was contingent on the Anadarko purchase working. It did. And with the US Federal Trade Commission approving the deal, Anadarko will become part of Occidental by the end of 2019.
But not everyone is happy about the situation. Some investors and shareholders of Occidental believe that it badly overpaid for Anadarko, and were rankled by the deal bypassing a shareholder vote on the matter. The chief critic of this is activist Carl Icahn, who owns a US$1.6 billion stake in Occidental, who slammed it as ‘misguided’ with the CEO and Board ‘betting the company to serve their own agendas’. Icahn has already filed a lawsuit demanding access to Occidental’s books and records, and has just take the fight to a new level.
Last week, Icahn filed regulatory paperwork to call for a special shareholder meeting where he hopes to oust four of Occidental directors and modify the company’s charter through stockholder consent from ever engineering a similar takeover. Icahn wants Spencer Abraham, Eugene Batchelder, Margaret Foran and Avedick Poladian out from the Board, holding them responsible for the ‘fiasco’. He has, of course, nominated his own preferred replacements, including one of his portfolio manager’s Nicholas Graziano, his general counsel Andrew Langham, former Jarden finance chief Alan LeFevre and former president of Shell John Hofmeister. While Icahn has publicly acknowledge that the Anadarko takeover will probably go ahead, his aim is for the new Board to oversee ‘future extraordinary transactions to ensure that they are not consummated without shareholder approval where approval.’
Will it work? Before the proxy fight can go ahead, Icahn must get at least 20% of shareholders to agree to a meeting. That’s a tall order, given that the current crop of directors and Boards were re-elected at the May annual meeting, although with lower support. But there is certainly some appetite, given that Occidental’s stock has dropped nearly 17% since the initial April hostile takeover, reflecting market mood that it had bitten off more than it could chew.
All of this is playing out against a backdrop of pessimism in the Permian. Although the shale revolution had brought American crude production to record highs and sent its crude exports to a new record of 3.3 mmb/d in June, there are now cracks showing. With limited infrastructure, low prices and over-exploitation, the Permian boom is slowing down. Once an investor’s darling, financing has now become far tougher for Permian players, as the high production fall off rate means that companies have to spend more and more money to just maintain production. It’s a situation that is particularly negative for the small, nimble players that powered the initial shale revolution who lack the deep pockets to optimise shale assets over a longer production period. All across the Permian, independent players have lost between 50-100% of their market value, making them ripe for acquisition by majors and supermajors. Deals like the Anadarko one make sense in this context, but with the financial risk increasing, these blockbuster deals may never lead to blockbuster returns. Carl Icahn may not be able win his battle for the Occidental board, but he is certainly making a serious – and very valid - point.
The Occidental-Anadarko deal:
According to the Nigeria National Petroleum Corporation (NNPC), Nigeria has the world’s 9th largest natural gas reserves (192 TCF of gas reserves). As at 2018, Nigeria exported over 1tcf of gas as Liquefied Natural Gas (LNG) to several countries. However domestically, we produce less than 4,000MW of power for over 180million people.
Think about this – imagine every Nigerian holding a 20W light bulb, that’s how much power we generate in Nigeria. In comparison, South Africa generates 42,000MW of power for a population of 57 million. We have the capacity to produce over 2 million Metric Tonnes of fertilizer (primarily urea) per year but we still import fertilizer. The Federal Government’s initiative to rejuvenate the agriculture sector is definitely the right thing to do for our economy, but fertilizer must be readily available to support the industry. Why do we import fertilizer when we have so much gas?
I could go on and on with these statistics, but you can see where I’m going with this so I won’t belabor the point. I will leave you with this mental image: imagine a man that lives with his family on the banks of a river that has fresh, clean water. Rather than collect and use this water directly from the river, he treks over 20km each day to buy bottled water from a company that collects the same water, bottles it and sells to him at a profit. This is the tragedy on Nigeria and it should make us all very sad.
Several indigenous companies like Nestoil were born and grown by the opportunities created by the local and international oil majors – NNPC and its subsidiaries – NGC, NAPIMS, Shell, Mobil, Agip, NDPHC. Nestoil’s main focus is the Engineering Procurement Construction and Commissioning of oil and gas pipelines and flowstations, essentially, infrastructure that supports upstream companies to produce and transport oil and natural gas, as well as and downstream companies to store and move their product. In our 28 years of doing business, we have built over 300km of pipelines of various sizes through the harshest terrain, ranging from dry land to seasonal swamp, to pure swamps, as well as some of the toughest and most volatile and hostile communities in Nigeria. I would be remiss if I do not use this opportunity to say a big thank you to those companies that gave us the opportunity to serve you. The over 2,000 direct staff and over 50,000 indirect staff we employ thank you. We are very grateful for the past opportunities given to us, and look forward to future opportunities that we can get.
Headline crude prices for the week beginning 15 July 2019 – Brent: US$66/b; WTI: US$59/b
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