6 Group

The Slow Oil & Gas Revival: Where are we now?

Alistair Campbell, Associate Director

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During my 19-year career in the global Energy business, I have seen several downturns which, fortunately, were short-lived and recovered rapidly – but what we have experienced over the last four years has been brutal.

One trillion dollars of Capex has been cut owing to a lack of confidence in the oil price coupled with 120,000 redundancies in the UK Oil & Gas supply chain across 2016 (Oil & Gas UK). What’s more, some of our industry leaders and senior management have taken early retirement and droves of professionals have turned their backs on the sector favouring less cyclical and more stable industries.

Whilst there has been a small bounce in the oil price, phrases like “Lower for Longer” from BP and “Lower Forever” from Shell do not instil a surge in confidence of a potential rally in the near future. The US unconventional sector managed to unsurprisingly reduce costs by 25% and, as a result, has increased production further which has stalled a rapid recovery in the oil price.

Despite the doom and gloom, recovery is underway with Brent oil price averaging $51.7/bbl so far in 2017 which is 20% higher than the 2016 average of $43.7/bbl. This year has also seen almost twice as much money invested through mergers and acquisitions, $4 billion more than across all of last year. Further encouragement can be taken from BP who have had more new projects commissioned in 2017 than any other year in the company’s history – totalling seven global mega projects underway with an annual Capex of between $15B and $17B. Expectations for Capex in 2017 for Exxon, Statoil and BP are 30% lower than in 2014 but still represent an increase since the downturn.

Confidence is growing and operators are spending again so the benefits of this will gradually percolate through the supply chain and the need for talent will rise. If you thought the war for talent pre-oil price crash was tough, this time around will be even more severe with the industry having haemorrhaged hundreds of thousands of Oil & Gas professionals globally.

There is a whole group of talent that has now been lost to other industries. How do companies know if they have the right capabilities internally to cope with a more agile and leaner oil environment? Those companies that are focused on knowing what resources they will require, combined with the behaviours required for oil companies to operate for the future, have already started proactively mapping and engaging with the market.

Developing an extensive pipeline of passive candidates which is underpinned by informative intelligence – e.g. location, skill sets and compensation & benefits – would be a good starting point for those looking to navigate the new industry landscape. Combine this with a bespoke competency assessment framework, which will gauge whether candidates have the ideal functional and behavioural capabilities to thrive in a reshaped Oil & Gas industry, and this will grant organisations with a real competitive advantage.

Alongside 6 Group’s more traditional Executive Search capability, an increasing number of companies are now asking us to map, identify and assess their most sought-after talent. To find out how we can help you attain a comprehensive understanding of your market and develop a highly effective assessment process, get in touch.

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