Hays Oil & Gas Global Job Index Q2 2014

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HAYS OIL & GAS GLOBAL JOB INDEX Q2 2014Stronger business activity driving hiring trends as regions worldwide experience an uplift

GLOBAL INDEXWelcome to Q2 2014 Global Job Index. The second quarter of 2014 was positive with an overall quarter-over-quarter increase in the job index from 1.65 in Q1 to 1.99 in Q2. All regions except Australasia reported significantly more job vacancies compared to Q1. On a year-over-year basis all regions except Australasia and Europe have shown an increase in the index, reinforcing our view that the global economic recovery is gaining momentum.

In Q2, the job markets in South America, Africa and the CIS were particularly strong. In Mexico, the new economic reform will allow the potential of private and foreign investments. In Africa, key projects in Angola, Mozambique and Nigeria continue to create jobs. The CIS region saw a significant upturn from a low job index of 1.01 in Q1 to a high of 1.66 in Q2. This rise has mainly been spurred by increased seismic activity, exploratory drilling and further investment in LNG including the Yamal project. A recent survey from a Top 4 advisory business, Deloitte, which interviewed executives from both state owned and private business in the area, highlighted that improving field development efficiency and continued exploration and drilling ranked highest on their priorities and for continued investment for the remainder of 2014, provided that they can continue to attract the right talent and capital given the region’s instability.

The recent signing of the $400 billion trade deal between Russia and China will see continued investment in the region. LNG Projects such as Sakhlin and Yamal will compete with projects in the US, Nigeria, Qatar and Mozambique for the already small pool of specialist engineers with liquefaction experience. Exxon has started drilling with its partner Rosneft in the Kara Sea. Igor Sechin, the CEO of Rosneft, was recently quoted in RIA saying “The Kara Sea projects are currently the largest projects being undertaken globally and match those of Saudi Arabia. The Kara Sea has the potential of reserves larger than the Gulf of Mexico.” Provided international sanctions do not hinder these projects, we would expect compensation packages to rise overall in the region.

North America has seen steady growth with several key LNG projects receiving approval to export to FTA and non-FTA approved countries. Along with continuing investment into the midstream and downstream sectors, business activity is increasing and jobs are being created. The US total crude oil production, which averaged 7.4 million barrels per day (bbl/d) in 2013, is expected to average 8.5 million bbl/d in 2014 as reported by the US Energy Information Administration. This is the highest annual average level of oil production since 1972, putting a strain on the midstream sector. We expect to see significant investment in this area over the second half of 2014.

On a more pessimistic note, both Europe and Australasia were relatively flat on a quarter-over-quarter basis, and down year-over-year. Figures released by the Australian Bureau of Statistics in July reported an unemployment rise of 0.4 per cent. The job market remains tough with major projects reaching completion and unfavourable economic conditions which may cause operators to not sanction further investment in the region.

Overall, the price per barrel of oil is strong at $105 and with current global political instability, particularly in Iraq, Ukraine and Russia, many analysts predict it will rise to over $110 per barrel in Q3. This will make conditions more favourable for continued capital expenditure despite the pressure they are receiving from investors to increase cash flow and to show returns on the massive capital investments made over the past years. Dependent on the outcome of the political unrest, we expect continued growth in the job market and for compensation levels to remain flat throughout Q3 and the rest of the year.

What is the Job Index? The Global Job Index is a quarterly publication featuring news and updates affecting the oil and gas employment market. It provides an insight into fluctuating job numbers, as well as local events which affect employment demand making it a unique and informative resource for the industry professionals.

BackgroundFinding a new job via an online medium is now the norm for any job seeker looking for work. This trend has of course led employers to rely on their web presence, either direct or indirect, to source, attract and drive candidates to apply for their jobs.

The oil and gas industry is no stranger to the use of online media to attract candidates, with globalisation and remote work locations meaning the vast majority of roles in the industry are now resourced using online portals. These sites range from a company’s own online web pages to large recruitment groups, specialist job boards focused on specific geographies, and those dedicated to the oil and gas industry in all its guises across the world. These global boards have grown considerably in the last few years and now contain many thousands of jobs and resumes of users eager to access their next opportunity.

MethodologyOur team of analysts and researchers measure the numbers of live jobs posted on all the major job boards that are specific to the oil and gas industry. These are collated into regional figures and compared against a datum of 1.00 taken from October 2010.

At this time the industry had largely recovered from the global recession, and the oil price reflecting this recovery slowly edging upwards over $80 bbl. Capital had flowed back into the industry boosting exploration, project starts and profits. Recruitment had recovered steadily since the start of 2010 in line with the increase in revenues although there were no significant skill shortages at that time. With expectations of a growing recruitment market through 2011, October 2010 appeared to be an ideal point from which to set our benchmark for the Global Job Index.

Each month since this date we have measured job posting activity on the same sites making sure we are consistent in how and what we measure. From time to time the sites themselves will change the way in which they post and maintain jobs, and this is closely monitored to ensure that this does not alter the results of our research over and above the specific measure of job posting activity we are seeking.

This data is broken down further to give a measure of regional activity and the trends within those regions. This further analysis is essential to oil and gas recruiters that scan the world for available talent.

All salaries in the Global Job Index are listed in US Dollars.

The ResultsHays Oil & Gas publishes its results on a quarterly basis producing the Global Job Index along with dedicated figures for each region; Europe, Africa, Middle East, Russia and CIS, Asia, Australasia, North America and South America.

GLOBAL OVERVIEWQ2 job index by region

Asia

Middle East

North America

Q2 2011 Q2 2012 Q2 2013 Q2 2014

Yearly comparison of Q2 job index

inde

x sc

ore

Europe

Africa

South America

Australasia

CIS

0.0

0.5

1.0

1.5

2.0

2.5

3.0

EUROPE AFRICA CIS MIDDLE EAST ASIA AUSTRALASIA N.AMERICA S. AMERICA

0.5

1.0

1.5

2.0

2.5

3.0

Jan Feb Mar Apr May Jun

Continued growth as companies fight for talent, with some surpluses forming.Q2 of 2014 has taken an interesting path for major pipeline projects. For instance, Keystone XL has hit regulatory and environmental hurdles, with little news coverage or advancement on start dates. As Keystone XL and other major projects hover in regulatory uncertainty, there has been a shift to rail transportation and pipeline reversal plans to assist with the transportation of oil sands production.

Whilst Apache seeks to sell their share in Kitimat LNG, Chevron continues to push forward with projects, facing competition from Canada LNG and Aurora LNG for key liquefaction specialists. The LNG market continues to see strong hiring activity both in large scale export facilities and smaller domestic projects and demand for LNG specialist knowledge is expected to remain high for the remainder of 2014.

Along with this, there has been a large focus on production optimization and completions. This in turn has led to an innovation boom in technologies based around these areas. Organisations who work in the oil tools sector, especially in completions, have experienced an increase in demand for their services. Therefore, as this market has grown, employers

are placing significant importance on attracting top talent to ensure this demand is capitalized on. Some of the roles that are particularly sought after include Technical Sales Specialists, Operations/General Management, and Engineering Specialists (electrical, mechanical, and electronic).

The North American subsurface market has continued to move away from exploration and to focus more on operations and production. In the second quarter of 2014, we noticed this shift creating candidate surpluses in subsurface explorationists, particularly in Canada, while at the same time shortages in Production Geologists, Reservoir Engineers and Site Operational roles. Due to increased acquisitions and sales of lower 48 operational and speculative assets, there has been a significant upswing in Acquisitions and Divestitures (A&D) Reservoir Engineering positions with investment banks. Large Exploration and Production (E&P) businesses are looking to increase their Houston based A&D teams and capitalize on the investments seen over the past six months in this area.

With the recent government announcements in Mexico to allow private business to invest in the Gulf of Mexico, operators will look to make investments in the Mexican controlled Gulf of Mexico. As a result, we are anticipating a significant increase in demand for upstream talent with deep water experience, based in Houston over the next two quarters.

In demandTechnical Sales Professionals – CompletionsAverage salary in North America $125,000 base + commission & package

A&D Reservoir EngineersAverage salary in North America $160,000 base + bonus & package

Year-on-year comparison

NORTH AMERICA

201320122011 2014

2.28

0.5

1.0

1.5

2.0

2.5

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Contrasting effects of government decisions are seen across the region.Mexican President, Enrique Pena Nieto, has enacted new rules governing the historic opening of the state-run oil, gas and electricity industries to foreign and private companies. The President has also vowed to start putting in place regulatory and oversight agencies to implement the new rules by the end of August 2014. With this reform, Mexico opens up its large reserves of both deep water and onshore shale plays.

Provided that government authorities can assign complex deals to private companies without the obstacles that have hindered the area in the past, we should see significant investment from major operators. This will create job opportunities in Mexico and Houston as companies will seek to utilize the skills and technology already gained from US deep water operations and shale plays.

In Colombia, however the feeling is not as positive. Difficulties in achieving environmental licenses, security problems in operational areas and complex negotiations with local communities are delaying business activities and therefore business investments.

Over the last quarter, we have seen an increase in professionals moving between Argentina and Colombia, as employers seek to address the demand for top talent with shale gas and deposits experience. As new investors are attracted to the area, there will be a continued rise in demand for candidates in the construction and project sectors.

In demandGeologistAverage salary in South America $135,000 base

Senior Drilling Engineer Average salary in South America $150,000 base


SOUTH AMERICA

201320122011 2014

0.5

1.0

1.5

2.0

2.5


2.49

Labour market strengthening across UK and Europe. While the job index has declined year-over-year and has been relatively flat between Q1 and Q2, we have recently seen a rapid surge in jobs advertised in the last 2 months. The surge will not come as a surprise to those within the sector. Although some parts of the market such as exploration and production have remained relatively flat, there have been several project announcements that have led to a marked increase in demand for various discipline engineers.

Within the UK market the original equipment manufacturers have experienced a strong quarter along with consultancies and Engineering, Procurement, Construction and Manufacturing (EPCMs) companies. For example, our Aberdeen business has been inundated with requests for design and manufacturing skills and in the London market, the design based disciplines have fared well, along with skill sets related to risk engineering and verification.

Some of the usual hard-to-find skills remain highly sought after such as integrity related roles for subsea installations and pipelines. The Geoscience and Petroleum Engineering disciplines have had a relatively quiet quarter although there has been a noticeable increase in demand towards the end of the quarter. All-in–all, the UK market remains somewhat fractured. Several large organisations have made redundancies – often heavily publicized – and yet many organisations are still struggling to source these very same skills.

Further across Europe the job market is also looking more positive. There are numerous projects underway which has seen an increase in demand similar to that within the UK. Engineers with design experience remain in high demand especially in relation to process engineering and plant upgrade projects.

There haven’t been any significant policy changes throughout the quarter but it is likely the Scottish independence vote will feature heavily in Q3 as this will have a knock on effect across the region.

In demandSenior Process Engineers Average salary in Europe $120,000 base

Pipeline Engineers Average salary in Europe $150,000 base

EUROPE


201320122011 2014

1.0

1.5

2.0

2.5


1.88

African labour market goes from strength to strength.Africa has seen continued growth throughout Q2 as key projects in areas such as Angola, Mozambique and Nigeria continue driving job creation.

South Africa’s oil and gas sector is set for growth, as an upsurge in exploration and the increasing prospect of the country’s offshore acreage point towards considerable upside potential for the country’s long-term upstream prospects. The country also has vast unconventional resource potential, and with growing political support for lifting the moratorium on hydraulic fracturing, we could see shale development permits issued in the second half of 2014. However, the passage of the mineral and petroleum resources development bill has caused widespread unease in the industry, and deep regulatory uncertainty may cloud the country’s long-term oil and gas outlook, unless the government can offer greater clarity to potential investors. Should the government overcome the unease then we expect the demand for those candidates with deep and ultra-deep water experience to rise significantly putting further pressure on the upstream talent pool globally.

In general terms, East Africa remains the hottest part of the region particularly in terms of exploration and production activity. There is a steady demand for geosciences and petroleum engineering expertise along with local in-country experience. Numerous companies continue to fight over the limited highly skilled and locally knowledgeable staff available.

Although a large percentage of perceived activity in the region resides with smaller organisations, several of the global players are also investing significant resource in the continent. An example being the recent meeting between Eni’s CEO and Gabon’s President to discuss the Nyonie Deep prospect.

The Ebola outbreak has had an impact on a number of companies operating in the region, even those whose focus is elsewhere in the continent. Concerns about the outbreaks has caused a decline in confidence within the markets for projects throughout the region, not just in West Africa. Numerous start-up and small exploration and production companies listed on exchanges such as the UK’s AIM have seen significant decreases in their market capitalization.

In demandSenior Geoscientist – New Ventures Average salary in Africa $200,000

Operations Engineers Floating Production Average salary in Africa $150,000


AFRICA

2.75

201320122011 2014

0.5

1.0

1.5

2.0

2.5

3.0


Upward pressure on salaries increasing disparity in wages. With 2013 witnessing an upturn in the global economy, the regions’ resource rich oil and gas economies were all predicting strong growth at the start of the year. Instead, the labour market experienced a surprisingly flat start to the year, but in Q2 we’ve seen a significant upturn in job numbers, as reflected by the job index.

It’s the usual suspects driving the job market. Original Equipment Manufacturers are aiming for ambitious growth targets and geoscience and petroleum engineering roles, particularly in Malaysia, are also in high demand. As ever, the region’s shipyards and fabrication markets have continued on their upward curve with Offshore Oil & Gas/Marine fabrication projects creating demand for hands-on technicians up to Senior Project Managers with mega project experience.

Across the region, the consistently high level of job vacancies has seen salary pressure increase as candidates are now fully aware of the rising demand for their skills. However, employers continue to resist and we are witnessing a widening gap between candidates’ salary expectations and employer offers,

which extends the time to fill roles as employers hold out for skilled candidates within budget. This disparity is particularly pronounced when it comes to employing local talent, as the workforce becomes increasingly savvy with regards to pressure on employers to recruit Asian nationals.

In Singapore, the Ministry of Manpower (MOM) is pushing to restrict foreigners, particularly on S Pass visas. This is starting to have impact on the target demographic of the workforce in Singapore as not only are employers finding it harder to take on new staff from overseas, but also an increasing number of visa renewals are being turned down. This clamp down seems to be focused more on lower end salaries and S Passes with higher salaried roles not experiencing the same issues.

In Malaysia, employers’ focus on “Malaysianisation” has continued to gather momentum this year causing salary demands to increase in areas where there are skills shortages. This is particularly evident in the geoscience area where companies, mainly operators, are now vying for talented local professionals who can take over and drive the technical and staff development requirements and occupy roles traditionally held by expats, further widening the divide between candidates’ and employers’ salary expectations.

In demandRegional Sales/Business Development ManagerAverage salary in APAC $140,000-$200,000 + bonus + package

Process Design EngineerAverage salary in Asia $90,000-$140,000 base

Project Manager FPSO/FSOAverage salary in Asia $180,000-$250,000 base


ASIA

201320122011 2014

0.5

1.0

1.5

2.0

2.5

3.0


2.56

Labour market activity strong despite current political affairs. Although many projects located in Russia that are managed by international oil and gas companies have been delayed, we have found that those initiated by Russian employers across the globe are proceeding. Projects in CIS countries are also progressing, and the major oil and gas producers around the Caspian Sea are highly active in exploration and production.

The intelligence from our local teams suggests that as soon as the international media focus on the Russia-Ukraine crisis reduces, many projects will quietly and without fanfare come on stream. Therefore, the prospects for candidates based in Russia are looking positive, and employers can continue to rely on a ready supply of highly qualified and good value local candidates.

In demandBilingual Drilling or Well Engineer Average salary in Russia & CIS $9,000 per month

GeologistAverage salary in Russia & CIS $6,000 per month


COMMONWEALTH OF INDEPENDENT STATES (CIS)

201320122011 2014

0.5

1.0

1.5

2.0


1.68

State and commerce implement initiatives to keep Australia competitive. Overall, the general Australian economy has finally showed some signs of stabilization and slight growth. Across industries we are witnessing some renewed optimism after two years of deteriorating circumstances. This optimism has not yet crept into the oil and gas industry, which showed a significant year-over-year decline in the job index and no change from last quarter.

Despite this, there are some positive activities that are propping up the industry. APLNG downstream is now 75 per cent complete with first deliveries of LNG set for the middle of 2015. The transmission pipelines from Surat Basin to Gladstone are in commissioning and companies are currently looking to feed their LNG facilities, beginning to focus on getting the most out of existing infrastructure and developing new assets. This is increasing demand for Petroleum Engineers with experience in low permeability coals to assist in development.

Refining in Queensland must become more cost effective to compete with the Hitech Mega Singapore refineries which are heavily automated. Strategies have been put in place to increase their standing on the Solomon Scale. Professionals with maintenance and training experience are highly coveted and demand for specialist technical skills remain high across subsea, and drilling and completions disciplines.

Inpex’s Ichthys project has reached a major milestone and completed dredging of the inner harbour. As the project moves into construction phase, specialist trades, welding supervisors and quality assurance/quality control professionals are in high demand and early works on the offshore 800 km subsea pipeline installation have now begun. ConocoPhillips’ BayuUndan facility is preparing for a major shut-down in October and recruitment has already begun for shut-down specialists with offshore experience. Additionally, as the upstream component of the Gorgon project moves closer to completion, candidates with construction and project delivery experience are readily available for work and keen to find a new challenge.

The removal of Australia’s Carbon Tax will make the region more competitive again; however it will likely take a bit of time before it makes an impact. Salaries have remained stable with specialist areas still commanding higher rates. We expect salary increases will be highly unlikely in the coming months. We are also finding contract positions are more abundant than permanent. Regional sales and business development managers are in demand to sell internationally manufactured products into Phase 2.

In demandPetroleum Engineers - low permeability coal Average salary in Australia $250,000-$350,000

Subsea Engineers – installationsAverage salary in Australia $1200-$1500 per day


AUSTRALASIA

201320122011 2014

0.5

1.0

1.5

2.0


1.07

Employers take action to attract top talent in shrinking talent pool. The future looks increasingly bright for the region’s drilling industry as oil rig construction companies report significant increases in orders of drilling rigs. National oil drilling companies too have confirmed onshore and offshore drilling projects, indicating that drilling will be an active area of the market through to 2016.

Well service activity has increased within Oman, Kuwait and Yemen, areas that historically have been more challenging extraction environments, an indication that life extension and enhanced recovery projects are under way and are yielding positive results.

As more projects are awarded, the battle for top talent continues to rise. Employers still hire contractors to staff project work, however in order to attract and retain the best skills, permanent recruitment is also on the rise. Businesses are revising employee benefits packages to differentiate themselves from their direct competitors and salaries are being pushed higher, in particular for non-rotational positions in less desirable locations.

To address the future skills shortage, we are seeing large scale investment in training by both Oilfield Service and Operators in the region. However, the current high demand in skilled workers requires the appointment of expatriate workers across the Gulf Cooperation Council (GCC).

In demand

Lead Instrumentation Engineer Average salary in the Middle East $14,000 per month

Contracts EngineerAverage salary in the Middle East $12,000 per month


MIDDLE EAST

201320122011 2014

1.0

1.5

2.0

2.5


2.22

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