Yagya Ahuja, CEO of Global Energy Talent, predicts that in the next decade or two Indians are going to be predominant in the global energy workforce, particularly in white collar technical jobs in upstream areas. He says there are several enabling factors for this to happen, but, as is usually the case with India, inevitable spoilers as well. Here he tells Pipeline why India will be the next talent hub.
HUMAN DEMAND for energy is insatiable, and unlikely to ever dip below the 55-60% range of our total energy requirements. Even the USA is not expected to drop below its 37% dependence on oil. As long as it can be found, we will continue to drill for it.
This relentless pursuit is spawning new discoveries every year, many in non traditional geographies and in difficult to access locations, like the deep sea bed or the Arctic. The increase in global exploration and production activities, coupled with the increase in the difficulty of extraction has fuelled an increase in the demand for qualified personnel.
But there lies the rub – there just isn’t enough qualified manpower to service this growing demand. Different analysts have differing estimates but broadly agree that currently there is a 40% global shortage of petro-engineers and geo-scientists; and a 30% worldwide shortage of technical workers, such as drillers and loggers.
This situation will be exacerbated further by the fact that the energy industry is populated mostly by workers in their 40s and 50s. This is particularly true in the North America and Europe, which are expected to lose a third of their workforce by 2012 through attrition and retirement.
In fact, one study by the International Gas Union suggests that this year will be the last when the number of experienced oil and gas workers will be in excess of the number of inexperienced workers or new graduates in the energy workforce.
Great crew change
By 2018, the study goes on to say, those who are considered experienced today will simply no longer be in the workforce. This is the so-called “Great Crew Change” of the industry, a somewhat alarmist projection to outsiders, but one that the industry has already taken on board and is currently agonising over.
Though the manpower shortage is real, it is not uniformly distributed around the world. While there are large areas of deficit supply (North America, Europe, Russia), or the frontier producers such as Angola, Uganda and Ghana (where there never has been a reservoir of technically trained manpower); there are pockets of excess supply as well – Mexico, Indonesia, India and China. Of these, India is best positioned to reap the employment harvest, as we shall see.
Current Indian scenario
India is witnessing increased activity and investment in both upstream and downstream fields. Refineries are being announced, or under construction, while new discoveries in Rajasthan and the Krishna-Godavari basin have recently reached the production stage.
According to a 2006 study jointly conducted by the Petroleum Federation of India and Price Waterhouse Coopers, India produces about 400,000 to 500,000 engineering graduates every year; around 200,000 of these can be said to be graduates of disciplines directly relevant to the energy industry. But of this ample pool, barely 50% join the industry.
Further, the Society of Petroleum Engineers highlights declining enrolments in petroleum related courses in the west. As Asian demand increasingly sets the price for oil, and emerges as a major global refining region, demand for talent in the industry is set to skyrocket.
China and India produce up to 2500 and 2900 graduates in subjects applicable to the hydrocarbon industry like geosciences, petroleum engineering, refining etc. Given their English speaking advantages it is clear that India is set to do an IT in the Oil and Gas sector. However according to the Petrofed–PWC report not all of them join the industry or are absorbed by it.
The reasons for the low intake are varied; from the relatively small size of India’s E&P activities, the preponderance of the public sector in the industry, the readiness of other industries such as IT to absorb just any kind of engineering graduate, the attractiveness of other industries which do not have prolonged stints in the field, to the fact that Indian Oil Companies tend to have erratic recruitment policies where the intake tends to rise and fall in tandem with the price of crude.
Thus India is one of the few countries in the oil producing world where there is qualified manpower (albeit not the most experienced) available for the industry, but how does this translate into an advantage for India?
India’s manpower advantage
The “Great Crew Change” will have less of an impact on Indian ONG firms than on their overseas counterparts. Its effect will be felt more in public sector oil companies (particularly downstream oil marketing firms) than on private sector firms, which have a younger employee profile. And while E&P activities in India will continue to increase, it won’t be by as much as was originally expected by policy makers, given the dismal response to the eighth round of bidding of the NELP. On the demand side, things are going to run more or less as before.
On the supply side, India has a demographic dividend of sorts when it comes to engineering courses – demand for undergraduate and graduate seats far exceeds supply, unlike, for instance, in the United States (where there are less than a thousand geosciences and petro-engineering graduates every year).
Although many people in India gripe about slow growth in higher education and vocational training, the number of institutions catering to both streams is increasing.
India is producing more energy industry-friendly graduates than can be absorbed by the domestic industry. This is Indian manpower’s primary competitive advantage and the icing is provided by other attributes that are India-specific and well known, though strictly speaking, not unique to the energy industry.
- Familiarity with English
- Willingness and ability of Indian workers to work anywhere in the world
- The comparatively low cost of hiring Indian workers
These attributes give Indian energy professionals the edge over those from countries such as China and Indonesia, who also have excess manpower and technical education as good as, if not better than, India’s.
Lastly, but most crucial is timing. Just as the Millennium Bug of 2000 provided the impetus for Indian engineering’s grand entry into software, the Great Crew Change is our entry pass to the global energy industry.
Those who enter the industry today, or in the next two years, will be well placed to take positions of responsibility when the effects of the “crew change” begin to be felt in earnest, ten years hence. Whether a majority will be Indian or Chinese, only time will tell.
The spoilers
This discussion would not be complete without enumerating the factors that can spoil the impending party for India.
There is a bewildering lack of awareness among Indian graduates about the global oil and gas opportunity. Opinions differ on whether this is because of the traditionally domestic orientation of the Indian industry or whether this is a result of the almost total lack of synch between industry and academic institutions.
Be that as it may, if things continue the way they are, India will have missed the bus. Another factor that can cloud the horizon is the attractiveness of other industries such as IT and telecoms, which tend to pay better in the initial years of work.
This is exacerbated by negative imagery associated with the energy industry; namely the hardship postings, the sometimes dangerous work (the Deepwater Horizon disaster in the Gulf of Mexico looms large here) and environmental concerns (though India’s youth can hardly be accused of having a green conscience just yet).
But these issues are not insurmountable and the problem we face on the energy manpower front is not the lack of supply, but rather channeling the available supply to the right areas, in the right manner.
India is best positioned among all countries to be a major supplier of technically qualified and competent manpower to the global oil and gas industry, without compromising on national requirements. There are potential dampeners of course, but none that cannot be overcome. Whether events pan out as I have predicted in this article will only be evident in 2020 or so when we will have the luxury to look back with what else – 20/20 hindsight!
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