oil and gas global salary

OIL & GAS GLOBAL SALARYGUIDE 2013Global salaries and recruiting trends.

PEOPLE RESPONDED TO THE SURVEY

RESPONDENTS ARE EMPLOYERS IN THE INDUSTRY

RESPONDENTS WORK WITH A GLOBAL SUPER MAJOR

COUNTRIES WORLDWIDE REPRESENTED

DISCIPLINE AREAS COVERED

25,000+8,200+2,500+5324

THANK YOUWe would like to express our gratitude to all those organisations and individuals who participated in the collection of data for this years survey. More than 25,000 responded, which is approximately 74 per cent up on last year and this has once again ensured that we can produce an informative document to help support your business and employment decisions.

Disclaimer: The Oil & Gas Global Salary Guide 2013 is representative of a value added service to our clients and candidates. Whilst every care is taken in the collection and compilation of data, the survey is interpretive and indicative, not conclusive. Therefore information should be used as a guideline only and should not be reproduced in total or by section without written permission from the producers of this guide.

SURVEY SUMMARY

25,000+8,200+

2 A global perspective

Section one - salary information

6 Overview and salaries by country

7 Salaries by discipline area

8 Salaries by company type

9 Contractor day rates by region

Section two - industry benefits

12 Overview of benefits

13 Benefits by company type

14 Benefits by region

Section three - industry employment

17 Staffing levels

18 Diversity and movement of workforce

20 Experience and tenure

22 Employment mix

Section four - economic outlook

26 Industry outlook

27 Most significant issues

CONTENTSIt is with great delight that we introduce this years global oil and gas salary guide. This is the fourth year we have published the document and each year we have seen an increase in the number of respondents taking their time to give us such valuable information and insights into their world of work. This years survey saw more than 25,000 professionals and skilled employees in the oil and gas industry respond, giving us more than one million separate pieces of information to collate into findings. As with previous years, it is the trends and movements within the data that make for such interesting reading indeed every figure tells its own tale!

With so much data it can become a question of what to present and publish, however, we have tried to stay true to the goals that we set ourselves when first embarking on such a document. This was namely to produce some meaningful data on how salaries and remuneration change as we move around the world of work in the oil and gas industry. This is then complemented with some informed insights as to what industry events and activities are contributing to the outcomes. We hope you enjoy reading the document, and more importantly it is of assistance to you in your employment dealings.

2012 was a good year for many in the oil and gas world with an increase in salaries, benefits and conditions. The same cannot be said for too many other industries and it would not be stretching the truth to state that more wealth has been created in the oil and gas industry than any other over the last 12 months. With nearly every country around the world striving to secure its own energy future, either through exploration, increased production or developing infrastructure, demand for the oil and gas professional, in all its guises, was most definitely high.

Our headline figure for the average base salary has once again grown to now sit at $87,300*, showing an 8.5 per cent increase on the previous year. Such an increase now accounts for a 14 per cent rise in base salary in two years alone. That is significant for an industry employing some five million people worldwide.

There were numerous developments contributing to this rise through 2012, not least of which was a proliferation of non-conventional field developments. This was seen by many nations as the route to energy independence and saw a wave of hiring. Indeed many countries eagerly embarked on this path only to discover that the skills didnt exist, at least not in their own country. This was consequently, for some, their first steps onto the global recruitment market. The other change that this sector saw was an expansion into cities/regions previously untouched by the industry. The likes of Houston, Aberdeen and Perth are still important, just not as important as they were, it would seem.

There were some environmental challenges to overcome and for some countries or regions this was a bridge too far. (Development stalled and salaries with it, trends that are easily spotted within our data).

Despite the general upward trend there were headwinds to overcome. As the year came to a close the oil price edged slowly lower, reflecting continued negative sentiment around the general global economy, and the impact this may have. Most roads led back to Europe in this regard and their continuing debt issues weighed down consumer demand. This in turn impacted manufacturing output, most notably in China. The fragile nature of this scenario has dominated the economic backdrop, and appears likely to continue well into 2013. This said, confidence from those taking this survey has remained high and at least in the oil and gas world, forecasts are for continued optimism, albeit guarded.

We would like to take this opportunity to thank all of those individuals that gave up their valuable time to respond to this survey, once again allowing us to produce such a valuable document. We would also like to thank those people in our marketing departments for helping collate and design the guide. Lastly, but by no means least, we would like to thank our consultants and staff for their valuable insights which undoubtedly bring the document to life.

Matt Underhill, Managing Director, Hays Oil & Gas

Duncan Freer, Managing Director, Oil and Gas Job Search

*Respondents were asked to provide their base salary only in US dollars equivalent, converting

foreign currency into US dollars at the time of responding.

2013 Oil & Gas Salary Guide | 1

A GLOBAL PERSPECTIVE

BRAZILA long awaited round of field auctions announced, breathing life back into the market

UNITED STATESEnergy self-sufficiency now in sight for the US with extensive shale gas developments

NORTH SEAThe drain of talent to overseas markets intensifies skill shortages

2 | 2013 Oil & Gas Salary Guide

AUSTRALIAAustralia dominates the LNG market with a multitude of projects under construction

IRAQFlurry of hiring as a range of new mega-projects kick off

SOUTH KOREAKorean ship yards seek to monopolise vessel and rig fabrication work

EAST AFRICAEast Africa becomes the next big focus for oil and gas majors


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SECTION ONESALARY INFORMATIONPermanent salaries rose 8.5% over the last 12 months.


With almost 50 per cent of those responding experiencing an increase of 5 per cent or more to their salary, this was the second consecutive year of significant rises for the industry.


CHANGES TO SALARIES IN THE LAST 12 MONTHS

EXPECTED SALARY CHANGES IN THE NEXT 12 MONTHS

2013

2013

2012

2012

27.5%

32.4%

49.7%

49.5%

29.8%

30%

16.3%

16.6%

24%

20.9%

30.3%

29.7%

17.6%

15.7%

3.7%

4.2%

1.1%

1%

Increase more than 5%

Increase more than 10%

Increase up to 5%

Increase between 5-10%

Remain Static

Increase up to 5%

Decrease

Remain Static

Decrease

SALARY INFORMATIONSalaries


Once again we saw the average permanent salary for those in the oil and gas industry rise by a significant amount. On the back of last years 6 per cent rise, 2012 delivered another impressive increase in base pay of 8.5 per cent, rising to $87,300* as an average US dollar equivalent worldwide. There would be few industries with such a track record of growth over the last few years in what has been, in the most part, an uncertain economic environment.

While the headline growth is impressive, the individual country figures once again portray the numerous forces shaping remuneration in the industry. Be they issues stemming from politics, the environment, the economy or in some cases armed conflict, each countrys salary tells a story.

Overall, we have seen the recruitment industry working well to iron out the extreme variations in pay, with those at the top of the table seeing salaries plateau or in some cases ease slightly, and those at the bottom seeing higher demand for cheaper talent, which in turn raises salaries. As the markets continue to become more efficient, with national borders less restrictive to skilled migration, and the movement of people more prevalent, this is inevitably the outcome.

In general the year saw increases for most countries as the global energy industry remained buoyant. It is therefore more interesting to look at some of those that fell and speculate why. There were a number of locations that suffered from issues stemming from political fallout, Iran and Venezuela being the obvious standouts. The delay in auctions in Brazil saw a drop in their previously spiralling salaries (to some this would be a welcome respite). Some parts of Europe continued to suffer from the debt crisis with relatively flat demand, i.e. Spain; and in Poland the environmental lobby combined with a number of disappointing drilling campaigns put the brakes on shale gas developments and in turn local salaries.

At the top of this years table we once again see Australia and Norway. Both countries have limited skilled labour pools and significant workloads, the result is very high pay rates, although both would appear to have met some sort of ceiling. Completing the top five on local salaries, we also see New Zealand, Netherlands and Canada.

Where imported salaries are concerned, it is once again the frontiers of the industry that are pushing the upper limits of pay. Representing a mix of danger money and hardship allowance in these base salaries, we find Russias arctic exploration driving imported skills, and Chinas drive on non-conventional skills also pulling in experts on premium rates. Along with Australia, the Caribbean hub for oil and gas, Trinidad & Tobago, rounds off the top five importers by salary level.

The major headwind in the world economy in late 2012 was the slowdown in growth within the Chinese manufacturing sector. It is therefore somewhat surprising that their local and imported salary figures exhibit such growth. However, taking a closer look at the market this is clearly a reflection of their quest to become self reliant on energy in the future driving exploration and infrastructure development, than any immediate increase in domestic energy demand. Other countries showing big increases include Iraq, Nigeria, Thailand and Argentina. The first two reflect significant project demand; Argentina is playing catch up on the previous years sluggish growth; and Thailand is increasingly home to many oil and gas professionals on rotation on offshore facilities in South East Asia or North Western Australia.

In general the Asia Pacific countries have fared well in the year with Singapore, South Korea and Malaysia joining China in those with positive increases. Aside from the USA which saw a relatively flat year for remuneration (all be it at a high level) we did see increasing rates in Mexico and Colombia, two hot spots for the region.

As we forecast in 2011, Northern Europe also came through with increasing salaries reflecting a lack of skills to meet burgeoning demand. Demographic issues contributed to this shortage, as did a brain drain of professionals overseas, which continues to take its toll on the UK talent pool in particular. The relative low salary levels in the UK clearly contribute to this effect, and it will take further significant rises domestically before we see the trend reversing.

At the time of writing the oil price remained above $80 bbl and at this level we should see salaries continue to rise as we progress into and through 2013. This rise however will be modest and we would expect the increase to be somewhere in the bracket of 4 to 6 per cert. We also expect to see more flattening of the market as skills move around the world to alleviate pockets of acute demand, and employers move to those countries at the bottom of our tables to take advantage of lower cost levels.

*Respondents were asked to provide their base salary only in US dollars equivalent, converting foreign currency into US dollars at the time of responding.

ANNUAL SALARIES BY COUNTRY

Local average annual salary

Imported average annual salary

Algeria 45,200 92,400

Angola 53,700 108,700

Argentina 94,200 60,000

Australia 163,600 171,000

Azerbaijan 47,500 133,500

Bahrain N/A 92,200

Brazil 111,000 131,400

Brunei N/A 123,100

Canada 123,000 122,500

China 68,300 161,400

Colombia 81,700 106,900

Denmark 109,700 148,500

Egypt 41,900 118,500

France 92,800 107,400

Ghana 40,500 121,600

India 38,900 111,800

Indonesia 45,200 146,000

Iran 46,900 68,100

Iraq 47,200 124,500

Italy 69,000 84,600

Kazakhstan 41,900 117,200

Kuwait 114,400 79,700

Libya 42,200 82,800

Malaysia 47,200 130,200

Mexico 50,000 132,300

Netherlands 123,800 84,900

New Zealand 127,600 110,700

Nigeria 55,100 140,800

Norway 152,600 128,600

Oman 72,600 92,100

Pakistan 32,600 70,000

Papua New Guinea N/A 145,600

Philippines 35,600 170,000

Poland 42,500 139,600

Portugal 51,000 125,800

Qatar N/A 77,900

Romania 34,400 105,200

Russia 57,900 151,100

Saudi Arabia 86,500 81,000

Singapore 84,900 103,900

South Africa 75,300 93,100

South Korea 81,400 141,800

Spain 68,900 97,900

Sudan 31,100 59,800

Thailand 49,400 142,400

Trinidad and Tobago 66,200 168,800

Turkey 77,400 101,900

United Arab Emirates N/A 79,400

United Kingdom 93,400 93,100

United States of America 121,400 123,800

Venezuela 62,200 113,000

Vietnam 53,300 132,700

Yemen 35,100 97,300

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Breaking the data down into discipline areas and comparing against the previous years figures provides us an interesting insight into what has been driving the market.

Following the downturn of 2008, those projects put into development the following year were starting to make their way through to operational phases, and it is in both the downstream operations and upstream production management figures that we saw this effect both sets of figures climb, particularly in the more junior ranks, implying volume recruitment. Conversely, the disciplines associated with exploration were somewhat flat after sizeable rises in 2012, although high levels of production ensured it was a busy year in drilling.

In line with more project work coming through Final Investment Decision (FID), the core disciplines of electrical, mechanical, piping and process engineering all had a good year, making up for some lost ground in 2012. This was also mirrored in HSE and commissioning specifically in the more senior roles, where experienced managers of projects in these disciplines were hard to find.

When considering the various levels of seniority in employment, and in line with the previous section, salaries were up. However we saw the biggest increase in graduate salaries rising by more than 12 per cent to just under US$40,000 equivalent. For an industry that has historically under-invested in entry-level skills this is welcome news. At other levels, salaries for operators/technicians also saw rises of 9 per cent, as did the top end of the scale with base salaries in VP/Directors rising by the same amount.


ANNUAL SALARIES BY DISCIPLINE AREA

Operator/Technician Graduate Intermediate Senior

Manager Lead/ Principal VP/Director

Business Development/Commercial 53,500 35,600 48,900 65,500 100,900 184,300

Construction/Installation 58,700 46,400 57,200 80,600 124,000 191,400

Commissioning 62,000 47,400 53,300 96,700 139,600 N/A

Downstream Operations Management 59,300 42,800 53,600 74,900 103,900 174,600

Drilling 75,200 39,400 75,100 102,400 151,700 181,300

Electrical 59,600 37,100 50,800 73,100 98,000 N/A

Estimator/Cost Engineer N/A 38,100 51,700 68,500 103,800 N/A

Geoscience 58,500 43,400 58,800 101,800 144,500 230,000

Health, Safety and Environment (HSE) 55,000 39,900 58,100 76,900 107,500 148,500

Instrumentation, Controls & Automation 50,600 N/A 47,700 68,700 104,000 N/A

Logistics 57,800 34,300 40,200 70,200 85,200 114,500

Maintenance 54,100 41,100 47,400 87,700 108,600 N/A

Marine/Naval 62,700 41,100 55,300 87,900 112,800 142,200

Mechanical 53,700 38,900 54,100 75,600 108,300 158,500

Piping 49,400 34,100 43,100 68,900 104,800 N/A

Process (chemical) 54,900 38,600 52,200 81,200 117,300 166,100

Production Management 68,300 36,200 52,100 77,600 117,600 240,600

Project Controls 56,100 42,700 54,200 85,300 118,100 169,000

Quality Assurance/Quality Control (QA/QC) 51,300 40,000 52,400 76,300 102,400 123,200

Reservoir/Petroleum Engineering 51,800 37,500 66,300 96,800 124,100 153,300

Structural 52,800 34,500 51,100 68,400 101,200 191,700

Subsea/Pipelines 63,500 37,000 65,900 102,400 149,500 251,200

Supply Chain/Procurement 42,200 37,000 54,600 72,700 97,700 141,300

Technical Safety 55,300 31,900 50,400 75,600 110,500 142,400



This data is fascinating. With such a healthy oil price, it is no surprise that the operators are increasing salaries by about 12 per cent, however, it was a surprise to see the global super majors lagging their competition with only a 6 per cent rise.

This aside, we saw the largest rise at more than 16.7 per cent within the equipment manufacturers. There is some conjecture as to why this is happening, however, it is probably no coincidence that this industry was the least well paid of the company types surveyed in 2011. It is only now after a couple of years of positive revenue that they are starting to claw back some of the lost ground in what they can afford to pay their workforce. We have also seen technological demands in the industry

accelerating at a faster rate than at any point in history. Much of the onus for meeting these demands rests with those in this sector and this in turn is driving talent needs and the salaries needed to recruit effectively.

The other under achievers historically in terms of salaries are the service contractors, and these companies also saw a good return in 2012 with an increase of 11 per cent.

In terms of the magnitude of the base salaries by company type, global super majors and other operators continue to lead the market as we would expect, however the relative levels between these two groups makes for some interesting reading in itself. As is evident big is not always best.

ANNUAL SALARIES BY COMPANY TYPE

Operator/Technician Graduate Intermediate Senior


Consultancy 56,100 36,100 50,600 82,600 119,300 162,500

Contractor 68,800 40,800 53,100 72,000 107,300 181,700

EPCM 57,000 48,400 54,800 82,000 126,300 172,000

Equipment Manufacture & Supply 50,400 30,700 50,600 61,700 85,500 166,200

Global Super Major 76,800 55,200 71,900 103,900 131,700 252,100

Oil Field Services 53,400 37,900 49,300 70,700 98,300 166,500

Operator 58,000 48,800 75,000 105,900 153,800 244,000

YEARLY SALARY CHANGES BY COMPANY TYPE

+6.4%

+11%

+8.4%

+16.7%

+5.6%

+9.1%

+11.8%

Consultancy

Contractor

EPCM

Equipment Manufacture & Supply

Global Super Major

Oil Field Services

Operator

2013 $96,000

2013 $83,000

2013 $98,900

2013 $71,900

2013 $107,700

2013 $73,400

2013 $115,500

2012 $90,200

2012 $74,800

2012 $91,200

2012 $61,600

2012 $102,000

2012 $67,300

2012 $103,300


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Our data shows healthy rises in day rates for most disciplines across all levels. The operator/technician level saw some of the largest rises and at these lower levels this implies volume hiring with plenty of project work available. As highlighted in this report it is the construction/installation companies along with the large EPCMs that have most need for contractors, and with a wave of new facilities now being built and coming through design we would expect the operator/technician rates to continue rising.

The other significant rise was in the manager/lead/principal level, particularly in East/South Africa and North Asia. The latter region saw good rises across all levels for contractor rates being led in the most part by large engineering firms out of South Korea (with China not far behind). Constructing and fabricating FPSOs, vessels, and large scale subsea infrastructure, the need for senior engineering talent is driving up rates, and also saw them elevated to the top of the table for importing talent (see table on page 6).

Background for this section

Only where the sample size is large enough have we listed figures in these tables. Where not enough responses were received, entries are returned as N/A.

Permanent staff salaries are the figures returned by respondents as their base salary in US dollar equivalent figures (respondents were asked to convert their salary into US dollars using xe.com at the time of responding) excluding one-off bonuses, pension, share options and other non-cash benefits, for those working on a yearly payroll. Those on a daily payroll are extracted and listed separately.

The average salaries listed under local labour are representative of respondents based in their country of origin. Salaries listed under imported labour are representative of those who are working in that country but originate from another.

Contractor rates are listed as US dollar equivalent day rates as listed by respondents.

Notes: EPCM - Engineering, procurement and construction management; HSE - Health, safety and environment; QA/QC - Quality assurance/quality control.

CONTRACTOR DAY RATES BY REGION

Operator/Technician Intermediate Senior


Northern Europe 430 490 720 850 1,130

Western Europe 390 360 550 770 940

Eastern Europe 300 250 340 460 N/A

CIS 350 440 580 830 880

Middle East 250 320 400 610 1,000

North Africa 310 300 440 560 N/A

West Africa 320 350 610 750 N/A

East/South Africa 310 270 450 820 790

South East Asia 330 320 450 750 1,060

North East Asia 240 340 630 940 1,260

Australasia 690 700 940 1,330 1,590

North America 420 490 760 840 1,110

South America 340 320 480 630 N/A

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SECTION TWOINDUSTRY BENEFITSBonuses account for rise in benefits.


The rise in bonuses continues and now represents the dominant mechanism by which companies attract and retain their talent.


5 LARGEST INCREASES IN BENEFITS Value of the benefit as a percentage of the overall package

2013 2012 IncreaseBonuses 5.80% 4.78% 21%

Health Plan 2.90% 2.59% 12%

Home leave allowance/flights 2.30% 2.00% 15%

Hardship 1.50% 1.26% 19%

Housing 3.40% 3.13% 9%


INDUSTRY BENEFITSOverview of industry benefits

The significant figure in our data here is that the number of people not receiving benefits has once again dropped, this year to just under 35 per cent. We know from our own activities that benefits and allowances are a vital part of recruitment in the industry, where tailoring to the individual, the project and the business are increasingly commonplace. In this way companies are able to engage far more with the individual they are seeking to employ and retention rates are bolstered. To some, the fact that 35 per cent do not receive any benefits is still incredible.

The main mechanism by which employers are engaging with candidates is through bonuses and this is where we have seen the largest growth, rising 7.8 per cent since 2011 to a total of 42.8 per cent of our respondents receiving some sort of bonus. Healthcare and home leave allowances were the two other movers in 2012 rising 3.16 per cent and 2.56 per cent respectively.

In terms of what these benefits were worth to individuals there was not a great deal of change from 2011. Tax assistance rose slightly as a percentage of what it is worth, however, slightly fewer were receiving it, so it has not made much of an impression on the overall remuneration pool.

Breaking down the data into company types we see a similar pattern across all sectors. The exceptions included a jump in healthcare provision within equipment manufacturers and global super majors, along with home leave allowance showing a small increase across the board.

Background: The bar chart shows two figures related to benefits that employees in the oil and gas industry receive. The first figure represents the percentage of respondents that receive that particular benefit, i.e. 42.8% of respondents receive some sort of bonus. The second figure represents the value of that benefit stated as a percentage of their overall package for those that receive it, which in the case of bonuses is 13.8%.

13.8%

16.5%

10.2%

16.1%

12.7%

12.1%

10.8%

12.0%

10.8%

14.4%

10.2%

12.6%

17.9%

17.5%

12.9%

42.8%

10.4%

7.5%

6.7%

9.5%

14.3%

18.9%

6.7%

26%

7.8%

19.1%

10.8%

19.2%

15.1%

18.2%

34.6%

Bonuses

Hardship allowance

Commission

Hazardous danger pay

Tax Assistance

Meal allowance

Pension

Share scheme

Health Plan

Schooling

Car/Transport/Petrol

Training

Housing

Overtime

Home leave allowance/flights

No Benefits

Percentage that receive the benefit

Average percentage of their total package

OVERVIEW OF INDUSTRY BENEFITS


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ENEF

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INDUSTRY BENEFITSCompany benefits

Almost 65 per cent of the respondents receive some benefit or allowance above their base pay, the highest rate of participation since the survey was launched four years ago.

TOP BENEFITS BY COMPANY TYPE

Overtime17%

Meal allowance13%

Home leave allowance/flights19%


Housing19%

Car/Transport/Petrol23%



No Benefits

No Benefits

No Benefits

No Benefits

39%

30%

30%

38%

Health Plan23%

Pension22%

Pension24%

Pension15%


Housing16%

Housing20%

Housing16%


Health Plan28%

Health Plan29%

Health Plan22%

Bonuses

Bonuses

Bonuses

Bonuses

35%

42%

43%

33%

EPCM/CONTRACTOR

EQUIPMENT MANUFACTURER & SUPPLY

GLOBAL SUPER MAJOR/OPERATOR

OILFIELD SERVICES/CONSULTANCY

Background: Graphs here show the top benefits by company type and the percentage of people who receive them.


INDUSTRY BENEFITSRegional benefits

TOP BENEFITS BY REGION

Overtime

Meal allowance


9%

19%

Meal allowance14%


Housing


11%

24%

Housing17%

No Benefits

No Benefits

No Benefits

No Benefits

36%

43%

26%

40%

Pension

Health Plan

Pension19%

27%

29%

Pension12%



Housing21%

10%

22%

Home leave allowance/flights19%Health Plan


Health Plan25%

12%

24%

Health Plan20%

Bonuses

Bonuses

Bonuses

Bonuses

37%

33%

43%

30%

AFRICA

AUSTRALASIA

ASIA

COMMONWEALTH OF INDEPENDENT STATES

As with previous years Asia remains the region in which more allowances and benefits are paid out as a percentage of the overall package than any other region. The Middle East is not far behind, with Africa and South America next. Europe and North America continue to weight their salaries towards basic salary and consequently benefits are relatively light in comparison.

In terms of regional differences we identified a number of interesting patterns. In South America health plans are given to far more employees than any other region. They also pay out a high proportion of meal allowances, at a level not seen elsewhere. In Asia there is a distinct absence of pension payments, as well as overtime. This was offset by having the highest payments of bonuses.

Whilst the Middle East and Asia continue to deliver higher levels of benefits across most categories, this is in the most part offset by lower basic salaries. Indeed the inter relationship between base salary and benefits should not be ignored when considering regional differences in overall remuneration. Perhaps even more of a factor for some regions is the level of tax on gross pay, and this is where the majority of the Middle East clearly plays its trump card, having a zero tax on earnings.

Background: Graphs here and overleaf show the top benefits by region and the percentage of people who receive them. CIS includes Russia and the former Soviet Republics.


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INDUSTRY BENEFITSRegional benefits

Overtime9%

Overtime11%

Overtime18%

Meal allowance24%



Housing29%


No Benefits

No Benefits

No Benefits

No Benefits

49%

34%

27%

25%

Pension22%

Pension22%

Health Plan24%

Pension21%

Meal allowance7%

Training10%


Housing13%

Health Plan19%

Health Plan35%


Health Plan39%

Bonuses

Bonuses

Bonuses

Bonuses

30%

37%

40%

39%

EUROPE

NORTH AMERICA

MIDDLE EAST

SOUTH AMERICA

TOP BENEFITS BY REGION

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SECTION THREEINDUSTRY EMPLOYMENTConfidence remains high with almost a quarter of employers expecting salaries to rise by 10 per cent or more in the next year.



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INDUSTRY EMPLOYMENTStaffing levels

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Confidence levels in the industry on staffing demand remains high, in line with rising salary costs. However, the level has come off from 2012 albeit only slightly. Through the latter part of 2011 and early 2012 European debt worries dominated business confidence. As the year progressed the possibility of serious financial melt-down in Europe receded and the markets became similarly afflicted with concern for the downturn in growth within China, an economy that has helped to prop up global activity for the last few years. This concern is having an impact on the wider economy, however, less so in the oil and gas

world. Energy demand continues to edge up and demand for skills continue to outstrip supply in many regions.

The contractor base in the industry has remained relatively static since 2011. We also see the use of contractors has continued to predominate in the construction and installation disciplines. However, looking ahead the market does not have the same confidence as last year that this contract base will increase. While it is still high, more of our sample believes contractor numbers will remain static.

Interestingly, the use of expats appears to be falling, with more than 20 per cent of those responding stating that their company did not employ people on an expat basis. This is very much in line with the increasing trend to localise the workforce. The level of those expecting the number of expatriates to increase remains stubbornly high however. This was the same in 2011, despite this years data showing a contraction in expat use contradicting that forecast.

CONFIDENCE THAT STAFFING LEVELS WILL CHANGE IN THE NEXT 12 MONTHS

PERCENTAGE OF STAFF EMPLOYED ON A TEMPORARY OR CONTRACT ASSIGNMENT

PERCENTAGE OF WORKFORCE EMPLOYED AS AN EXPAT

DISCIPLINE AREAS IN WHICH CONTRACTORS ARE EMPLOYED IN OIL AND GAS

Ops, Maintenance & Production

Petrochemicals

Project Controls

HSE & QAQC

Geoscience & Petroleum Engineering

Equipment & Supply

Engineering & Design

Drilling & Well Delivery

Subsea/Pipelines

48.3% 38.8% 12.9%

39.5% 35.7% 24.8%

43.7% 45.5% 10.8%

46.5% 38.3% 15.2%

30.5% 44% 25.5%

37.6% 42.7% 19.7%

40% 43.7% 16.3%

32.8% 41.7% 25.5%

36.1% 45.3% 18.6%

Always Sometimes Never

EXPECTATION THAT CONTRACTOR LEVELS WILL CHANGE IN THE NEXT 12 MONTHS

EXPECTATION THAT EXPAT LEVELS WILL CHANGE IN THE NEXT 12 MONTHS

39.6%Increase

43.4%Increase

44.3%Remain the same

48.5%Remain the same

16.1%Decrease

8.1%Decrease

Remain static None

None

22.9% 12.5%

21.1%

Increase between 5-10% Between 5-20%

Between 5-10%

23.9% 29.7%

22.8%

Decrease5.2%

Increase up to 5% Up to 5%

Up to 5%

23.2% 18.9%

20.1%

Increase more than 10% More than 20%

More than 10%

24.8% 38.9%

36%


INDUSTRY EMPLOYMENTDiversity & movement of workforce

Disappointingly we didnt find an increase in the number of women working in the industry. With skill shortages as they are this appears to be the ideal time to take advantage of what should be a sizeable proportion of the workforce, unfortunately it appears an opportunity missed. Regionally the Americas are faring better than other regions, as the only two continents with more than 10 per cent of female workers. The Middle East, Africa and Asia are once again at the lower end of the scale.

The spread of discipline splits amongst women in the industry remains the same as last year, with Business Development, Project

Controls and HSE as the largest sectors of employment for females.

There has been a small aging of the working population within our sample and this is in line with the years of experience as documented in the figure below. While overall the global data does not show any significant issues with demographics, the same cannot be said of specific markets. The market with the most acute issue is the US with more than 55 per cent of respondents over 50 years of age. We believe that this is already driving the high demand for talent in the US and Canada, that would appear to exceed current project and production needs.

In line with our own experience, the number of oil and gas professionals working overseas continues to increase. In 2012 this percentage has risen to 47.4 per cent, up from the previous years figure of 42.6 per cent. This trend is due to a number of factors, primarily the promotion of inward skilled migration by nations governments that facilitates the growth. With skill shortages as they are, we do not expect it will be long before there are more oil and gas professionals overseas than there are in their own home countries.

9.1%

5.9%

6.5%

22.4%

5.6%

22.9%

8.3%

17.6%

8.3%

12.0%

3.1%

6.8%

10.2%

6.6%

1.3%

10.3%

3.9%

0.5%

90.9%

2.6%

93.5%

12.4%

94.4%

16.2%

91.7%

14.0%

91.7%

13.6%

96.9%

12.0%

89.8%

11.3%

6.1%

89.7%

9.3%

2.5%

Australasia

24 and under

Asia

25-29

Africa

30-34

Europe

35-39

CIS

40-44

Middle East

45-49

North America

50-54

60-64

South America

55-59

65 and over

Male

Male

Female

FemaleREGIONAL GENDER DIFFERENCES

DIVERSITY OF STAFF AGE DEMOGRAPHICS

WORKING AT HOME OR ABROAD

52.6%Home

47.4%Abroad


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INDUSTRY EMPLOYMENTDiversity & movement of workforce

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Of all the sections in this report, this one gives us the most insight into the markets around the world and how they are faring. High levels of project work, lack of home grown talent and drives on localising the workforce can all be identified within these figures.

In Australia, the overall percentage of imports dropped, however we also know that the workforce grew at a significant rate, and this demand was filled with Australian nationals. The proportion of Australian nationals working at home once again grew for the third year running. The Middle East continues to be the

largest importer of skills, although localisation of staff levels did manage to make a small dent in the levels of those imported. In Asia there was a significant increase in local participation, again we believe due to those returning home to higher rates of pay.

Moving the other way we saw something of an exodus of foreign nationals from Europe, most of which were heading east to chase the dollars. Africa continued to increase its imports as did South America as wages increased.

In terms of nationals working overseas (see table below) the figures support three big movers in the export of staff. These include; Asian nationals, primarily from the sub-continent, but also the Philippines and China; Africa, with nationals mostly heading north to Europe; and more recently as the data shows South Americans heading to both Europe and North America.

49.4%

28.8%

50.6%

71.2%

18.2% 81.8%

48.1% 51.9%

35.6% 64.4%

23.8% 76.2%

14.2% 85.8%

43.2% 56.8%

58.9% 41.1%

34.7% 65.3%

86.4% 13.6%

23.5% 76.5%

27.8% 72.2%

31.5% 68.5%

33.0% 67.0%

42.5% 57.5%

Australasia

Australasia

Asia

Asia

Africa

Africa

Europe

Europe

CIS

CIS

Middle East

Middle East

North America

North America

South America

South America

Imported labour

Working overseas

Local labour

Working in home country

IMPORTED WORKFORCE VERSUS LOCAL WORKFORCE

WORKING OVERSEAS VERSUS WORKING IN HOME COUNTRY

MOVEMENT OF THE WORKFORCE


INDUSTRY EMPLOYMENTExperience and tenure

In 2012 we reported a large influx of new and experienced hires into the oil and gas industry. This saw record numbers of people in the zero to four years experience bracket. This year these numbers remain high, although some have moved through into the following band with the net effect of increasing the experience levels across the whole sample. The changes, however, are relatively small and indicate a more steady state market than in previous years when the market was emerging from a downturn.

In terms of disciplines, the construction and project controls figures have both increased their average experience level. This would

suggest that the wave of projects coming through the industry has gone through its peak and the big flex in headcount (those with zero to four years experience) is behind us.

There was little change in most of the other disciplines, including those in the sub-surface areas.

Again we have seen only a small change in the tenure of respondents with a small increase. As the market settles into this particular cycle we would expect tenure to continue to increase, albeit gradually. Should the market turn down then this may well accelerate as last in: first out principles start to take hold.

Last year we started to measure where oil and gas professionals sought their new roles. To recruiters there are a number of useful observations that we can see derive from numbers. Firstly that traditional newspaper advertising continues to disappear as a source of job hunting. We also saw a small decline in those seeking work through internal company websites, or internal moves. On the increase was head hunting and the use of agencies. Job board use remains level at just over 15 per cent.

YEARS OF EXPERIENCE

OIL & GAS INDUSTRY

FOR SPECIFIC DISCIPLINE AREAS

20 + years10-19 years5-9 years0-4 years

Construction/Installation

Project Controls

Geoscience

Subsea/Pipelines

21.8%

27.1%

21.6%

21.8%

19.6%

25.1%

24.5%

25.1%

27.8%

23.7%

25.5%

23.4%

30.8%

24.1%

28.4%

29.7%

28.3%0-4 years

23.4%5-9 years

23.5%10-19 years

24.8%20+ years


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INDUSTRY EMPLOYMENTExperience and tenure

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Tenure edged up slightly from last years figures, reflecting a less volatile market but one which continued to drive hiring.

TIME IN CURRENT ROLE

SOURCE OF NEW EMPLOYMENT

2013

2012

24.6%Less than 1 year

26.0%Less than 1 year

29.2%1-2 years

25.0%1-2 years

24.7%3-5 years

28.7%3-5 years

13.7%6-10 years

12.0%6-10 years

7.8%10+ years

8.3%10+ years

Newspaper Company website Online job board Word of mouth

Head hunted Agency Internal move Other

6.1% 15.0%21.0%

16.0% 14.5%7.9% 7.1%

12.4%


INDUSTRY EMPLOYMENTEmployment mix

In last years data we saw most companies (outside of the constructors/installers) changing their mix of employment to include more permanent staff, at the expense of contractors (direct or through an agency). This was appropriate for a market where confidence was sky high.

This year, as confidence has come off its highs, weve seen the trend reverse with employers seeking more flexibility in their workforce. The most pronounced shift occurred within the super majors and operators, closely followed by the consultancies.

EMPLOYMENT MIX BY COMPANY TYPE

PERCENTAGE CHANGE FROM 2012 to 2013

Contractors

Consultancy

Oil Field Services

Equipment Manufacturer & Supplier

EPCM

Operators

Global Super Major

47.1%

42.9%

60.9%

80.7%

53.1%

59.5%

52.6%

2.5%

3.3%

3.5%

2.0%

1.6%

1.4%

1.5%

26.4%

27.4%

20.2%

10.3%

24.6%

14.9%

14.2%

24.0%

26.4%

15.4%

7.0%

20.7%

24.2%

31.7%

Permanent Permanent/Part-Time

Contracted Direct

Contracted through agency

5.1% 5.9%

-0.6% -1.3%

2.4% 0.1%

-6.9% -4.7%

GLOBAL SUPER MAJOR OPERATORS


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INDUSTRY EMPLOYMENTEmployment mix

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1.6%

0.0%

0.4%

0.3%

4.8%

0.0%

-0.9%

-0.1%

-1.6%

-0.8%

1.4%

0.4%

1.2%

-0.5%

1.3%

-3.1%

0.5%

-1.5%

1.8%

-5.3%

EPCM

OIL FIELD SERVICES

CONTRACTORS

EQUIPMENT MANUFACTURER & SUPPLIER

CONSULTANCY

Most of last years gains in permanent hires were reversed this year as economic concern saw a move towards more flexible employment solutions.

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SECTION FOURECONOMIC OUTLOOKConfidence was delicately balanced in the year with high profits from a buoyant oil price offset by concerns over European debt and a slowdown in Chinas growth.


Skill shortages are now by far the major concern for employers in the industry.


EMPLOYERS CONCERNS IN THE CURRENT EMPLOYMENT MARKET

37.3%Skills shortages

7.2%Immigration/overseas visa program

25.3%Economic instability

8.1%Security/safety caused by social unrest

11.8%Environmental concerns

1.6%Other

8.7%Safety regulations


ECONOMIC OUTLOOKIndustry outlook

These figures remain largely in line with 2011, which represents high levels of confidence in comparison to figures given in other years. This is a pleasing result for those involved in talent acquisition, showing that the market still has a great deal to offer both employers and job seekers alike. In 2008, before the economic downturn, the skill shortages were acute in a few select places. This caused salaries to spiral upwards, jeopardising many of the projects that caused the demand in the first place.

This cycle has seen widespread demand, but without the critical spikes. This said it is without doubt that investment rates of return are being tested in such locations as Australia and Brazil, however, we are yet to see this stall project development.

The key factors affecting the market in late 2012 included, on the positive side, a high oil price, driven by growing energy demand. This is giving operators plenty of revenue to drive

development. Balancing this positive sentiment is concern around Chinas growth and whether Europe will re-emerge as the trigger to create a meltdown. For now both forces are balancing each other and producing a steady, buoyant market. It would, however, not take much to push the markets out of kilter either way, so it is with some interest that we enter 2013. Whether or not the current positive feeling turns to trepidation we will have to wait and see.

EMPLOYERS CONFIDENCE IN THE CURRENT EMPLOYMENT MARKET

2013

2012

26.0%Extremely positive

26.7%Extremely positive

47.8%Positive

46.8%Positive

20.7%Neutral

20.8%Neutral

5.5%Negative

5.7%Negative

EMPLOYERS GEOGRAPHICAL FOCUS OVER THE NEXT 12 MONTHS OUTSIDE THEIR OWN REGIONAL AREA

Middle East Europe CIS Australasia

Africa Asia South America North America

16.6% 13.4% 13.3%

12.2% 10.4% 9.5% 8.3%

16.3%


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ECONOMIC OUTLOOKMost significant issues

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In terms of the worries for employers in the industry, it is clear that skill shortages are their number one concern. This is a change from last year when this issue was on a par with those around the economy, and would indicate that the pendulum continues to swing towards a candidate-led market.

Economic worries were conversely waning as were those concerns around environmental factors and safety. Social unrest and immigration issues remain steady and at relatively low levels.

EMPLOYERS CONFIDENCE IN THE CURRENT EMPLOYMENT MARKET

Middle East

North America

South America

Europe

CIS

Australasia

Asia

Africa

All 37.3% 25.3% 11.8% 8.7% 7.2% 8.1%

Skills shortages

Economic instability

Environmental Concerns

Safety regulations

Immigration/overseas visa program

Security/Safety caused by social unrest

Other


PEOPLE PLACED INTO TEMPORARY ASSIGNMENTS LAST YEAR

PERMANENT CANDIDATES PLACED LAST YEAR

CONSULTANTS WORLDWIDE

OFFICES WORLDWIDE

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