No quick fix for oil industry's skills gap

By Jane Merriman

LONDON (Reuters) - Shortages of engineers in the oil industry that have played a part in the rise in oil prices will take a generation to correct, the chief executive of oil services group Petrofac (PFC.L: Quote, Profile, Research, Stock Buzz) said on Tuesday.

"There are pockets in the industry where you have severe (skill) shortages and it's going to continue for a long time," Ayman Asfari said at the Reuters Global Energy Summit.

The oil industry is suffering a skills shortage because engineering lost out to other higher paying careers in the 1990s and 1980s, including in the high-tech and financial services industries.

"The commercial wisdom then was that this (oil) was a dying industry," said Asfari, whose company provides services to national, international and integrated oil companies and employs about 10,000 people around the world.

Petrofac floated on the London Stock Exchange in 2005 via an initial public offering.

Pay rates have now risen sharply to try to attract more people into the oil business, which has had to catch up with juicier pay rates elsewhere, particularly in the financial sector.

"At the time of our IPO (initial public offering), the most junior accountant on the due diligence team was charged to us at the rate we could charge a 20-year-experience process engineer," said Keith Roberts, Petrofac's chief financial officer, also speaking at the summit.

"That disparity has created a problem," Roberts said. "It's going to take a generation to turn this around."

CHALLENGING ENVIRONMENTS

The shortage of experienced engineers is cited as one reason for lack of investment in new oil production that has contributed to surge in oil prices this year to record highs above $135 a barrel.

Big international oil companies have struggled to get enough staff with the relevant skills and experience to go after oil in more challenging environments.

In contrast, big emerging economies such as China, India and the Middle East produce lots of engineers.

"China has been churning out about half a million engineers a year for a long, long time," Roberts said.

Graduates in the West have a lot more choices than they did 10-20 years ago, so compensation has to be such that it makes engineering careers in the oil business more attractive.

"So when someone graduates from university and as a trader here can make 50,000 pounds ($98,330), he's not going to travel to Africa for less than 100,000 pounds," Asfari said. "So if you compensate him enough you will get him."  Continued...