Ahmedabad: Locating quality professionals for exploration and production (E&P) business in India is proving to be as challenging a task for the companies as discovering oil and gas.
Anecdotally, the attrition rate has almost doubled in the past few years with multinational companies entering the Indian oil and gas sector and companies in West Asia luring professionals with higher compensation packages.
“We have rigs but few rigmen to run the show. Two years back, we had over 1,600 rigmen, today we are left with just 200,” says an official working with the biggest exploration company in India, the Oil & Natural Gas Corp. Ltd (ONGC).
The four main areas of E&P operations are in the field of geology, geophysics, reservoir engineering and drilling. “India needs about 20,000 personnel in these four areas, but the existing pool is just about 50% of the requirement,” says the ONGC official.
Bob Frith, president of Bangalore-based Shell Technology India Pvt. Ltd, agrees, saying: “We find recruitment in certain sub-surface disciplines difficult due to the fact that there are fewer students studying petroleum engineering in the IITs than, say, chemical engineering.” Shell Technology provides technical studies, projects and technical services for oil giant Shell Group.
The UK-based hydrocarbon major BG Plc.’s subsidiary in India, BG India, plans to invest a significant amount over the next five years to increase hydrocarbon recovery from its Panna Mukta and Tapti fields in western India. It is also finding hiring and retaining qualified manpower the biggest challenge.
“In the recent past, the attrition rate has almost doubled, primarily in the technical fields. Increasing competition with the increased number of multinationals entering the Indian oil and gas sector, aspirations for higher studies and lucrative compensation, especially from companies inthe Middle East, are the main reasons for employee turnover,” a spokesperson forBG said in an e-mail. BG India employs about 300.
India, the seventh-largest consumer of oil, is expected to soon emerge as the fourth-largest consumer after the US, China and Japan. It imports 80-90 million tonnes (mt) of oil and its dependence on imported oil has jumped from just 30% of its domestic demand in 1991 to 70% now. The total availability of domestic oil is only 32mt.
India has opened up its E&P sector in a big way to improve the domestic recovery of oil and gas. Under various rounds of its New Exploration Licensing Policy (Nelp), it has invited private players to explore hydrocarbons across varying geographies.
With just six of the 25 geological regions of the country being explored for hydrocarbons, the last round of Nelp VI saw government offer 55 exploration blocks. Sixty-five bids were received for 52 blocks.
Overall, 68 companies participated in the bidding process—36 foreign and 32 local firms. “These developments should create a demand for trained personnel in the E&P sector,” says David Nisbet, director, group communications, Cairn India, the Indian subsidiary of Cairn Energy Plc.
A recent report by investment bank Lehman Brothers estimates that the biggest E&P player in India’s private sector—Reliance Industries Ltd—is expected to pump in Rs1,20,000 crore over the next five years for its E&P business. ONGC too plans to invest over Rs82,000 crore between 2007 and 2012. All these have added to the demand for more personnel.
Till recently, about 100 E&P professionals used to quit ONGC each month to move to the private sector for fatter pay packets. This is because ONGC is constrained by the government salary norms and cannot match the private-sector salaries. It has approached the government seeking parity with the private players.
“Once we get the government nod for higher salaries, we would begin shopping people from private sector, even multinationals, in a big way. We are confident that many would come back. In fact, over 300 such professionals from the Middle East have expressed interest to join us,” says the ONGC official. Meanwhile, it is asking its retired personnel in the field of E&P to help it tide over the crisis.
The private sector alone is not fuelling the demand for personnel. Many professionals are taking up assignments in Africa and the troubled West Asia, areas where others do not want to tread.
Multinational companies operating in India feel that in the long run, lack of qualified manpower could have an adverse impact on the industry. “Although we have been able to recruit to meet our needs today, competition for E&P graduates and professionals may increase which may hinder growth,” says Shell’s Firth.