Doubts return over oil jobs

08.05.2015
Numbers applying for engineering courses in Norway this autumn are unchanged from 2014, but far fewer want to take petroleum-related subjects. Industry associations fear a repeat of the errors made after the last price slump in the late 1990s.
  • Alf Inge Molde and Tommy Ellingsen (photos)

Alanah Rochell (left), Johnny Phi Tran and Redwan Hassan Maalin

Tougher demands.
Arindam Guha (left), head of Nito’s student branch at the UiS, makes quick-frozen icecream with Beder Al Furati using liquid nitrogen. Both believe in a future in the petroleum industry, but accept that more effort will be needed to find a job.

 

The corridors in the University of Stavanger (UiS) buzz even more than usual when 2 500 upper secondary pupils across the local region visited to find what it has to offer them.

A bit of showmanship comes in handy on such occasions – and icecream, naturally.

“It only takes a few seconds,” explains Arindam Guha, who heads the student branch of the Norwegian Society of Engineers and Technologists (Nito) at the UiS.

He vigorously stirs the mix of cream, sugar and vanilla, while Beder Al Furati carefully pours on more liquid nitrogen. And the dish is ready in a flash.

Alanah Rochell, Redwan Hassan Maalin and Johnny Phi Tran have already decided that they want to be engineers.

While Rochell, who is already studying mathematical methods at the UiS, is primarily interested in civil engineering, the others – classmates at Sola upper secondary school – are considering computing and electrical engineering as well.

But not petroleum. “I’ve thought about it, but it’s in a downturn,” says Rochell, whose mother works at ConocoPhillips. The advice from home is that a commitment to oil and gas would be risky today.

Tran’s father works at Stavanger fabricator Rosenberg WorleyParsons, which is also experiencing cutbacks.

“I was very tempted by the oil industry in lower secondary school,” he says. “But I see on the news that it’s in slow decline, so a commitment there would be dubious.” 

 

Message

After nine months of one newspaper story after another on falling oil prices, cost cuts, layoffs, redundancies and declining investment, the message seems to have got through to tomorrow’s engineers – prospects for the petroleum sector are uncertain.

That is reflected in a survey conducted by pollster TNS Gallup for the Norwegian Oil and Gas Association. When asked whether they would recommend an oil-related education to somebody they cared about, 64 per cent of respondents said no, 30 per cent said yes and the rest were undecided.

Seven out of 10 people polled also expressed concern about the Norwegian economy and welfare state in the wake of the oil price slump. 

 

Worried

“Demolishing something is incredibly quick to do,” observes Lise L Randeberg, president of the Norwegian Society of Graduate Technical and Scientific Professionals (Tekna).

She has met a number of people who describe the mood in the industry as “sombre”, and is worried about the short-termism which prevails in many companies – reflected in the number of calls being received by union officials and lawyers.

But she nevertheless notes that the actual number of engineers out of work remains low. The Labour and Welfare Service (NAV) reported 4 948 unemployed engineers and ICT personnel in February, a 50 per cent rise over 12 months – but still only 1.9 per cent of this occupational group.

Randeberg is particularly concerned about the consequences this will have for recruitment to university-level technical studies in Norway.

Demand for such disciplines will remain high, she points out, and it takes five years to educate an engineer to MSc level. Much can happen in such a space of time.

“The companies must keep their nerve rather than pursuing aggressive downsizing,” she adds. Doing the latter makes it difficult to secure the necessary expertise later.

It also destroys the community itself ­– the people with ideas in their heads. Randeberg warns companies that making the youngest and oldest employees redundant reduces their diversity.

Norway’s power industry lost a whole generation in that way, and so did the IT business after the dot.com crisis. It could now be the oil sector’s turn, she fears.

In her view, the industry is repeating the mistake it made in the late 1990s when many jobs were shed and few people applied for petroleum-related studies because recruitment ceased.

“And the companies weren’t happy afterwards,” she emphasises. 

 

Changed

Guha clearly saw that times had changed during the Industry Day at the UiS in January. Many companies which had previously actively offered summer jobs now only wanted to show that they existed.

“One oil company said it might be interested in somebody in their fourth year with high average marks,” said Guha. “Nobody else had a hope.”

He is in his second year of petroleum geology studies. So is Al Furati, who reports that a number of fellow students have shifted to mechanical or civil engineering.

But he has decided to continue. “The oil price is fluctuating, but it’s always done that.” He checks the latest prices at least once a week.

Classmate Joakim Nesheim, who is already a qualified driller and has three years of experience from Ekofisk, hopes that a BSc and a good network will help when he starts job hunting again.

 

Drive

The Norwegian Oil and Gas Association has long spearheaded a drive to boost science studies and recruitment by the industry, and could report progress in recent years.

Figures from the education ministry show a 40 per cent rise in the main take-up of students for science and technology courses over the past four years. And offers of places for technological subjects in 2014 were up by 563 from the year before.

Thina Hagen, communications manager for working life at Norwegian Oil and Gas, is keenly awaiting the figures on applications for the next academic year. She expects to see a decline for petroleum-related subjects.

A relationship has previously existed between oil prices and applicant numbers at the Norwegian University of Science and Technology (NTNU) in Trondheim, with a time lag of one-two years.

These courses are difficult to get onto in any event, Hagen points out. The queue will simply become shorter.

“The level of activity we’ve seen in recent years – with big recruitment challenges, a huge pay spiral and the need to recruit foreign labour – has been unsustainable,” she emphasises.

Nevertheless, Hagen hopes applications for science and engineering studies remain high overall. That would benefit the oil business, Norwegian industry in general and the public sector.

According to the Industry Builders 2015 report from the International Research Institute of Stavanger (Iris), petroleum-related activities employed 186 000 people in Norway last year.

Petroleum engineers account for only a fraction of this group, with demand equally high for civil and mechanical engineers as well as IT experts and a number of other specialists.

Senior adviser Bjørn Vidar Lerøen at Norwegian Oil and Gas shares Randeberg’s concerns that the industry is downsizing too much and sending signals that it offers no future.

He is in close touch with the companies, and hears both operators and suppliers saying they are aware of the problem and working on it. But redundancies continue, particularly among young employees.

“They talk about a long-term view, but operate on the basis of ‘quarterly capitalism’,” complains Lerøen. “That tempts them to cut more than they should. But the industry mustn’t frighten young people away.” 

 

Topped

Statoil has topped the list of favoured employers among engineering students for a number of years, and has devoted substantial resources to securing future personnel and expertise.

At the same time, the Norwegian oil company wants to cut its costs – and reduce its workforce by 1 600-1 900 people.

 

Tone Rognstad

Cutting and recruiting.
Recruitment manager Tone Rognstad says that Statoil is giving priority to young recruits while cutting 1 600-1 900 jobs. Eighty new graduates will be hired this year.

 

Tone Rognstad, Statoil’s recruitment manager, appreciates that these two messages are not so easy to reconcile, but maintains that both are necessary.

“We’re making every effort to recruit young people, despite being in a restructuring phase,” she explains. “We must think long-term, and it takes years to develop the expertise we need. That’s entrenched at all levels here.”

Many of the company’s offshore workers are aged 50 and above. New fields, like Johan Sverdrup, will be operated for several decades to come. So it has a big need for new engineers and skilled workers.

Rognstad knows from experience that it is difficult to secure engineers in the 30-35 age range, and emphasises the importance of recruiting young people even in difficult times.

Statoil currently takes on 130 apprentices annually, compared with 170 three years ago. In addition come 300 students given summer jobs, which Rognstad describes as the most important recruitment channel. About 80 new graduates are hired on a permanent basis annually.

Asked whether apprentices and summer workers are to be regarded as normal recruitment, she explains that they are viewed as temporary staff.

“Both categories are key elements in Norway’s education system, which also makes it important for us to support them. We have a social responsibility, and thereby back the commitment to science studies and take on far more apprentices than we need ourselves.

 

Transferred

Aker Solutions is one of the Norwegian companies which has seen a dip in demand, particularly in the maintenance, modification and operations (MMO) market. So personnel were offered the chance last year to transfer to human resources company Frontica Advantage.

Lasting seven months, this solution was accepted by 500 employees – with 45 securing a new job, mostly outside the company. In addition, 400 consultants were shed and 40 workers made redundant.

The MMO business has not improved and new measures could be taken during 2015. But press head Anne Cecilie Lund-Andersen says demand for the company’s products and services remains robust. That applies particularly to the deepwater and subsea segments. The order backlog is NOK 48.3 billion, Lund-Andersen maintains that Aker Solutions is keen to hire new graduates, and that this becomes even more important when the level of activity falls. The company is still hiring apprentices, and had advertised a limited number of summer jobs.

“It’s not necessarily the case that recruitment to the industry becomes more challenging when market activity is down,” she maintains.

Given the complexity of Aker Solutions’ operations and the technology it works with, she believes that young engineers will still find it attractive to seek work there.

 

Alanah Rochell (left), Johnny Phi Tran and Redwan Hassan Maalin

But not petroleum.
Alanah Rochell (left), Johnny Phi Tran and Redwan Hassan Maalin believe a commitment to electrical, mechanical or civil engineering will be more secure than petroleum-related studies.