Mr. Utpal Ghosh, CEO & President, UPES

These are challenging times globally for the oil and gas sector. Competition, declining oil prices and glutted energy demand are significant factors affecting this industry. Companies are downsizing as volatility and uncertainty in the sector seem to the new norm. It is time for the leadership team to reassess the strategic direction their organization should take and how to sustain and stay profitable. Some strategies that may help leadership team include- look for their strength areas and become agile enough to adapt to changing market conditions; avoid illogical cost cuttings that can leave an organization ill prepared for future conditions; focus on exploiting new technologies to innovate and reduce operational costs. As the volatile conditions in the oil and gas sector continue every organization will be challenged in various ways and leadership teams will have to prepare themselves for quick turnarounds.

Despite the drop in crude prices, huge spending cuts and thousands of job losses, there are reports of the world’s top oil and gas companies gearing up to produce more in the near future. Top oil companies continue to struggle with declining revenues after more than halving of prices since mid-2014. However, their production has persistently grown as projects sanctioned earlier in the decade come on line. Some analysts estimate that overall production at the world’s seven biggest oil and gas companies is set to rise by about 9 per cent between 2015 and 2018. There is expected to be slow and steady recovery in prices, driven by global supply-and-demand dynamics. Demand for transportation fuel caused by growth in developing economies will be responsible for sustaining global oil demand leading to minimal growth in some markets.

According to recent reports, a number of government reforms are in process that aims to unlock $40 billion of oil and gas output by simplifying licensing rules and offering price incentives to recover gas from difficult offshore fields. Crude prices are expected to rise in future and the new set of reforms by the Indian government will surely provide a much needed shot in the arm to development of hydrocarbon resources.

The oil and gas industry is changing constantly, and it is difficult for human resource managers to sketch their strategies and modify them in line with the dynamic business environment. At a time when HR training is witnessing phenomenal changes the world over, it is imperative that Indian oil and gas companies reinvent their human resource strategies to meet the challenges facing the sector and prepare employees for the exciting future that awaits the energy space. However, adapting to changes in the oil and gas sector is not easy because of long investment and project lifecycles. According to an EY study, the industry requires around 25,000 additional professionals in next five years due to business growth and retirement or attrition in the sector. Aging workforce in this sector is also a cause of concern as around 50% employees have more than 20 years of experience and the majority is due to retire in the next 5-10 years.

The current downturn in the oil and gas industry is a great opportunity for training, retraining and reskilling the workforce. This would arrest the decline in the talent pool and make the sector more attractive for the younger generation looking to build careers in this critical industry. There is an urgent need to reinvent HR strategy so as to make it attractive for existing and future employees. Oil and gas companies could create and implement relevant training and skill development programmes that would not only help retain the current workforce but also rope in fresh talent. This would enrich the oil and gas companies and result in consolidation of the industry. Skill India, Make in India and Digital India are great ideas and they need to be converted to outcomes and actions. Considering I represent an academic institution, Skill India for the oil and gas sector is close to my heart. There must be close engagements between the industry and academia to ensure graduates are more employable. The focus here, in addition to hard technical skills, should also be on soft skills – communication – the ability to lead and take people along. Oil and gas companies also need to establish a core team of people to decide on human resource strategies that will set off an avalanche of goal-oriented ideas. The idea is to get this core together and initiate ‘action learning programmes’ at every level of the organisation. We need to have the entire organisation engaged in the fabric of learning and development.