ilo - working conditions of contract workers in the oil and gas industries

7/22/2019 ILO - Working Conditions of Contract Workers in the Oil and Gas Industries

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InternationalLabourOfficeGeneva

WorkingPaperN o.276

Energy

Workingcondit ionsofcontractworkersintheoilandgasindustries I a nGraham

110B09/214 englap.4

SectoralActivit ies Depar tment


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W P.276

SECTORALACTIVITIESP R O G R A M M E

WorkingPaper

Workingconditionsof contractworkers inth eoilandgasindustries

byIanGraham

Workingpapersarepreliminarydocumentscirculatedtostimulatediscussionandobtaincomments

InternationalLabourOfficeGeneva2010


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CopyrightInternationalLabourOrganization2010 Firstpublished2010Publicationsfth enternationalabourOfficenjoyopyrightnderrotocol ftheUniversalCopyright Convention.Nevertheless,shortexcerptsfromthemmaybereproducedwithoutauthorization,onconditionthatth esourceisindicated.Fo rrightsof reproductionortranslation,applicationshouldbemadetoIL OPublications (Rightsndermissions),nternationalabourffice,H-1211eneva2,witzerland,rymail:[email protected]. TheInternationalLabourOfficewelcomessuchapplications.Libraries,nstitutionsndthersersegisteredwitheproductionightsrganizationsmaymakeopiesnaccordancewiththelicencesissuedtothemfo rthispurpose.Visitwww.iirro.orgtofindthereproductionrightsorganizationinyourcountry.Graham,IanWorkingconditionsofcontractworkersinth eoilan dgasindustries105 pp.ISBN:978-92-2-123827-0(print)ISBN:978-92-2-123828-7(Webpdf)InternationalLabourOffice.SectoralActivitiesDepartment

ILOCataloguinginPublicationData

ThedesignationsemployedinIL Opublications,whichareinconformitywithUnitedNationspractice,an dthepresentationfmaterialhereinootmplyhexpressionfan ypinionwhatsoevernheartftheInternationalLabourOfficeconcerningthelegaltatusofan ycountry,reaorterritoryorofitsauthorities,rconcerning t hedelimitationof itsfrontiers. Theresponsibilityfo ropinionsexpressedinsignedarticles,studiesan dothercontributionsrestssolelywiththeirauthors,ndpublicationdoesno tconstituteanendorsementbytheInternationalLabourOfficeoftheopinionsexpressedin them.Referencetonamesoffirmsndcommercialproductsndprocessesoe sno timplytheirendorsementbytheInternationalLabourOffice,an dan yfailuretomentionaparticularfirm,commercialproductorprocessisnotasignof disapproval. IL Opublicationsandelectronicproductsca nbeobtainedthroughmajorbooksellersorIL Olocalofficesinmanycountries,rirectromLOublications,nternationalabourffice,H-1211eneva2,witzerland.Cataloguesristsfnewublicationsrevailablereefhargeromheboveddress,rymail:[email protected]. Visitou rw ebsite:ilo.org/publns.

Printedby theInternationalLabourOffice,Geneva,Switzerland


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Preface Oilndasressentialomponentsfmodem,ndustrializedivilization;ssocietiesan deconomiesgrow,sodotheiroi lan dgasindustries.Theoilandgasindustries haveevolutionizedumanivesndmprovedurtandardfliving.hendustries'

productsconstitutebuildingblocksteverylevelofproductionan dconsumptioninke y sectorsofeconomicife.Atableupplyofoilndgassneededtoustaincontinueddevelopmentofou reconomies.Theoilan dga sindustriesarehighlycapitalized;muchofthemanualworkha seeneplacedbyutomation,butignificantpartsofoilndas operationstillel ynumannput.oundmployer-employeeelationsreherefore crucialtothestableproductionan dsupplyofoilan dgas.TheectoralctivitiesrogrammefhenternationalabourOfficeeldhe TripartiteMeetingonPromotingSocialDialoguean dGoodIndustrialRelationsfromOil an dGasExplorationan dProductiontoOilan dGasDistributioninGenevaon1-14M ay 2009.Themeetingadoptedase tofconclusionsthatrequesttheOfficetocarryoutfollow-

upctivities.histudywasommissionedinordertoulfilhemeeting'sonclusions.Theaimofthispaperistoexploresomepracticesan dproblemareasfo rimprovementin workingconditionsndoccupationalsafetyan dhealthintheoilandgasindustries.he paperasreparedyanraham,ndependentnergyournalist.esoecongratulatedfo rhisworkan dcontributiontotheimprovementofworkingconditionsin theoilndga sndustries.TheIL Ohopesthatthistudywillprovidenopportunityto considerhowworkingconditionsan doccupationalsafetyan dhealthca nbeimproved,in th einterestsofbothdecentworkan dgreaterprosperityof theindustries. ElizabethTinoco DirectorSectoralActivitiesDepartment(SECTOR)InternationalLabourOffice

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ContentsPage

Preface nListofabbreviations ii Introduction1 .ontractlabourin theoilan dgassector-A noverview

1.1.henatureofcontractwork1.2.ecentemploymenttrends 01.3.utureemploymentprospects 8

2.ages 72.1.ag eratesan dlabourcosts 72.2.ompositionofpay 22.3.inimum wages 3

3.orkorganizationan dworkingtime 33.1.or ktimepatterns 33.2.egalframeworks 6 3.3.orkorganizationan dgender 8

4.econcilingworkan dfamilylife 95.ccupationalsafetyan dhealth 25.1.ccupationalsafetyan dhealthan dworkingtime 25.2.afetyan dhealth performance-Operatorsan dcontractorscompared35.2.1.pstream performance-Worldwide 35.2.2.ownstreamperformance- InEurope 85.3.elicoptersafety 0

6.heroleofsocialdialogueinimprovingconditionsofwork 36.1.ipartitesocialdialogue 46.2.perator-contractordialogue 76.3.ialoguewithemploymentagencies 86.4.overnmentaction 96.5.ationalityan dlocalcontent 2

7.ummaryan dpossibleareasofactionand/orresearch 47.1.ummary 47.2.ossibleareasofactionand/orresearch 5 References 7

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AppendicesI .LOrequestforinformationon workingconditionsofcontractorsan dsubcontractorsintheoilan dgasindustries 75 II.radeunionnegotiatingguidelinesforcontractingout,outsourcingand/oragencylabour77 III.anguageoncontractinginglobalframeworkagreements(GFAs)betweentradeunions an dmultinationalcorporationsinth eoilan dgassector(selectedextracts)81IV .odelagreementon thedivisionof responsibilitiesbetweenoperatoran dcontractorcompaniesonmobilepetroleumstructureson theNorwegiancontinentalshelf83 V.harterbetweenRhodiaGroupan dAdeccoGroup 85 VI.emorandumof Understandingbetweencorporatemembersof theInternational ConfederationofPrivateEmploymentAgencies(CIETT)an dU NIGlobalUnion88 Sectoralworkingpapers 91


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Listo fabbreviations AIFllinjuryfrequencyA PImericanPetroleumInstitute APPEAustralianPetroleum Productionan dExplorationAssociation BBCritishBroadcastingCorporation CAODCanadianAssociationofOilwellDrillingContractorsCIETTnternationalConfederationofPrivateEmploymentAgencies CONCAWEilCompanies'EuropeanOrganizationforEnvironmentalan dHealth ProtectionCSBnitedStatesChemicalSafetyBoard Dieesenter-TradeUnionDepartmentofStatisticsan dSocio-economicStudies

ofBrazil E& Pxplorationan dproductionEIAnergyInformationAdministration EM FuropeanMetalworkers'FederationFA RatalaccidentrateGFAlobalframeworkagreementHSEealth,safetyan denvironmentLADCnternationalAssociationofDrillingContractorsLARCnternationalAgencyfo rResearchonCancerICEMnternationalFederationofhemical,Energy,Minean dGeneralWorkers'UnionsIEndustriEnergiUnion,Norway IE AnternationalEnergyAgency IFAnternationalframeworkagreement IM FnternationalMetalworkers'FederationIT FnternationalTransportWorkers'FederationLOorwegianConfederationofTradeUnions LTIFos ttimeinjuryfrequencyLWIFos tworkincidentfrequency M UAaritimeUnionofAustraliaNAOCigerianAgipOilCompanyNH OonfederationofNorwegianBusinessan dIndustryNUPENGationalUnionofPetroleuman dNaturalGasWorkers(Nigeria)OECDrganisationforEconomicCo-operationan d DevelopmentOGPnternationalAssociationofOil&GasProducersOLF orwegianOilIndustryAssociationWP-External-2010-07-0060-1-En.doc/v2 VI I


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OSHAccupationalafetyndHealthAdministrationfth eUnitedtatesDepartmentofLaborOWTUilfieldsWorkers'TradeUnion PENGASSANetroleuman dNaturalGasSeniorStaffAssociationofNigeriaPSAetroleumSafetyAuthorityNorwayR O G W UussianOilan dGasWorkers'Union ShelloyalDutchShellpic SPDChellPetroleum DevelopmentCompanyofNigeriaTRIRotalrecordableinjury rates UKC SnitedKingdomcontinentalshelf

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Int roduct ionContractingisntheincrease.Acrossllindustriesndservicessectors,th eus eofcontractan dagencylabourha ssoared.n2007,over95millionagencyworkers(infull-timequivalents)weremployedworldwide.ha twasmoreha nwiceheigureor 1997.heurnoverftheworld's2,000rivatemploymentgencieseached23 4

billionn2007-up eren tro mthereviousyearInternationalConfederationofPrivateEmploymentAgencies(CIETT),2009).Atth esametime,theoutsourcingoftaskstocontractoran dservicecompaniesha sgrownrapidly.Theoilan dga sindustriesarenoexceptiontothesetrends.Upstream,contractorfirmsaretworknxploration,rilling,roduction,onstruction,ransportndatering.Downstream,they haveabig presenceinth erefineries,whichtheyalsohelptoplan,build,equipan dmaintain.Individualcontractworkers,oftenhiredthroughspecializedorgeneral employmentagencies,areactivethroughoutthesector.Whattypesofworkdotheydo?Whatrethetrendsndchallengesacingthem?

Whataretheirpaylevels,an dhow aretheyset?H ow istheirworkingtimeorganized?C an theyreconciletheirworkwithfamilylife?Whatcanbedonetopromotetheirsafetyan d healthat work?H owca nsocialdialogueimprovetheirconditions? Researchonth eworkingconditionsofcontractorsan dsubcontractorsintheoilan d ga sndustrieswaspecificallyrequestedbytheTripartiteMeetingonPromotingocialDialoguean dGoodIndustrialRelationsfromOilan dG asExplorationan dProductionto Oilndasistribution,hichaseldnenevan1-14ay009,nhe conclusionsadoptedbythemeeting(ILO,2009a).Theterm"contractor"smprecise.tsmeaningca ndifferfromcountrytoountry

an dfromsectortosector.Tosomeextent,thisvariationreflectsth erangean dcomplexityofpresent-dayemploymentrelationships.heILO'sonstituentshavepaidconsiderableattentiontothatissueinrecentyears.Thosepointsapplytocontractlabourintheoilan d gasindustries,eventhoughtheconditionsthereareno taltogethertypical.Thespecificsofthissectorareexamined throughouttheworkingpaper.TheIL Othereforesentou tarequestforinformationtotheparticipants,an dalsotoawiderangefompaniesincludingperatorsndontractors),radenionsnd governments.aluablenformationasrovidedymployers'ndorkers'organizationsnustralia,cuador,orway,ussianederation,ndrinidadnd Tobago.heataontributedav eee nse dhroughouthisaper.heourcesindicatedeachtime,togetherwith"2009IL Osurveyresponse".AcompleteformoftherequestforinformationcanbefoundinAppendixI.Tohisnecdotalvidence,eav eddedataromtherourcesndthercountries,wherepossible.neachcase,th esourcean dyearareindicatedinparentheses,an dth edetailsaregivenintheReferencesattheen doftheworkingpaper.However,withthenotableexceptionofhealthan dsafetyperformanceigures,ompaniesntheectoran dtheirtradefederationsdonotappeartocollectdataondifferencesbetweenconditionsforoperatorsan dthoseforcontractors.Noraremostnationalan dinternationalstatistical servicescurrentlyabletoprovidedifferentiatedfiguresforcontractoran doperatorlabourconditionsinth esector.AnexceptionisStatisticsCanada,whichproducedaseriesof two- yearcomparativedataforpermanentan dtemporaryemployeesintheCanadianoilan dgas

extractionindustriesfor thisworkingpaper.Thiscontributionisgratefullyacknowledged. Thisworkingpapershould beseenasnomorethananinitialoverviewof thesubject.Giventh eshortageoforiginaldata,ithasbeendifficulttoestimateho wfarthepa yan d



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conditionsfcontractorsnheilndasndustriesifferromhosefoperating companiesorldwide.riginalieldesearchnhisopic,nd/ororeystematiccollectionofdataromompaniesndtradenions,ouldnooubtbe usefulutureactivity.Forheurposesfhisworkingaper,heer mcontractor"sefinedsnindividualororganizationperformingworkfortheoperators,followingverbalorwritten

agreement,while"subcontractor"istakentobesynonymouswith contractor .Theterms"contractworker"ndcontractabour"av eee nse dhroughoutheext.Casual worker"an d"casuallabour"areequivalenttermsin theoilan dgasindustriesinsomeparts ofth eworld.nontrast,heermoperatormployees"asenerallybeense dodescribethoseworkerswhoareonanoperator'sow npayroll,an dwhoarealsosometimesknownas"permanentemployees","companyemployees"or staffemployees". Ifmuchfthistudyouchesnhemploymentelationship,tsls oighlyrelevanttoanothercoreIL Oconcern-decentwork.TheDecentWorkAgenda,promotedbyth eILO,ha sfourmaincomponents:rightsat

work;mploymentandwork;ocialprotection;ndsocialdialogue.Clearly,al lofthesearedirectlyrelevanttoth esituationofcontractorsinth eoilan dgasindustries.Whatis more,thefourelementsarestronglyinterrelated,asarecentstudypointsout:Rightsatwork"affectal laspectsofwork.orinstance,rightstoaminimumwage an dahealthyworkingenvironmentaffectth eforman dvolumeofemployment.Therighttoreedomofassociationan dcollectivebargaininghasonsequencesforth edegreean d patternofsocialprotection.Italsoaffectsthenaturean dsubstanceofsocialdialogue." Employmentlevelsan dstatus"affectsocialsecurityinobviousways.Highlevelsofremunerativemploymentbviateheee dorertainypesfocialecurity.he content,deliveryan dfinancingofsocialsecurityareinfluencedbyth eproportionofthelabourforceindifferentworkcategories.helatteralsohaveanimpactonth eformofworkerndnterpriserganizationndmodefnegotiations.mploymentevelsnd remunerationffecttheontentofcollectiveargaining.he yls offecthebilityofworkerstonegotiateonarangeof issuespertaining torightsatwork." Socialprotectionsnmportantcomponentofdecentworksth eoveragend benefitlevelsofsocialsecurityaffectemploymentthroughtheirimpactonlaboursupply,investmentlevels,productivityan dworkerresponsetochangean dinnovation.Theyalso influencethebargainingpowerofworkersnocialialoguendtheirabilitytoecureotherrightsatwork."Socialdialogue"providesavehiclefornegotiationsonrightsatworksuchassocial security,minimumwagesan dconditionsofwork.Socialdialoguealsomakesitpossibleto influencetheimplementationof theserights,aswellastomonitorachievement.Collectivebargainingha sanobviousimpactonthestructure,levelan dconditionsofemployment.It alsoprovidesaforumfo rnegotiationsontheformandcontentofsocialsecurity.Tripartitean dbroaderformsof socialdialogueinvolvinggovernments,enterprises,workersandcivil societygenciesxercisennfluencenllimensionsfdecentworkhroughheirimpactonmacro-economican dotherke ysocialan deconomicpolicies."(Ghai,2006). TheinterrelationshipofthesefourelementsisshowninfigureA.Theimportanceofth elinkagebetweencontractlabouran ddecentworkisrecognizedbysomemajorprivate

employmentagencies,whichunderstandtheimplicationsfortheirsocialacceptabilityan d theirbalancesheets.InM ay2009,fo rexample,th eAdcorpGroup,whichisbasedinSouthAfrica,nnouncedsolidfinancialesultsnhallengingtimes",uoyedbyth etrongblueollariasftslexibletaffingperationsndhengoingkillshortage".

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Accordingtoth esamepressrelease,CEORichardPikeaidthat"Adcorpwasactivelyinvolvedinthedebatearoundfurtherregulationgoverningthecontractlabourmarketan d supportsadherencetoth eprincipleof'decent work'asdefined byth eInternationalLabourOrganization (ILO)"(Adcorp,2009).Themplicationsorontractworkersrelsowellnderstoodyradenions."Workersverywhereeedoerotectedy ell-establishedemployment

relationship', insiststh eInternationalFederationofChemical,Energy,Minean dGeneralWorkers'UnionsICEM).tbelievesthat"moreworkshouldbeon ewiththeIL Oto makeureha tegalrotectionsorontractndgencyabourorkers..re strengthened...nparticular,thereisaneedtoguaranteeth econtractan dagencylabourworkers'ightsoreedomfssociationndollectiveargaining"ICEM,008a).Tacklingprecariousworkwason eofth ethreeprioritiesse tbyth eInternationalTransportWorkers'ederation(ITF)fo ritsparticipationintheWorldDayforDecentWork(ITF,2008).eanwhile,henternationaletalworkers'ederationIMF)ointsohe adoptionbyth eILOofth eEmploymentRelationshipRecommendation,2006(No.98),urgingthat"W emustpushllovernmentsoegislatenlinewiththisnternationally agreedecommendationorovideorkersithreaterrotections"IMF/European Metalworkers'ederationEMF),008).A ndheU NIGlobalUnionsommittedoworkwiththeILOan dotherinternationalbodiestoensurethatself-employedworkersareegallyecognizedsavingheightoepresentationndollectiveargaining" (UNIGlobalUnion,2007).

Contractorsan dcontractworkersintheoi lan dgasindustriesarecertainlyentitledto decentwork.hisworkingaper,nrawingogetherhevailablenformationnd suggestingsome possiblefurtheraction,isasmallsteptowardsthatgoal.FigureA . Interdependencebetweenrightsatwork,employment,socialsecurityan dsocialdialogue

Afleasscopan Scontentof seeurily :: ecuri ty Reducesaaigaininjinequalties an denhaneesetfecttenessofssclalilalope

Irnplayimnt Source:Ghai,2006.

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ContractlabourintheoilandgassectorA noverview Therearemanyreasonstoworkin theoilindustry:

xcellentmoney-oil industryworkerscaneasilyearnoverUS$90,000ayear;reatworkrosters-offshoreworkersworkinrotations,meaningthatyouspendmuchof

theyearonholiday;hallengingwork-ifyouaretiredofthe9-5routineorwantacompletechangeincareer,heilndustryffersemandingnvironmentoorkn,utugeopportunities[for]earningsandalsocareerprogression;nternational jobopportunities-if youwanttoworkabroadtherearealargenumberof theseolesvailable.ndmployersilloverourransportostsromourhometown,tothe rigandback(OilIndustryJobs,2009).ToearnUS$90,000forspending"muchoftheyearonholiday"doessoundenticing.Butatleastthisrecruitmentagencyishonestenoughtomention"challengingwork an da"demandingenvironment"aswell.Indeed,th ehardwork,onghours,angersnddifficultlivingconditionsacedby manyoilan dgasworkersdotendtobewellrewarded.Oilproductioninparticularisahigh-payingsector.In2008,crudeoi lproductioncamein jointsecondwithminingamongth eworld'smostprofitableindustries,witha14.1percentreturnonassets.Refiningcamein11th,witha5.4 percentreturn(FortuneGlobal500,2008).

1.1. Th enatureofcontractworkTheilndgasndustriesmakewide-scaleus eofcontracting.Butitsealitiesre

particularlycomplexan ddonotcloselyresemblethoseinotherindustries.Bythesametoken,thesituationofoi lan dgascontractworkersisnottypicalofcontractan dagency labourinotherpartsof th eeconomy.Oneactorheresherelationshipbetweenth eilndga sompaniesthemselves.SomeirmsnheectorreoncernedolelywithxplorationndproductionE&P),otherswithrefiningan ddistribution,whilestillothersintegrateth ewholeprocessfrom th eoilorgasfieldtotheen dconsumer.Therearealsofirmsthatarepurelycontractorsand theyrovidepecializedervicesoheperators.heseanangeromonstruction, explorationdrilling,welllogging(analyzingan drecordingthepropertiesof theformations penetratedbydrillholes),shaft-sinkingan dlaboratoryanalysistomaintenance,transport,

cateringndecurity.AurtheromplicationshatE& Pperatorsan,times,ls o functionascontractors.Oneoperatormaycontractto provideservicestoanother.So ,heermcontractworker"annac tover wideangefmploymentrelationshipsinthesector.Itincludesshort-termworkerswithadirectcontract,part-timeworkerswithadirectcontract,workersonashort-termcommercialcontract(whetherfull-timeorpart-time),agencyworkers,daylabourers,informalworkers,andworkersinan y employmentelationshipwith ontractorrubcontractoronilrasompany,includingthoseprovidingservicestoonecompanyon behalfofanother.Box.1howsthejobdescriptionsforsomecategoriesofworkeroftenhiredonacontractronsultantasis,ogetherwithurrentUnitedtatesmploymentatesnd likelyfutureUnitedStatesdemandfo rthesecategories(forthecorrespondingmedianpa y rates,seebox2.2)Thedescriptionsofth etasksareAmericantoo,andmayvarytosomedegreefromthoseapplyingelsewhere.However,inasectorthatrecruitsglobally,jobtitles



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aretendingtostandardizeonth eAmericanmodel.Box1.2explainsth ecompositionof th erigcrewsusedbyCanadiandrillingcontractors. B ox1 . 1

Selectedoccupationsin the oilandgasindustries,UnitedStates:Employment2006,projectedhiringneedup to2016,andjo bdescriptionsDerrickoperators,o i landgas

Rigderrickequipmentandoperatepumpstocirculatem udthroughdrillhole.Employment (2006)9,000Projectedneed(2006-16),000additionalTa s k sInspectderricks,or order theirinspection,priortobeingraisedor lowered.Inspectderricksforflaws,an dcleanando ilderricksin ordertomaintainproperworkingconditions.Controlth eviscosityan dweight of th edrillingfluid.Repairpumps,m udtanks,andrelatedequipment.

Se tandboltcrownblockstopostsat topsof derricks.Listentom udpumpsandheckregularlyforvibrationandotherproblems,nordertoensurethatrigpumpsanddrillingm udsystemsareworkingproperly.Startpumpsthatcirculatem udthrough drillpipesandboreholestocooldrillbitsandflushou tdrill-cuttings.Positionandalignderrickelements,usingharnessesandplatform-climbingdevices.Supervise crew members,andprovideassistancein trainingt hem.Guidelengthsof pipeintoan dou tof elevators.

G asplantoperators Distributeorprocessgasfo rutilitycompaniesan dothersbycontrollingcompressorstomaintainspecified

pressuresonmainpipelines.Employment (2006) 12,000Projectedneed(2006-16) 3,000additionalTa s k s

Monitortransportationandstorageof f lammableandotherpotentiallydangerousproductstoensurethatsafetyguidelinesarefollowed.Monitorequipmentfunctioning,observetemperature,evel,ndflowgauges,ndperformegularunitchecks,in ordertoensurethata llequipmentis operatingasitshould.Controloperationof compressors,scrubbers,evaporators,andrefrigerationequipmentinordertoliquefy,compress,or re-gasify naturalgas.Startandshutdownplant equipment.Record,review,andcompileoperationsrecords,testresults,andgaugereadingssuchastemperatures, pressures,concentrations,andflows.Adjusttemperature,pressure,vacuum,evel,flowrate,and/ortransferofgastomaintainprocessesatrequiredlevelsor tocorrectproblems.Clean,maintain,andrepairequipment,usinghandtools,orrequestthatrepairandmaintenanceworkb e performed.Collaboratewithother operatorstosolveunitproblems.Determineausesofabnormalpressureariances,ndmakeorrectiveecommendations,uchsinstallationof pipestorelieveoverloading.Readlogsheetsto determineproductdemandan ddisposition,or to detectmalfunctions.



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PetroleumengineersDevisemethodstoimproveo ilandgaswellproductionanddetermineth eneedfo rne wormodifiedtooldesigns.Overseedrillingandoffer technicaladvicetoachieveeconomicalandsatisfactory progress.

Employment(2006)Projectedneed(2006-16)Taste

17,0005,000additional

Assesscostsandestimateth eproductioncapabilitiesan deconomicvalueof o il an dgaswells,n ordertoevaluateth eeconomic viabilityof potentialdrillingsites.Monitorproductionrates,an dplanreworkprocessestoimproveproduction.Analyse datatorecommendplacemento fwellsandsupplementaryprocessestoenhanceproduction.Specifyandsupervisewellmodificationandstimulationprogrammestomaximizeoilandgasrecovery.Directandmonitorth ecompletionandevaluationof wells,welltesting,or wellsurveys.Assistengineeringandotherpersonneltosolveoperatingproblems.Developplansfor o ilandgasfielddrilling,andforproductrecovery andtreatment.Maintainrecordsof drillingandproductionoperations.Conferwithcientific,ngineering,ndechnicalpersonneloesolvedesign,esearch,ndestingproblems.Writetechnicalreportsforengineeringandmanagement personnel.

Petroleumpumpsystemoperators,refineryoperators,andgaugersControlth eoperationofpetroleumrefiningorprocessingunits.M ayspecializencontrollingmanifoldan dpumpingsystems,gaugingor testingo ilin storage tanks,orregulatingth eflow of o ilintopipelines.

Employment(2006)Projectedneed(2006-16)Ta s k s


Monitorprocessindicators,instruments,gauges,andmetersnordertodetectandreportan ypossible problems.Startpumpsandopenvalvesoruseautomatedequipmenttoregulateth eflowofo ilnpipelinesandnto an dou tof tanks.Controlor operatemanifoldandpumpingsystemstocirculateliquidsthrougha petroleum refinery.Operatecontrolpanelstocoordinateandregulateprocessvariablessuchastemperatureandpressure,andtodirectproductflow rate,accordingtoprocessschedules.Signaltherworkersyelephoneradioooperateumps,penndlosealves,ndhecktemperatures.Verifythatincomingandoutgoingproductsaremovingthroughth ecorrectmeters,andthatmetersareworkingproperly.Readautomaticgaugesatspecifiedintervalstodetermineth eflowrateof o ilintoorfrom tanks,andth eamount of o il in tanks.Operateauxiliaryequipmentan dcontrolmultipleprocessingunitsduringdistillingortreatingoperations,movingcontrolsthatregulatevalves,pumps,compressors,andauxiliaryequipment.Planmovementof productsthroughlinestoprocessing,storage,andshippingunits,utilizingknowledgeof systeminterconnectionsandcapacities.Readan danalysespecifications,schedules,logs,testresults,andlaboratoryrecommendationsin ordertodeterminehow toset equipmentcontrolstoproduce th erequiredqualitiesandquantitiesof products.



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Rotarydrilloperators,oi landgasSe tuporoperateavarietyofdrillstoremovepetroleumproductsfrom th eearthan dtofindan dremovecoresamplesfor testingduringoilan dgas exploration.

Employment (2006)0,000Projectedneed(2006-16),000additionalTa s k s

Traincrews,andintroduceprocedures tomakedrillworkmoresafean deffective.Observepressuregaugesan dmov ethrottlesan deversin ordertocontrolth espeedof rotarytables,an dtoregulatepressureof toolsatbottomsof boreholes.Countsectionsof drillrodin order todeterminedepthsof boreholes.Pushleversandbrakepedalsin ordertocontrolgasoline,diesel,electric,orsteam draw worksthatloweran draisedrillpipesandcasingsin andoutof wells.Connect sectionsof drillpipe,usinghandtoolsan dpoweredwrenchesandtongs.Maintainecordsoffootagedrilled,ocationan dnatureofstratapenetrated,materialsandtoolssed,servicesrendered,andt imerequired.Maintainan dadjustmachineryin order toensureproperperformance.Startandexamineoperationofslushpumpsn ordertoensurecirculationandconsistencyof drillingfluidor m udin well.Locateandrecoverlostorbrokenbits,casings,an ddrillpipesfromwells,usingspecialtools.Weighclay,andm ixwithwaterandchemicalstomakedrillingmud.

RoustaboutsAssembleor repairoilfieldequipment usinghandan dpower tools.Perform other tasksasneeded.

Employment(2006)4,000Projectedneed(2006-16)3,000additionalTa s k s

Cleanupspilledo ilby bailingitintobarrels.Unscrew or tightenpipes,casing,tubing,andpumprods,usinghandandpowerwrenchesandtongs.Bolt togetherpumpandengineparts.Walk flowlinestolocateleaks,usingelectronicdetectorsan dmakingvisualnspections.Movepipestoan dfrom trucks,usingtruckwinchesandmotorizedlifts,or by hand.Dismantleandepairo ilfieldmachinery,oilers,ndteamengineparts,singan dtoolsandpowertools.Digdrainageditchesaroundwellsandstoragetanks.Keeppipedeckandmaindeckareascleanan dtidy.Guidecranestomoveloadsaboutdecks.Supply equipment tor ig floorsasrequested,andprovideassistancetoroughnecks.

ServiceunitoperatorsOperateequipmentoincreaseoilflowfromproducingwellsortoremovestuckpipes,casing,tools,or other obstructionsfromdrillingwells.

Employment (2006)Projectedneed(2006-16)




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T a s k sObserveoa dariationsntrainauges,udpumps,andm o t o rpressurendicators,andistenoengines,rotarychains,andotherequ ipmentinordertodetectfaulty operat ionso runusualwel lcondit ions. Conferwithotherpersonnelnordertogathernformat ionegardingpipean doo li zes,an dborehole conditionsnwel ls.Drivet ruck-mountedunitstowel lsites.Installpressure-controldevicesontowel lheads.Threadcablesthroughpul leysnderricksan dconnec thydraul iclines,usinghandtools.Star tp u m p sh a tirculatewater ,oil,orotherf luidshrou ghwel ls ,nordertoe m o v ean dan dothermater ia lsobstructingth efreef low ofoil.Closean dsealwel lsnoongerinuse.Operatecontrolstha traisederricksan develrigs.Directdrillingcrew sperformingactivit iessuchasassembl ingandconnect ingpipe,applyingweigh tstodrillpipes,anddrillingaroundodgedobstacles.Perforatew el lcasingsor sidewal lsof boreholeswithexplosivecharges.

Wel lheadpu mpers Operatep o w e rp u m p sandauxiliaryequ ipmenttoproducef low ofoi lo rga sfrom wel lsnoilfield.

E m p l o y m e n t(2006)4,000Projectedneed(2006-16),000additionalT a s k sMonitorcontrolpanelsduringpu mpingoperat ionsinordertoensuret ha tmater ia lsarebeingpumpedat th ecorrectpressure,density,rate,andconcentration. Operateenginesandp u m p snordertoshu toffwel lsaccordingtoproductionschedules,an dtoswitch flow of oi lnt ostoragetanks.Performroutinemaintenance on vehic lesan dequipment . Repairga sandoi lmetersandgauges.Unloadan dassemb lepipesandpu mpingequipment ,usinghandtools.Attachp u m p sandhosestowel lheads. Startcompressorengines,anddivertoilfromstoragetanksnt ocompressorunitsan dauxiliaryequ ipmentinorder torecovernaturalga sfromoil.Openvalvestoreturncompressedga stobot tomsofspecif iedwel lsinordertoe-pressurizetheman dforceoi ltosurface.Superv iseoi lpu mpersan dotherworkersengagednproducingoi lfrom wells.Drivetrucksnordertot ransporthigh-pressurepumpingequipment ,andchemicals,fluids,orgasestobe p u m p e dnt owel ls.

Source:O'NETOnl ine.

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B ox1. 2Rigcrewsfo rdrillingcontractors,Canada

Rigcrewsworkin shifts24/7an dareresponsiblefo rth esafe,efficientoperationof th edrillingequipment.Adrillingcrewhasbetweenfouran dsixindividuals.Typically,threetofourdrillingcrewsareassignedto a r i g .Ar ig crewhasth efollowingpositions:T h erigm a n a g e r is theseniorsupervisor onsiteandis in completechargeof th erig.H eis responsiblefo r

theri gcrews,th eequipmentandth eoveralloperation.Th er igmanager'sdirectionandleadershipkeepsth eoperationrunningsmoothly.T h edri l lermonitorsandrecordsth eprogressofth edrillingoperationandcommunicatesthistoth er ig manageran dth ewellsitesupervisor.H es alsoresponsiblefo rdevelopinga well-trained,reliableandsafety-consciouscrew.T h eer r i ckhandassiststh edrillerwithequipmentmaintenancendooksafterth epumpsndm udsystem.Whenrequired,th ederrickhandwillclimbth ederrick(about25 metresaboveth erigfloor),whereheis positionedtoguideth epipeintoth ederrickstructure.T h emotorhandlooksafterth eenginesandothermachinery.H e worksonth er ig f loorwithth efloorhandsandis involvedin th etrainingan dsupervisionof juniorcrewmembers.T h ef loorhandhandlesth edrillpipeonth er igfloor.Somerigswillhavetw ofioorhands.Afloorhand's

responsibilitieslsoncludequipmentaintenance,ixingudndhemicals,ndssistingthercrewmembers.T h eleasehand performsgeneralabourandmaintenancetasksaroundth eigsite,suchashelpingtodigdrainageditchesan dtogreaseequipment.Somerigcrewsdono thaveleasehands.Onthesecrews,th eentry-levelpositionis th efloorhand.Otherpeoplewillbeonsiteandinvolvedn th edrillingoperation,bu tthesepeoplearenotemployedby th edrillingcontractor.

S o u r c e :C a n a d i a n A s s o c i a t i o n o f O i l w e l lD r i l l i n g C o n t r a c t o r s ( C A O D C ) , 2 0 0 9 .Withtheexceptionofday labourersan dinformalworkers,whodoexistinsomeareas

ofthesectorbutaregenerallyno ttypicalofit,mostoi lan dgascontractworkersarein whatisknownastriangularemploymentrelationships.Theseoccurwhenemployeesofan enterprise("theprovider")performworkforathirdparty(the"userenterprise")towhom theirmployerrovidesabourrervices.uc hituationsaneeneficialoll concerned,butincertaincircumstancestheyca nresultinalackofprotectionforworkers. Fortheemployee-whoisacontractoragencyworker-threeke yquestionsarise:W hoismyemployer?Whataremyrights?W hoisresponsibleforensuringthem?Relationswithtradeunionsca nalsobecomecomplicated.Forexample,theseemployeesmaybeunsure aboutwhichunionrepresentative,ifany,is"responsible"fo rthem.Figure1.1howsho w thistypeofemploymentrelationshipca nlook.Figure1 .1 . Onee x a m p l eo fthecomp l i ca tede m p l o y m e n trelat ionship

JLJLJnJIREPimC O M P A N Y

CO HT R CT 0F W 0R K

EDUCATION? W H A TAB OUT SOCIALSECURITY? A G B N C Y C O M P A N YWH OISSHOP STEWARD?DA IL YM A N A G E M E N T

NO E M P L O YM E N T CONTRACT

AGKYWOUKCH

WH OIS RESPONSIBLEE M P LO Y E R ? ..- -E M P L O YM E N T CONTRACT

S o u r c e :I C E M ,2 0 0 8 a .



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1 .2 . RecentemploymenttrendsGlobalemploymentdataforoi lan dga sexplorationan dproduction"d ono texistan d evenationalmploymentatareifficultobtain"ILO,009b).Analysisfthe availablenationaldatasuggeststhat,inall,some3millionpeoplearecurrentlyemployedinthextractionofcrudeoilndnaturalasworldwide.Globalmploymentncreased fromabout3millionin2000toapeakofover4millionin2004,thengraduallydeclined.

Nearly1.5millionpeopleareestimatedtobeemployedinoilrefiningworldwide.Attempting lobalstimatefcontractabourevelswithinhendustrysven moreroblematic.nheUnitedKingdomxtractionndefiningectors,emporaryworkersmadeup ,respectively,3.3percentan d4.3percentofth eworkforcein2003 (Oil&GasUK ,2007).Projectedontotheglobalestimatesreferredtoforth esectorasawhole,hoseercentagesoulduggest orldwideemporaryworkforcefom e 400,000inextractionan dsome215,000inrefining.Butthisislikelytounderestimateth esituation.Thereisaclearneedformoresystematicdata-gatheringinthisfield.Table1.1showsCanadiandataforth eoilan dgasextractionindustries,distinguishing

between permanentandtemporaryworkers.Itshouldbeborneinmindthatth e"temporaryemployees"ategoryoe snotncludeveryoneworkingorheontractoridefth eindustries.Aworkerpermanentlymployedby ontractorompanywilleounted under"permanentemployees".Table1.1. E m p l o y m e n tinth eo ilandga sextract ionindustriesinCanada( two-yearaverages) ,1998-2008

Temporary employees3 53 24 55 95 85 4 95 25 7

Source:StatisticsCanada,LabourForceSurvey,Program A091108.Oneproblemisowbroadlyoefinecontractingndubcontracting".ikeny majorindustry,th eoi lan dgasindustrieshavesubstantialknock-oneffectsthroughouttheeconomy.Forxample,whenRoyalDutchhellicShell)aystha sapproximately102,000taff,utmoreha nou rtimessmanyeopleworkorussontractorsrsuppliers",itmaywellbeincludingsomeemploymentimpactsoutsideth esectorassuch(Shell,2009a).Somesefulndicationsaneleanedromheontractors'wnmploymentfigures.able.2howsowmanyeopleremployedworldwide,ndowmany nationalitiesrnowan yountries,yom eignificantontractorndervicecompaniesintheoilan dgasindustries;howeverheretoothefiguresshouldbetreated with caution.Whilethecompaniesselectedareactiveinupstreamand/ordownstreamoiland ga sndustries,om eanndoecomenvolvedntherectors.narticular,hoseengagedinthemanufacture,assemblyanddismantlingofinstallationsmaydiversifyinto

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Totalemployees Permanentemployees1998-99 48000 4 45001999-2000 44000 408002000-01 49600 4 5 6002001-02 5 6200 511002002-03 5 7400 515002003-04 5 8 400 526002004-05 62600 576002005-06 71500 666002006-07 78500 733002007-08 81400 75700


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otherypesfindustrialndivilngineering.tollowshattheirworkforcesreot alwaysxclusivelymployednilndasrojects.Also,otllofth eontractors'employeesarefrontlineindustrialworkers.Whileth esectordoescalluponmanysmall- scalecontractorsan dfamily businesses,fo rtransportan dcateringforexample,someof th emostignificantontractorsrehemselvesarge-scalenterprisesithheirwncomplementfdministrativendncillarytaff. urtheromplicationsha the contractorshemselvesayav ewoypesfworker:hemployeesnheirwn payrolls,an dth econtractworkerstheyhireasan dwhentheyneed to.

ThecaseofAkerSolutionsillustratesth edifficultiesinvolvedinarrivingatarealisticfigure.able.2howsha theompanymploysom e6,000eople;owever,t31December2007,ithad atotalworkforceof32,717.Thiswascomposedof24,427direct employeesnd,290nontract.Moreover,nl y7peren tfthemployeeswerefrontlineskilledworkersoroperators.Theother63percentwereadministrativestaff.Oftheompany'swnpersonnel,47.3percentwereworkinginNorway,2.9percentin otherpartsofEurope,27.2percentinth eAmericas,12percentin Asiaan d0.6percentin Africaan dth eMiddleEast.tsworkforceturnoverin2007averaged0.4percent.A nd whileAkerSolutionsisamajorengineeringan dconstructioncontractortoth eoi lan dgasindustries,othpstreamndownstream,tls orovidesimilarervicesohe chemical,mining,metal,an dpowergenerationindustries(AkerSolutions,2008).

Chiyodaestimatesthat,onaverage,abouthalfofits6,300workforceatan ytimewill becontractworkers(information communicated).Table1.2. Employmentinselectedoi landgascontractor companies,2008-09Company Activit ies Countryo f origin Numbero f

emp loyees (approx.) Countr ies /nationali t ies(approx.)

AkerSolut ions Engineer ing,construct ion,technologyproducts,integratedsolutions

N o r wa y 2600 0 30

BakerH u g h e s Oil-fieldservices UnitedStates 3 98 00 90B JServ ices Cement ing,st imulat ion,coiledtubing,complet ion,pipeline commiss ion ingandnspection

UnitedStates 1800 0 n.a.

Ch iyoda Integratedcontractor Japan 63 00 3 0 Hal l ibur ton Oil-fieldservices UnitedStates 5 700 0 7 0 JG C Engineer ing Japan 206 9 70NaborsIndustries Drilling B e r m u d a 269 12 Main lyUnitedStates

and Canada;also SaudiArabia,EasternEurope,RussianFederationan dCh ina Saipem Offshore,onshoreanddrilling Italy 3 000 0 100Schlumberger Oil-fieldserv ices UnitedStates 7700 0 140Technip Subsea,offshorean donshore France 2200 0 n.a.Transocean Offshoredrill ing UnitedStates 21000 n.a.Weatherford Mechan ica lsolutions,technology

applications,servicesUnitedStates 4 000 0 1 0 0

n . a .= datano tavailable.Sources:AkerSolutions,2008;BakerHughes,2009;JServices,2009;Chiyoda(informationommunicated);Halliburton,2009a;G C ,2009;NaborsIndustries,2009;Saipem,2009;Schlumberger,2009;Technip,2009;Transocean,2009;Weatherford,2009.

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Innyase,heroportionofcontractabourwithinheworkforcesottable.Flexibilityisoneofth econtractors'biggestsellingpoints,whethertheyarecompaniesor individuals.Italsomakesthem morepronetocutbackswhenthereisadownturn.Fromtheoperator'side,ConocoPhillipstateshatSinceweannotontrolhericesfthecommodityproductswesell,controllingoperatingan doverheadcosts,withinthecontextofou rommitmentoafetyndnvironmentaltewardship,reighriorities..nresponseoheurrent2008]epressedmarketnvironment,wexpecttoreduceur workforcein2009,reduceth eheadcountofcontractors,an dcontinuetoemphasizecostdisciplinethroughoutou roperations"(ConocoPhillips,2009).Fromthecontractors'ide,Halliburtonmakesasimilarpoint:Asou rcustomersawardworkinthisenvironmentofdecliningcommodityprices,pricingcompetition[amongcontractors]ntheinternationalarenaasntensified."toesnoiscussourrecentndurrentnitiatives",which includereducingeadcountnocationsxperiencingignificantctivityeclines"(Halliburton,2009a).

EmploymenturnoverrendsmongAustralianilndasorkershaveee ncyclicalconnectedtothepriceofabarrelofoilan dtheoffshoreactivityatthetime".In generalerms,weav eadloseoul lmploymentorbothpermanentndasual[contract]workers,withhorterperiodsoflo wactivityndunemploymentamongstth ecasuallabourwhoarefirsttobestooddowninquietertimes".Whiletheaveragelengthofemploymentinth eAustralianindustrywouldbedifficulttoestimate,"i twouldbefairto sa ythatthereisabout60-70percentpermanentemploymentan dth erestismadeupofcasualscontractorkers]".ostav eee nonsistentlymployedverheeriod 2000-09.eafarersmployednheector,ndoveredbyhelassificationsftheMaritimeUnionofAustralia(MUA),areIntegratedRatings(acombinedclassificationofAbleeamenndMotormen);Cooks,ncludingBakers;Caterers;ndCraneOperators (whoaregenerallyqualifiedasIntegratedRatings).Therearethreetermsofemploymentpossibleorheseategories:ornndefiniteeriodfemployment,s ermanent employee,nnyofth eategories;or pecificeriodoftimethesemployeesre classedsasualworkers);ror pecificask,whichmayeproject-relatedalsoclassedascasualworkers)(MUA,2009IL Osurvey response).

InEcuador,heresighjobotationmongontractworkersnheilndas industries,butitisacceptedthatthisisth enatureofthebusiness.Giventh ehighdemand inth eindustries,contractworkersaregenerallyabletoremaininemployment.Adirectly employedworkforcewould,tsuggested,ubjectperatorsoneconomicallyigh costs.Whiletherearenospecificfiguresfo rtheoilandgasindustries,some75 percentofth everallndustrialworkforcencuadorsontractabourNationalederationfChambersof IndustryofEcuador,2009IL Osurveyresponse).Inth eNorwegianoilandga sindustries,"toou rknowledge,theemploymentturnoveriselativelyoworompanymployeesndurmpressionsha theurnoveror contractworkersslsoelativelyow".hemixfcompanymployeesndontract workersseemsoetablendasee noverime"NorwegianilndustryAssociationOLF),00 9LOurveyesponse).pproximately5eren tfhe Norwegianorkersnheilndasndustriesremployednontractornd subcontractorcompanies.Around10percentof theseworkersarewomen.Thetrendha sbeenha theperatorseaveor efheon-coreusinessoontractorsnd subcontractors."Acontract"maybefo ron esingletaskorlastuptofiveyearswiththeoptionfenewal"PetroleumafetyuthorityorwayPSA),00 9LOurveyresponse).IntheRussianFederation,al lworkersintheoilan dgasindustriesareoncontracts,in linewithRussianemploymentlaw.Thereiscurrentlyatendencyforservicingsubsidiariestosplitofffromthemainoperatingcompaniesan dtobecomeindependentoperators.This

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isavingandverseffectnverallmploymentnheector(RussianOil,Gasnd ConstructionWorkers'Union(ROGWU),2009ILOsurveyresponse).ThemajorityofcontractworkersinTrinidadan dTobago'soilan dgasindustriesareemployedinconstruction.Thereisittleornomploymentturnover.Workersntheil an dgasndustries,whethercompanyemployeesorcontractworkers,tendtopendtheirentireworkinglifeinth esamejob.Thisisparticularlyth ecaseforcontractworkers.Asa

resultofoutsourcing,mostofthesemi-skilledpositionsnth eoilndgasindustriesarenowfilledbycontractworkers.Fewerpermanentworkersarethereforebeingappointedto thesepositions.heus eofcontractlabourhasbeenincreasingconsistently.herehavebeeneffortsbythelocaloilcompanytoformalizetheus eofcontractlabourbyincludingit inth ecollectiveagreement,buttheOilfieldsWorkers'TradeUnion(OWTU)isopposingthismove(OWTU,2009IL Osurveyresponse). Seasonalitysnothereasonorluctuationsnhesefcontractors.efinery turnaroundsareagoodcaseinpoint.Theseareplanned,periodicshutdownsofal lorpartofarefineryformaintenanceandinspection,plustherepairofequipmentan dreplacementofrocessaterialshereecessary.nontinuousperationsuc hsefining,turnaroundsarealsooftentheonlyopportunitiestoimproveequipmentor processes.In007,nitedtatesenateommitteeskedhenergynformationAdministration(EIA)tolookintotheimpactofrefineryturnaroundsonthepriceofoiland gasoline.Alongtheway,theEIAgatheredsometellingfactsaboutseasonalcontracting. Turnarounds,tnoted,occurmostfrequentlyinthefirstquarteran dthefall";ogically enough,shoserehetimesofyearwhenemandorilndpetroleumproductsslowestintheUnitedStates.Butwithinthoseperiods,otherfactorsaffectturnaroundan d shutdowniming,uc hsvailabilityoflabor,ivenheer yargewingsnkilled workerseededorurnarounds".ornstance,holidaysndheuntingeasonre avoided".Infact,"adequateskilledworkersarenotavailabletohandlesimultaneouslarge turnarounds".his,nturn,meanshatcontractan dengineeringfirmsannotchedule suchactivitiesatthesametime".o,toavoidclashesofdatesforth edifferentrefineries'turnarounds,ariousourcesfinformationresed.Theontractorndngineeringfirmshemselvesremportantlayers.argeurnaroundsequirenoughutsidecontractingthatplansbecomeknownevenwhencompaniesdono tannouncethem." Therefineryturnaroundsentailanintensivebutseasonalus eofcontractworkers."A majorturnaroundonanFC C[fluidcatalyticcracker]unitca ninvolvetremendousswings ofutsideaborntondutfth elant. 00,000-barrel-per-dayefineryightnormallyav e00eoplentaff.Duringheurnaround,heremaye,500-2,000additionalpeopleontherefinerysiteforamonthorso,increasingth epersonnelonsitebymorethanafactorof three."Nonetheless,th eworkisno tquiteasseasonalasth erefineries

mightlike,foraverygoodreason:Theneedforlargelaborswingsduringturnarounds,coupledwiththeskilledlaborshortage,preventscompaniesfromdoingmuchofthiswork simultaneously"(EIA,2007).Worldwide,contractlabourfo rrefineryturnaroundsha scertainlybecomeaseller'smarket.ccordingondustryataompiledynternationalonsultantsolomonAssociates,"thecostof turnaroundshasrisenby15pe rcentannuallyfrom2000to2008,largelys resultoflabouros tncreases,materialos tncreases,ndcopefwork increasesuringhiseriod.heumberfworkoursevotedournarounds,or example,increasedby0percentannuallyduringthisperiod."Inotherwords,no tonly aretherefineriesdippingintothesameimitedpoolofcontractturnaroundlabour,they

alsoeachneedthatlabourfo rlonger,owingtoth eincreasingcomplexityof th eoperations.Naturally,th erefinerswouldliketoge tou tof thisbiddingwar,oratleastcallatrucefrom timeoime.nd ,ustsaturally,olomonAssociatessfferingtservices.nSeptember2009,itannounceditsWorldwideRefiningTurnaroundPerformanceAnalysis,

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orTurnaroundStudy,orshort.Morethan80percentoftheworld'srefiningfacilities entrustolomonssociatesithheiros tensitiveperationalata,"tateshe company'sExecutiveVice-PresidentDaveBossung.SolomonAssociatesusesth edata"as theasisor roprietary,onfidentialomparativenalysisha telpsurtudy participantstoidentifyan dclosegapsintheirperformance".WiththeTurnaroundStudy,"w eextendthismethodologytoexamineal laspectsoftheturnaroundprocess,analysinglabourexpenses,workhours,materialscosts,incidentrates,lostproductionforturnaround outages,an dmore"(SolomonAssociates,2009).

Atnon-turnaroundtimes,meanwhile,theproportionofcontractworkerstocompanyemployeesanaryonsiderablyromneefineryonother,venwithinheam ecompanyan dthesamecountry.ee,orexample,th efiguresorfiveBritishPetroleum (BP)refineriesintheUnitedStates(box1.3).Butverall,sntherectors,henderlyingrendhroughoutheilndas industriessowardsontinuedrowthnhesefutsourcing,ontractingnd subcontracting.Thatgoesbothforth eblue-collarworkforcean dfortheus eofconsultants intechnical,scientifican dmanagerialposts.Twowell-documentedrecentcasesofsuchgrowtharenBrazilbo x.4,ogetherwithfigure.2)andNigeria(box.5 ,togetherwithtable.3).Theyshowthestrengthofthisrend,ndtheeasonsbehindit,utls oheotentialorresistancebyrganized labour.Inth ecaseofBrazil'sPetrobras,tradeunioncampaigning,plusachangedpoliticalcontext,seemsrecentlytohavereversedthe process.

B ox1. 3 ContractoremploymentatfiveUnitedStatesrefineries

Evennheam eompanyndheam eountry,heproportionofontractworkersemployedn refineriescanvaryconsiderably.Thism ayreflectdifferentproductioncapacitiesan dcomplexities.Th eBakerPanelreportintosafetyatBP'srefineriesn th eUnitedStates(box5.3)alsogavesomefiguresoncontractoremploymentat th efivesites.Carson:"Theefineryasheapacitytoprocess280,000arrelsofcrudeilperday.Th eCarsonbusinessunitincludesnotonlyth erefinery,bu talsoacogenerationplantandacalciner...About1,100B Pemployeesan d520contractorsworkat th esite."Cherry Point :"Asingletrainrefinery.CherryPointhas1 2 mainprocessingunits.thasa dailyprocessingcapacityof 244,000barrelsof crudeo i l .n additiontorefinedproducts,th erefineryproducesabout2,700tonsperdayofanodegradecalcinedcoke.Acogenerationplantsscheduledtoeginoperationn2008.TheCherryPointrefineryprovidesjobsfo r approximately65 0B Pemployeesand800contractors."TexasCity:"Consideredon eofth eworld'smostcomplexrefineries,itincludes29oilrefiningunitsan dfourchemicalunits.Theserefiningunitsproducegasoline,aswellasdistillate,petrochemicalfeed,heavyfuel,sulphur,sulphuricacid,petroleumcoke,andtoluene...Approximately1,800BPemployeesworkat th eTexas

Cityrefinery...WhileTexasCitygenerallyemploysapproximately2,000contractorsduringaverageoperatingintervals,th enumberofcontractorsworkingatth esitem ayreachashighas6,000duringpeakturnaroundperiods." Th eiteurrentlyemploysoledo:"...dailyprocessingapacityof150,000arrelsofcrudeil approximately 460BPemployeesan d200contractors."

Whit ing:"I thasdailyprocessingapacityof400,000arrelsofcrudeoil.Th eWhitingefineryasapproximately 1,400BPemployees...Th esitealsoutilizesanaverageof1,250contractors,dependingo n th elevelof maintenance andconstructionactivitya tth erefinery."S o u r c e :B a k e r ,2 0 0 7 .

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B ox1 .4 ContractlabourinPetrobras Revers ingatrend

"Despiteh eopposingpositionakenbyth ePetrobrasworkers,h eo m p a n yasbeenncreasingh e contractwo r k e rcont ingentyearafteryear ."Thatw asth emainconclusionofa2006reportb yDieese,Braz i l 'sInter-TradeUnionDepar tmentofStatisticsan dSoc io-economicStudies(Dieese,2006)."Whereasth en u m b e ro fcontractworkersn1995w asapproximately 29,000,"tstated,"b yth een dof2005,thisf igureh adshotupto 143,700workers."Accordingoth eeport,th eprocessofcontractingou tareasprev iouslyconsideredor emain tenancean doperat ions)coincidedwithth ederegulationofth esectorandth eadoptionofane w organizat ionalmodelby Petrobras" .Legislationapprovedin1997openedupth eBraz i l ianoilsectortoprivateenterprise.Accordingto Dieese,th ereorganizationinsidePetrobrasgavemanagersgreaterbudgeta u t o n o m y ,butalsopu tthemonasystemofassessmentan dp a y m e n tbyresults.Consequent ly,easiersolutions,uchascontractingoutan dth eprecarization oflabourrelationsasacostreductionstrategy,b e c a m em o r etempt ing" .Aprev iousDieesereport,in2002,listedareaswh ichitsaidPetrobrash adnowcontractedout:"catering, laboratoryests,warehou s ing,wel lement ingan dntegrity,rojectassemb lyandonstruction,T,erraincleaning,aintenanceterrain,echanical ,eating,elding,lectr ics,nstrumentat ion,efractories,ea tinsulationandequ ipmentinspection),oa dandling,w el ldrillingan dprofi l ing,probeoperation,medica land administrativeservices,transport,utilitiesan dsecurity".Whileconcedingt ha tPetrobrasitselfh adcitedarangeo fechnicaleasonso rontractingar iousactivit iesout,h e2002eportla imedh atnternalo m p a n y

docu mentsshowed"virtuallyall"thesecontracts(9 8pe rcent ,accordingtoauniongraphic)were"definedon th ebasisofl owerprice".Th e2006Dieeseeportdidnotet h a t" m o r erecent ly ,th ec o m p a n ym a n a g e m e n th asdecidedtoreverseth econtractingou tprocesseswi th intsoperations".B utitaddedt ha t" theresm u c hto bedoneinthisregard".Toagreatextent,h a treversalanepu tdownotradeunionampaigning-andoecentpolit icaldevelopmentsnBrazi l ."Beingastate-ownedcompany,Petrobras,asapr imaryemployer ,w asrelativelyeasy toengage,"ICEMVice-PresidentSergioNov isexplains,"particularly withachangeofgovernmentnBrazi l . "Therear enow "bet terrelationsb etweenth ec o m p a n y an dth eFUP,th enat ionaloi lworkers 'federation".Overaperiodofsixyears,"thish asresultedinareduct ionofth eratioo fcontractworkerstoPetrobrasworkersfrom ab ou t4 :1to2.2:1".B u t"we' reno tthereyet , "h ensists."Thereare stillm a n y ,m a n ycontractworkersonoilrigs"( I C E M ,2009a).

Figure1.2. NumbersofcompanyemployeesandcontractworkersatPetrobras,1995-20052000001500001OO000

50000 ;,-. .,pf .1^

lfcStSi -y.r,i v1 9 9 5 19969 9 7

Efetlvo1998003

Terceirtzado2005

Efetivo= C ompanyemployees;Terceirizado= Contractworkers.Source:Dieese,2006.

B ox1 .5 Body -shopp ingfo rworkers?ContractlabourinNigeria

Nigeria'soi lworkershavem a n yw a y so fdescribingth econtractab ou rsystem." B o d yShop"soneofth e m o r eprintableones.But ,b yanyothern a m e ,twou ldsmel ljustasba dohe i runionsh ePetroleuman dNaturalG asSeniorStaf fAssociat ionofNigeriaP E N G A S S A N )andh eNat ionalUnionofPetroleuman dNaturalG asWorkers( N U P E N G ) .T h e y are campaigningal l-outagainstw h a t theyse easexploitation.W h e nilan dga sproductionbegannNigeria,h eompan iesw e r entegratedine r m sofstructure,

staffingan doperations,"ecallsN P E N GGenera lSecretaryElijahOkougbo.Unfor tunately,overth eas ttwenty- f iveyears,anuglysituationstartedemergingwithth econtractingou tof certainjobs,perceivedby thesecompan iesno ttoedirectlyinkedwithh eoreproductionine."Thiscankerworm"as ,eays,eatendeeplyintoth endustrialrelationspracticenth eoi landga sndustry."



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Th eNigerianollunionsallegethat:ontractworkersaresubjectedto"variousdegreesofexploitationnotwithstandingthattheypossessth erequisitequalificationsandskillsneededtobeemployeddirectly onpermanentjobsIn whichsomeof them havebeenrenderingservicesascasuals/contractlabour forover 20yearsIn somecases";hey "arepaidpittancewagesan dhavenocollectivebargainingagreements";heir em ploymentis increasingly precarious;hey lackproperon-the-jobtraining;heyufferfromncreasedworkpressure,nclearesponsibilitiesndnadequateealthndafetyprotection;nsomecases,"theyaremadetopayfo rth eInsuranceprovisionnth eWorkmen'sCompensationAc tinsteadof beingcompensatedwheninjured";heuseof casualsan dcontract w orkershasledtolow production;asuallabourhasproduced"a navalancheof avoidableIndustrialrelationsproblemsIn th eindustry";heystemasmpactedegativelynheilnions'membershipndinances.Thisasotablyhappenedwhenmanagementdoesno trecognizeth eunionsasrepresentingcontractworkers,somaking

it impossibletouseth echeck-off system fo runiondues.Th eunionshavebeenonthecasesincethe1990s.Atthatt ime,PENGASSANstartedorganizingth econtractstaffatth eShellPetroleumDevelopmentCompanyofNigeria(SPDC)an dotherE& Pf irmssuchasMobilProducingNigeria,E l f ,andNigerianAglpOilCompany(NAOC)."Organizingtheseworkersatthatt imew asno tveryeasyasmostmanagementsvehementlyopposedth emove,"saysPENGASSANDeputyGeneralSecretaryLum um baOkugbawa.Onth eotherhand,"thecontractstaff(casuals)wereverymuchwillingtojoin",seeingthisasanopportunity"tostartenjoyingcertainbasicemploymentbenefitsiketheircounterparts(full-t imetaff)".Andth eeautyofta llw ash atth epermanentemployeesw howerealreadyPENGASSANmembersalsojoinedth econtractstaffintheirstruggletobecomeunionized".OrganizingsuccessesatSPDC andMobilProducingNigeriaencouragedPENGASSANtounionizecontractstaffacrossth eIndustry.Ou rmembersnderheontractStaffategoryowav eegotiatedrdefinedermsndonditionsof employmentexpresslystatedntheirCollectiveBargainingAgreementorsomethingsimilartoIt .Thoughtherecouldbemore."Union-employerrelationsonth econtractlabourssueremaintense.B utseveraldisputesan dtripartitemeetingslater,NUPENG'sOkougbusumsupwhathebelievestobeth eprinciplesan dinstrumentsnown

place:a llcategoriesof worker In theindustryare eligibletobeunionized;"Itw asdirectedthatlabourcontractorsbestreamlinedyth endividualo ilompaniestofacilitateth eunionizationprocessbyNUPENG";variousilompanieswillnnndividualasisaddresshessuewithiewtoegularizingheemployment of casuals";contractstaffw homeetcompanyrecruitmentstandards"shouldegivenequalopportunityfo rregularemploymentwhenvacanciesexist";equalremunerationfo rsimilarjobs;machinery fo rconflictresolution.Onthatbasis,th eunionshavemaintained"aggressiveunionizationofcontract workers"acrossth emajor

o ilandservicecompaniesnth eIndustry."Over60percentoflabourcontractworkershavebeenorganizedandw eareabletonegotiatecollectivebargainingagreementsfo rthem."Th eagreements"maynotin an yw ay b e comparabletoth epermanentstaffconditionsof servicebu ttheycontainth eprovisionsfo rminimumabourstandardsandwillcontinue toImprove".

O Hcompanies'"conversionoflabourcontractstoservicecontractsan dtheirfragmentationtoverylittlecontractterms"snowth ebiggestchallengetoth eunions,Okougbusays.Th eservicecontractshavebeen"reducedohorttenures"sw ayofcounteringnionizationdrives.elsolaimsh atunioneadersidentifiedwithinheompaniesreusuallyargetsofictimizationnderflimsyexcusesduringontractrenewalprocesses".B utth eunions"haveacceptedth echallengean dhaveorganizedsomeservicecontractworkersnNAOCNigerianAglpOilCompany) ,lf ,MPNUajointventureetweenExxonMobilndheNigerianNationaletroleumCorporationNNPC)) ,WRPCWarriRefiningndPetrochemicalCompany), SPDC,etc.ntoth eunion".Sofarthough,tsonlyatNAOCthat"somelevelofunderstanding"hasbeenreachedabouta collectivebargainingprocess.

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Organizingcontracttaffnderhirdartyrrangements/Contractors"slsohallengeor PENGASSAN,Okugbawaconfirms."Thesecontractstaffareundera formoftriangularemployment. . .Here,th econtractstaffcannoteasilyidentifyw h oh isemployeris .H emighthavebeennterviewedfo rth ejobbyth eparentompany,.g.Shell.owever ,h eparentompanywillhereafterransferisemploymentocontractor,e.g.OTSNigeriaLtd.tsOTSthatwillno wissueth econtractstaffh isAppointmentLetter."H eadvocatesa licensingsystem fo rthosew h orecruitcontractlabourfo rth eindustry.Although"nota panaceafo ra llth eidentifiedexcessesor extremitiesof contractstaffingandcasualization",a recruiter'slicence"may greatly addresstheseconcerns".H ealsowantsth eNigerianGovernmenttobringtogethera llconcerned."Wehavewrittenvariousletterstoth eMinistryofLabourrequestinganAllSectorsStakeholders'meetingtoreviewth estatusofasualizationndontracttaffingnariousectors,"eays.Unfortunatelyh isasetomaterialize."

Th eNigeriano il andgasunionswant tomoveforwardonth ebasiso f :ationallaw andth ecoreILOConventionsonlabourrights;heimmediateonversionofa llabour/serviceontractworkersw hoav eequisitequalificationndexperience,andw hohaveputin 5 yearsof continuousservice,intopermanent employment";n th einterim,operators'ensuringthroughtheirpre-qualificationandcontractingprocessesthatthirdpartycompaniesmeetminimumabourstandards,ncludingclearcontractualtermsandterminalbenefitsfo rworkersan drecognitionof theirrighttobeunionized;perators'encouragingheformationofaServiceContractors'Forum,imilartoth eexistingon efo r

LabourContractors,andempoweringtheirsupplierstonegotiatecollectiveagreementsonth ebasisof pre-qualification;n overhaulof th elaw onunionrecognition,withstifferpenaltiesfo rnon-complianceby employers;abourinspectionstopromotebestpractices.

Th eunionsplana seriesof awareness-raisingactions.ThesewillincludemarkinganannualCasualization Day"untila humanecollectivebargainingagreementis achievedfo rallcategoriesof workersin th eoilandgas industry".Th ecountry'slabourmovementasa wholew asclearlyreachingth eendof it s patienceonthisissueback

in September2008,whenth eNigerianTradeUnionCongress(TUC)reportedlyurgedth eFederalGovernmentto"invoketh erelevantaw softh ecountryagainstcompaniesthatenslaveNigeriansthroughth epracticeof casuaiizationan dcontractstaffing".Atameetingwithth eMinisterofLabourandProductivity,Dr.HassanLawal,TU CPresidentPeterEsele"observedthatunderth elawsofNigeria,anoilan dgasworkermustnotstaybeyondw oyearsonasualorcontractemploymentwithouteingmadefullyfledgedtaff'.e "wonderedw hysomeorganizationswerestillviolatingth erules".nNigeriatoday,hestated,"therearepeoplew hohavebeencasualsandcontractworkersfo rupto1 5yearsandtheydon'thavean ybenefitsattachedtotheircontractof employment.Nobenefits,nothingat th eendof th eday.Thatis unacceptable."Andhesingledth eo ilandgassectorou tfo rparticularcriticism:"Eseleobservedthatwhileth epracticeofcasualizationw as graduallyabatingnth ebankingsector,o ilandgascompanieshaveremainedadamantdespiteallpreviousconferencesanddialoguesbetweenorganizedlabourandth emanagement o fth efirms."

Eseleis alsosaidtohaveaskedth eMinisterfor "appropriatesanctionsagainstoilandgas companiesw h oviolateheexpatriatequotaules",emarkingh attherewereeveraljobshathouldav eeenefttoNigeriansbu twhichJointVenturepartnershavecontinuedtoshipnforeignersfromountriessuchasth ePhilippines,ItalyandIndiatotakeover".t w as"ridiculous"anda "hugewasteof resources"to"bringnth eso-calledexpatriatestoworkascleanersonth eo ilplatformsorbringnartisanstoworkasengineersnNigeriaw hentherearesomanymorequalifiedandbetterskilledNigeriansroamingth estreetswithoutjobs".Inresponse,th eMinisterreportedly"condemnedth enegativeabourpracticesandurgedth ecompaniesinvolvedtoturnanewleafasth eFederalGovernmentw asahundredpercentagainstcasualizationandviolationofexpatriatequota".H e"assuredth eTU Cthata lltheirrequestswillbeconveyed"toth eNigerianPresident"fornecessary actions".

Sources:Okougbo,2009;Okugbawa,2009;Ezigbo,2008.

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Table1.3. E m p l o y m e n tofregular andcont ractwo rke rsinth eoilsectorinNigeria,1999-2003 Typeof999employment 2000 2001 2002 2003

Nigerian Non-Nigerian Nigerian Non-Nigerian Nigerian Non-Nigerian Nigerian Non-Nigerian Nigerianon -Nigerian

Regular 28375 5578 2983 5 5 865 32175 6 325 33 9 30 6670 36270 7130Contract 1 0 91 4 485 11475 510 1 2 375 550 1 3 050 580 1 3 9 50 620Subcontract 4365 4 59 0 49 50 5 220 5 580Subtotal 43654 6 063 4590 0 6375 4950 0 6875 52200 7250 5580 0 7 750 Grandtotal 49717 52275 56375 59450 63550Sources:PENGASSANandN UPE N G ,nFajana,2005.

1 . 3 . Futuree m p l o y m e n tprospectsSkillsshortagesinanyindustrytendtocreatemoreopportunitiesforcontractlabour,whetherself-employed,agency-employed,or hiredbyservicecompaniescontractingtothemainoperators.Theoilan dgasindustriesarealreadysufferingsignificantskillsshortages, whicharelikelytogrow.Thisgoesbothfortheoperatorsan dfo rtheservicecompanies.Theaverageageofcompanyemployeesin theindustryha sincreased rapidly.Inheutumnf2004,heAmericanetroleumnstituteAPI)ommissionedsurveynworkforcehallenges"API,005).hisasromptedyoureriousconcerns:

dramaticecline"nverallmploymentwithinheUnitedtatesetroleumindustrysincetheearly980s,with"demographicconsequencesforindustryhiringneeds".otalmploymentinth eUnitedStatespetroleumindustrypeakedatover860,000jobsin982,beforeallingprecipitouslyinthe80san d'90s.Overhalfamillionetroleumjobsereos tetween982nd000.hisharpropwas accomplishedbyustainedayoffshichav ehendustryeputationfnunreliablemployer,ndharplyurbedntryntohendustryyearly ul l generation."

correspondingropnndergraduatenrolmentsnrofessionsarticularly essentialoheontinueddvancefetroleumechnology,uc hsetroleum engineering". declinenheeneralducationalmphasisnreasarticularlyelevanto technologicalprogress,suchasmathan dscience". Arowingerceptionha theetroleumndustrysnnattractivendustrynwhichtopursueaprofessionalcareer,in partbecauseof itspastcontractionaswellas itsrecentpricevolatility."

Takingpartnheurveywere2ompanies,manyofwhichrels oignificantinternationallayers.heespondentsereenndependentsAnadarkoetroleum,Apache,urlingtonesources,evonnergy,OGesources,arathonshland Petroleum,ccidentaletroleum,unoco,esoroetroleumndaleronergy);eightintegratedcompanies(AmeradaHess,BP,Chevron,ConocoPhillips,MarathonOil,MurphyOil,hellilndUnocal);ndou rilerviceompaniesBakerHughes,Halliburton,Schlumbergeran dNationalOilwellVareo).Thestudywasdesignedtoassessthelikelycumulativeeffectsofthefourpointslistedinthepreviousparagraph.Itsfocus

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waslimitedtoafive-yearperiod,i.e.upto2009.Asthesurveywasconductedin2004-05,theeconomicgrowthassumptionsunderlyingitmay needsomerevision,butitsresultsarenonethelessignificantforemploymenttrendsntheindustry,ndmoreparticularlytherolefontractors.ivenhelobalmportancefetroleumompaniesithheirheadquartersintheUnitedStates,th efindingsarealsolikelytoapplybeyondAmerican shores. TheAPIsurveyconcluded that"thecombinedeffectsof demographicsan dincreasing technicalkillrequirements"relikelytoposemajorchallengesobothrecruitingnd managingtheworkforceoverthenextfiveyears (i.e.uptoan dincluding2009).Ifal lofth eanticipatedneedsoverthatperiodcouldbesatisfied,aboutathirdof theke ytechnicalpositionswouldturnoverinjustfiveyears".But"theeasibilityofthiseplacementsproblematic,sevealedby broadoncernverhortagesnllfth eeyechnicalskills".Inparticular,therespondentsidentifiedeightke yskillsthatwerelikelytobeinshortsupply:killedrocess/productionperators,ngineers,aintenancerafts,engineering/geosciencesnalystsrechnologists,perationsupport,

instrumentation/electricalechnicians,eoscientists,ndealth,afetyndnvironment (HSE)professionals.Asigure.3hows,hesekillsccountedforjustunderone-thirdofth eamplefirms'workforce.Theproportionofthiske ytechnologicalworkforcethatwouldbecomeeligibleforretirementby31December2008(aroundaquarterinmostcases)isindicated inigure.4.ampleirms iringeedsorheseategoriespo00 9moreha n 22,000workersforthosefirmsalone)arese tou tinfigure1.5.Thefirms ow nperceptionsofshortagesinth eexternaltalentpoolfo rthoseskillsaregiveninfigure1.6(API,2005).

Figure1.3 . Keyskillslikelytobei nshortsupply,asshareofsampleUnitedStatesoi lfirms'workforce

Process/ProductionOperators(Skilled)11%

Engineers6o / aintenanceCrafts4 % Engineering/ GeosclencesAnalysts

orTechnologists3 % OperationsSupport3%

nstrumentation/Electrical 2% \_Geoscientists1% HSEProfessionals1%

Source:API,2005.Reproducedcourtesy of th eAmericanPetroleumInstitute,2009.



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Figure1.4. Shareofke yUnitedStatesoi ltechnologicalworkforceretirement-eligibleup to3 1December2008AllParticipants=22

OperationsSupport

Process/ProductionOperators(Skilled)

Per c en tofCurrent U.S.WorkforceRetirement-Eligibleby 12/31/2008

IBIS . ; P f:^^yv>:-:r ; :>' ;- -:..

2OMK.

Engineering/GeosciencesAnalystsormmu

25%Technologists ^^^H ^^

Engineers

0

21%/, sA 10% 15% 20%

Percent 25 % 30

Source:API,2005.Reproducedcourtesyo fthe AmericanPetroleumInstitute,2009.

Figure1.5. Key technicalskillshiringneedsup to2009,sampleUnitedStatesoi lf i rmsAll Participants=22 E s t im a t edTotalU.S.HiringNeeds

by2009

OperationsSupport

Process / ProductionOperators(Skilled)

Instrumentation/ Eectrical

MaintenanceCrafts

HSEProfessionals 152$Engineering/Geosciences Analystsor

Technologisis

GeoscienlistsHH2' *

H1.33i...

2,000,000FTE Source:API,2005.Reproducedcourtesyof th eAmericanPetroleumInstitute,2009.20 WP-External-2010-07-0060-1-En.doc/v2


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Figure1.6.UnitedStatesoilfirms'percept ionsofshortagesinth eexternalta lentpoolby2009 AllParticipants= 22 Potent ia lShor tage in theExterna lTalentPoo lby 2009

Other 2gHMathematics/StatisticsS

Chemistry|||||PhysicsH

CivilEngineeringHEnvironmentalEngineeringW

ComputerEngineering/ScienceaHOther1

ElectricalEngineeringLand Admlnistfalorsor Assistants

ChemicalEngineeringMechanicalEngineering

Process /ProductionOperatorsGeosciences Analystsor Technicians

Multi-skilledMaintenanceCraftsGeophysics

GeologyEngineeringAnalystsor Technicians

PetroleumEngineering0

114. 5 21

61

' .IHiliii ra^mmM H T J ,iin n M IIIM...JJ.J1111U m

Fr eq u enc yofSelectionacrossal ly ear s

Source:API,2005.Reproducedcourtesy of th eAmericanPetroleumInstitute,2009.Theseredictionsuggesthatmoreeoplewithuc hkillsmighteiredncontractasis.us towan yil lependnttitudesot hithinheperating companiesan damongqualifiedcontractworkersthemselves.Someinternationalrecruitersfortheindustrydopointtoashiftintheoperatingcompanies'pproach,datingfromth emid-2000snwards.he yee ewmphasisnheetentionndevelopmentfpermanenttaffaspposedtoontractonsultancies.But,tth eam eime,he ynote reluctancebyelf-employedtechnicalonsultantstobecometaffers.hisspparently

du eot hoheighpayratesommandedbyonsultantsndtoheargeumberofemploymentopportunitiesrecentlyavailabletothem.Onth eotherhand,somerecruitersbelievethatthelargenumberofcontractstaffon thepayrollsofexploration,productionan dservicecompaniesduringth emid-2000swasat leastpartlyduetotemporaryfactors.Theyarguethataconsolidationofservicecompaniesduringwoownturnsnhendustrywithin ecadeedoheeparturefmanyqualifiedersonnelwithoutompensatoryecruitmentrogrammeseingutnlace.And,asthesubsequentupturnwasnotseenaspermanent,manycompaniesstillpreferred tomaintaincontractstaffratherthanrecruitnew permanentemployees. Contractorcompaniesthemselves,meanwhile,havefacedacutelabourshortages.nearly008,opontractorwasskedoam ehereatestbstacleacingrilling contractorsan dothers.DennisSmith,DirectorofCorporateAffairsatNaborsIndustries, didno thesitate:"Ithinkth egreatestobstaclecontinuestobepeople.Ithinkitalwaysha sbeenan dalwayswillbeth ebiggestobstacle.Whetheryo uaretalkingaboutbuildingrigs-skilledwelders,electriciansan dpipefitters-orwhetheryouaretalkingaboutoperations-roughnecks,rillers,rigmanagers-thehigherth eskilletrequired,thetougheritisto attractndetainoo deople."heituationisarticularlycutenternationally,especiallytechnicalpeoplewhorefamiliarwiththesoftwarean dnewtechnology..Theglobalizationofth eindustryisposingnewstaffingchallenges:Ifyo uhavebeento theMiddleEast,yo useeth enfrastructurebuild-upthatisoingonoverthere.t'sthe

sameinIndia,Chinaan dRussia.Thatisth elabourpoolthatwemustcompetein."o, NaborsIndustriesis"recruitinginmanyne wvenues,suchasEasternEurope,Russia,evenChina,ndditionourraditionalreas".ontractorsanls oho wnternational flexibilityintheirdeploymentofpersonnel:WithCanadabeingasslackasitisinlate

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2007/early2008],wecanpullsomehighlyexperiencedan dskilledpeopleou tofthere" (Greenberg,2008).Reactingtotheskillsshortage,theInternationalAssociationofDrillingContractors(LADC)aunchedtsCareerConnectionnitiativen007.heimwasofacilitate contactsbetweenurmembersndprospectivemployees,"xplainedADCresident LeeHunt."IADCwon'tbeactingasanemployerrepresentativeorconductan yhiringor

interviewing.Ourgoalsobroadenth endustry'smploymentbasebeyondtraditional laboursources."Methodswouldincludeesearchnjobmarketswithnyeowardsareaswithhighnemploymentrwhereactorylosuresremminent",ravellingjobfairs,careerworkshopsgivenbydrillingcontractorrecruitersfo remployeesinfirmsthathaveannouncedclosuresordownsizing,recruitmentofmilitarypersonnelreturningfrom activeduty,and"enhancingtheEuropeanlabourforce:delegationsmaybesenttoEasternEuropetoaccessth elabourpotentialthereforWesternfirms"(Hunt,2007).Thisdoes,ofcourse,assumethatth eindustry'speakcouncilsca ncollectan danalysesufficientdatafromth ecompaniestopredictfutureskillsneedsaccurately.Thatmayno talwaysehease.mplicitly,heustralianetroleumroduction xploration

AssociationAPPEA)oncededsmuchnNovember00 9whentwelcomed ew workforceevelopmentplanyheGovernmentfWesternAustralia.Ourndustryneedsighlykilledorkers,"ommentedAPPEAesternustraliairectorom Baddeley,andithheargeumberfasrojectsnherawing-boards,tsimportantthatweca nworktogetherwithgovernmenttomeettheseskillneeds."However, headdedthat"establishingreliable,industrywideandsufficientlydetailedinformationon ou rskillsrequirementsisake ytaskforourindustry,an dthisisournumberonepriorityat th emoment"(APPEA,2009). So ,reheontractors'ecruitmentproblemsllow noworkers'referenceor otherindustries?Naborsndustries'Dennismithoesotbelievehatthatstillth ecase:"Wageshavecomeupalotinou rindustry.Inou rUSLower48operations,wearepayingentry-levelroughnecksover$60,000peryear...heindustryhadtoraisewages substantiallytoattracttherightpeopletotheindustry.Thatiswhatturnedth ekey.Forakid justou tofhighschoolwithlittleor n oprospects,desireoraptitudeforcollege,thatisaprettygoodstartingwage."Present-dayworkschedulesarealso"apositivefactor...Rig handsworka12-hourda yforsevendays,thenhavesevendaysoff.Forentry-levelpeople,thatasixedheroblem.ts ittleougherorheositionswhichequiremore specificskillan dexperience"(Greenberg,2008). Sourcesntherecruitmentagenciesonoteadeclineinth eglobalmobilityofthehigher-paidechnicalonsultants.ationalilompaniesnountriesutsidehe OrganisationforEconomicCo-operationan dDevelopment(OECD)have,theysay,been

reluctanttoraisetheirdayratesforconsultantsuptothelevelsprevailingelsewhere.The outcomeashatom eechnicalonsultants,yheiddlefhisecade,ould commandaroundUS$1,000adayinNorthAmericaorEurope,butonlyUS$400adayin South-EastAsia,orcomparabletasks.Atthesametime,nationaloi lcompaniesoutsideth eOECDav eendedtomaintainapolicyofuniformpaycalesortheirpermanentstaff,enerallyeggedt5-50eren tboveheverageationalage.his combinationofcircumstancescreatedne wopportunitiesforyounglocalresidentsofnon-OECDountriesoak epechnicalccupationswithinheilndasectorncontractbasis.However,thenationalcompanieshaveno talwaysbeensatisfiedwiththeexperiencean dqualificationsof thesene wcontractors. Employmentofbothontractndpermanenttaffwill,fcourse,oom extentdependonth elevelofactivitywithintheindustry.nJuly2009,hellCEOPeterVosercommentedthatth ecompany'ssecondquarterresults"wereaffectedbyth eweakglobaleconomy.hiseaknesssreating ifficultnvironmentot hnpstreamnd

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Downstream.Energydemandisweak.Thereisexcesscapacityinth emarket,andindustry costsemainigh."n resselease,osermphasizedhathell'sestructuring programme.ransition009,ouldsimplifyhell,ndncreaseersonal accountabilities".eniormanagementositionsadbeeneducedby0peren tan d substantialfurtherstaffreductionsarelikely"(Shell,2009b).Afterthepressconference,he waseportedlymorepecificboutheutsehadnmind:Iwanttotripwaythelayersthatarenotcreatingvalue,puttingmorefocusonfront-linevalue.tmeansfewerpeoplethinkingaboutstrategyan dmorepeopleactuallyimplementingit"(Perkins,2009).Thisseemstoconfirmtheimpression,amongsomeindustryrecruitmentconsultants,thatthebigoperatorsdonotmuchhavemuchscopefo rnewcutsintheirfrontlineworkforce,evenwhenenergydemandweakens.Nor,giventh eskillsshortage,dotheyhaveunlimited sourcesofnewrecruits.

AsheBritishffshorendustryssociationOil&GasUKold arliamentarycommitteein2009,"globaldemandinrecentyearsfo rskilledoilan dgaspersonnelha sle d tohortagescrossheector,aisingheecessityorheKndustryoork collaborativelytoaddressitsneedsfo raskilled,effectivean dsafeworkforce.Theindustry an dtheunionstogetherregardedthismatterasof suchimportancethattheytookstepsto reacquireOPITO,theoffshoreindustry'strainingorganization...toformOPITO,th eOil &GasAcademyin2007"(Oil&GasUK,2009a).Butthisdoesno tmeanthatthebanking crisiswillleaveemploymentinthesectorunscathed.Thesameparliamentarycommittee predictedinJune2009thattheoilandgasndustriesintheUnitedKingdomcouldlose50,000jobsif investmentprospectsdid notimprove(Perkinsan d Davies,2009).

InheNortheandlsewhere,hemploymentignalsav eee nmixed.he ScottishityofAberdeenshehubofE& PntheUnitedKingdomontinentalhelf(UKCS).Overth epastecade,heAberdeen&GrampianChamberofCommerceas publishedanannualoilan dgasurvey.PreparedwiththeFraserofAllanderInstituteat theUniversityofStrathclyde,thereportisbasedonarepresentativesampleofcompanies,bothBritishan dfromelsewhere,thatareactiveontheUKCS.Its2009survey(Aberdeen&GrampianChamberofCommercean dFraserofAllanderInstitute,2009)oncentrates onemploymentissues-no tleastthequestionofwhereoi lcompaniesrecruittheirlabour.Theanswerscamemostlyfromotheroilcompanies.

Amongthe2009survey'smainfindingswere: heUKCSndhelobalilectorrein eriodofdecliningnvestment,e- assessmentofprojectsandheightenedconcernastocosts";heproportionofcontractorsreportingthattheywereworkingatoraboveoptimum levelsnheUKCSeasedtoheowestevelsecordedbytheurvey,lthough someimprovementisanticipated fo r2010";killshortagesan drecruitmentdifficulties"wereagainreported,althoughnottothesameextentasinpreviousyears";n2010-13,themajorityofoperatorsxpecttoreducetaffbut"5 0percentofcontractorsexpecttoincreasestaff;hemainourcesfstaff"continuedoetherilndrelatedompaniesntheUKCS".

Mostoperatorsaidtheyhadbeenlessonfidentaboutth einternationalmarketn2008nd2009,butweremoreonfidentor2010.Overtheam eperiod,ne-thirdofcontractorsreportedrisinginternationalbusinessconfidence,nd22percentsaiditwas declining.Lookingforwardto2010,45percentofcontractorsweremoreconfidentand



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only0eren terees sonfident.igure1.7racesontractors'onfidenceninternationalmarketsaccordingtotheAberdeen&Grampiansurvey.Figure1.7. OilandgascontractorsactiveontheUnitedKingdomcontinentalshelf

Businessconfidence elsewhere ,i.e.ininternationalmarkets(netbalances)

ir #

BusinessopUmism elsewherecomparedto ayearag o |_jBusinessoptimism elsewhereov-th e next year

Source:AberdeenGrampianC hamberof Co mme rc eandFrasero fAllanderInstitute,2009.Amongcontractors,thedeclineininternationalactivitywaslesspronouncedthanthedeclineinUKCS-basedactivity;however,35pe rcentreportedreducednon-UKCSwork an donly23pe rcentreportedanincreaseinworkoverseas.However,48percentexpected anincrease,an donly24pe rcentadecrease,ininternationally-basedcontractworkduring2010.Despitetherecentdownturninctivityandinvestment,al loperatorsnd82percentofcontractors"wereseekingtorecruit.But60percentoftheoperatorsan d69percentfheontractorsaidheirecruitmentasainlyoeplaceegulartaff."Changingan ddecliningevelsfemploymentmongstbothperatorsndontractors weremorewidelyseenintermsof reducedemploymentofcontractandtemporarystaffs."Contractors'wnemploymentofcontractan dtemporarystaff"wasreducedin2009an d th edeclineisexpectedtocontinuethroughthenextyear".For2010-12,theproportionofUKCSoperatorsexpectingtoincreasetheircorestaffw asthesameasthoseexpectingadecrease:20pe rcentineachcase.Butnolessthan80percentwereexpectingtoreducetheircontractstaff.Amongstcontractors,5 0percentexpectedtoincreasetheircorestaffan d28percenttoincreasetheircorestaffoverthesamethree-yearperiod.Figure.8howsheercentagesfUKCSontractorseekingtoecruittaffin 1995-2009,hileigure.9omparesheercentagesfontractorshoeported difficultiesnecruitingariousategoriesftaffn004-09.sayeeen,recruitmentifficultieswanedetween00 7nd009,butweretillubstantial.he surveyfound"somevidencethatthehanginglabourmarketis factorinrecruitmentdifficultiesinsomespecialistareas".texplainsthat"whilstfirmsreseekingtoreducesalarycosts,candidatesstillhavehighremunerationexpectations".Thesurvey'sfindingsonpayareamongthoseanalysedinChapter2ofthisworkingpaper.

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Figure1.8. Contractorsactiveonth eUnitedKingdomcontinentalshelf:Percentagesseeking torecruitstaff

1 0 0 r8060 402 0

.O 0 0 n O 0 0 .0 .0 0 .0

P e r c e n t a g e R e c r u i t i n g Source:Aberdeen GrampianChamber of C ommercean dFraserof AllanderInstitute,2009.

Figure1.9. ContractorsactiveontheUnitedKingdomcontinentalshelf:Percentagesreportingdifficultiesinrecruitingstaff

120r-100 80-60

40

20

0professionaistaffs Technicianan dskilledtrades

tler ical/admin n0 0 4 L J0 07 2006 II 2009

Source:Aberdeen&GrampianCha mbe rof C omm ercean dFraserof AllanderInstitute,2009.Bothoperatorsan dcontractorsontheUKCScitedotheroilan doil-relatedcompaniesintheUnitedKingdomastheirmainsourceofne wstaff.However,asfigure.10shows,theroportionfontractorsecruitinghieflyromilndil-relatedompaniessmarkedlylowerthantheproportionofoperatorsdoingso.AccordingtotheAberdeen&

Grampianurvey,hiseflectsth eiderkilletmongontractors".nternational recruitersfor theindustry notesimilartrendselsewhereintheworld.Figure.11ndicateshemajoran dminorreasonsivenbyUKCSontractorsor theirlossesofcorestaffin2006-09.hesurveynotesthattheproportionofcontractors



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whoreportedcorestaffleavingtojoinotheroil-relatedfirmsinthearea"hasdecreasedfrom90percentin2006to48percentin2009,reflectingth eeasingofdemandinthelabourmarket".heproportionof workersmovingtootheroil-producingregions,itherwithinth esamecontractorcompanyorafterleavingit,mayalsobeseeninfigure.11.Globalmobilityamongcontractors'employeesappearstobehigh,althoughintheviewofUKCSontractorstleast,tappearstohavedeclinedsince2007s stafflossactor.Securityfmploymentil lertainlyemain orldwidessueithinontractorcompanies,whoseworkforceneedsaremoreimmediatelysensitivetodemandfromtheirclients,an dhencetoth egeneralstateoftheenergymarket.

Figure1 .10 .peratorsandcontractorsactiveontheUnitedKingdomcontinentaishelf:Mainsourcesofnewstaff(percentagesreporting),2005-09

1 2 0 r

60^

Ot heroil an drelatedcompan iesIn th e U K Qother U K basedIndustries

Source:Aberdeen&GrampianCha mbe r of Co mme rc eandFraserof AllanderInstitute,2009.Figure1 .11 .ontractorsactiveontheUnitedKingdomcontinentalshelf:Majoran dminor

reasonscitedfo rlossofcorestaff,2006-09

%

100 e o 60

40

20

0 Major reason J44ajorreason Minorreason2006 2007 2009

HIReti rementFloiningotheroil relatedf i rmsin area[ eavingto w o r kIn otheroilregiom

BecomingselfempioyedMoving with inco mp a n ytootherregionsleavingth eIndustryan dgoingtoother sectors

Source:Aberdeen&GrampianC hambero f Comm erceandFraserof AllanderInstitute,2009,

26 WP-Extemal-2010-07-0060-1-En.doc/v2


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W a g e s2.1. Wageratesandlabour costs

Oilan dgasjobstendtoberelatively wellpaid.Inth ecoreoccupationsatleast,theseareindustriesinwhichhighskillsarerequired.Mistakesca nproveverycostlyintermsofhumanlives,lostrevenue,damagetoexpensiveequipment,ndenvironmentalclean-up.So,lacingestrictionsnages,ecruitmentndraining,lthoughertainlyotunknownintheindustry,isseenasafalseeconomybymanyE& Pemployers.Inancillaryservices(forexample,cateringortransport),thismaybelessofaconsideration.IndustryrecruitmentspecialistsalsonotebiggerpaygapsinrefiningthaninE&P,wheremanyjobcategoriesare,inan ycase,mainlyoccupiedbycontractworkers.Incountriesoutsideth eOECD,aydifferentialsbetweenlocallyrecruitedlabouran dexpatriatesre frequentboneofcontention.

Inan yindustry,on emedium-term influenceon wage-settingwillbetheroleoflabourcostsinthepriceof theproduct.Fo rmostoi lan dga soperators,thisdoesno tappeartobe amajorconcern.Off therecord,someconcedethatlabourcosts areno toursinglebiggestworry",althoughtheyarereluctanttotalkfigures.Significantly,recentdetailedstudiesofoi lpriceeterminantsmakenomentionitherofwagesroflabouractorsngeneral (Desetal ,2008;InternationalEnergyAgency(IEA),2009).

Payrollostsls oen doorm elativelymallar tofoi lndasompanies' outlay.In2008,Eni'spayrollan drelatedcostswere4,004millionoutoftotaloperating expensesof80,412million(Eni,2009).Payinth eNorwegianffshorendustryeemsobeigh,ndoperatingompany employees(aminority,comprisingonlyabout25percentoftheworkforce)dosomewhat

betterhanontractormployees.n009,otalveragennualayas 634,000Norwegiankroner(NOK)foroperatoremployeesoffshore,andNOK530,000forcontractormployees.ot her eel lboveheverageanufacturingag efNOK3 54,000.Wagestructuresintheoilindustryhaveno tchangedsignificantlysincetheyear2000.At19November2009values,th eNorwegianannualoffshorepa yrateswould havebeenworthboutUS$112,730operatormployees)ndUS$94,300contractoremployees).Norwegianwagesnheilndasndustriesreotirectlyinkedoproductivity,butsomeompaniesopa yperformance-relatedbonusesOLF,00 9LO surveyresponse). Norwayha saspecificnationalcollectiveagreementforoilan dgasservicecompanies(NHO/OLF/LO/IE,2008).Sixtycompaniesareindividuallyorcollectivelysigneduptoit, includingmanyofth ebiggestmultinationalsinthesector.Thepa yscalesoperatingunderthatagreement,asfromJune2009,areshownin table2.1.



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Table2.1. Payscalesfo roi lan dgasservicecompaniesundertheNorwegiancollectiveagreement,asfrom June2009

Position SenioritystepsAbolishedntroducedJan.Jan.2010010

0456890 MWD9 2 4 2 5 4 7 8 6 7 5 2 2 9 5 8 4 8 8 45 4 2 5 6 6 6 6 8 2 3 5 59 7 5 2 2 6 8 5e n g i n e e r 2S e n i o r w e l l7 8 5 5 4 8 3 8 3 2 9 5 8 8 7 7 8 6 9 7 6 23 7 3 94 3 7 6 5 9 4 77 4 5 8 2t e c h n i c i a n W e l l5 9 4 5 2 4 7 9 8 8 2 5 9 4 4 4 5 5 7 4 7 52 8 6 3 5 4 3 8 9 2t e c h n i c i a n R o u s t a b o u t 4 7 8 4 6 4 6 7 3 9 4 2 5 6 3 4 3 4 5 2 7 4 3 4 2 5 2 3 56 2 77 2 8 2 7r i g g e rJo btitlesshownare translationsof th efirstNorwegianjob category on eachscale.Th eM WD(measurementwhile drilling)engineerscale alsoappliestosupervisors,fieldgeologists,andwellspecialists.Th esenior welltechnicianscalealsoappliesto senior operatorsandengineers,senior dataengineers,electricalandinstrumenttech nicians,specializedcraneoperators,seniordivingtechnicians,anddeckforemen.The welltechnicianscalealsoappliesto dataengineers,geologists,skilledworkers,welders,craneoperators,anddivingtechnicians.Source:NorwegianOilIndustry Association(OLF)( informationcommunicated).

InEcuador,therearenosignificantdifferencesbetweenpaystructuresfo rcompany workersan dthoseforcontractworkers.TheaveragemonthlywageinEcuador'soilan d gasindustriesisUS $650,asagainstanaverageindustrialwageofaboutUS$450.Therehavebeennoignificantchangesnwagetructuresve rth epastdecade.roductivity-linkingofpa yisno tpractisedintheindustries,an dthereisnoevidencethatpa yratesan d th epriceofoilinfluenceeachother.Payinthesectorisbasedonexperiencean dthereisnovidencefaenderifferentialNationalederationfChambersfIndustryfEcuador,2009ILOsurveyresponse). Inmoneyterms,Russianwagesincrudeoilextractionan dnaturalga shaveincreased rapidly.Theaveragemonthlywagewas25,098rubles(RUB)in2004,an dRUB47,188in 2008(equivalenttoUS$874an dU S$1,642,attheexchangerateapplyingon19November2009).ervicerganizationmployeesrepaid5peren telowhisate.heotal remunerationpackageisinkedtoproductivityviath epayndbonusprovisionsnth ecollectiveagreement.Wagesintheoi lan dgasindustriesdependonmarkettrends.hisinfluencesel to reateregreebyth employeesfservicerganizations.Wages accountfor12-14percentof thesector'scosts,buttheirimpactonoilpricesislow.Therearenowagedifferencesbetweenunionmembersan dnon-members,norbetweenmenan d

women(ROGWU,2009IL Osurveyresponse).Australianpayratesorffshoreupportoccupationshaverisenby30percentor moreverthepastecade.Annualratesorthebl eeaman/integratedratingcategory (coveringheul kfffshoreupport/supplyessellassifications)ere64,949AustralianollarsAUD)nOctober000,ndAU D7,672nOctober00 9 (aboutUS$60,050ndUS$81,050).orabosun,hiefcookorchiefcaterer(ondiving supportndpecialistessels),heateser eUD82,246nctober000,nd AU D 107,706nOctober2009aboutUS$76,044ndUS$99,594).Forcomparison,he currentveragennualmanufacturingwagenAustraliaspproximatelyAUD3 8,000 (non-skilled)andAUD55,000(skilled).Wagesarehighintheoilan dgasindustriesan d

employmentintheseindustriesismuchsoughtafter.Thereisnodirectlinkbetweenpayan dproductivity.Exceptfor"loading"Section2.2.Compositionofpay),ompanyan d contractworkersarepaidatth esamerates.Equalpayisprovidedformalean dfemale workersnhendustry.nom eases,herereignificantifferencesnaynd

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conditionsbetweenunionizedan dnon-unionizedworkers.Marketdevelopments,uc has thepri

ilo - working conditions of contract workers in the oil and gas industries

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