Skills shortage may hit oil projects - expert

A stabilising of oil prices above $70 is likely to expose a skills shortage at Gulf national oil companies (NOCs) which could lead to “bottlenecks” in completing projects designed to ramp up capacity, according to a leading energy consultant.

With oil now above the $70 a barrel mark, companies would be more inclined to embark on projects to raise capacity following a period of infrastructure spending restraint due to lower oil prices, said David Smith, vice president of Celerant Consulting, which advises leading NOCs in the region.

“The key thing that will affect them is that a skills shortage will start showing again,” he told Arabian Business. “That’s been less of an issue for the last year because things have started slowing down.”

There could be a particular skills shortage in Iran, as the government looks to raise production on the world's second-largest oil and gas reserves, Smith said.

“With places like Iran opening up in the region and with the fact the oil price is now looking attractive, the pace of projects, of which there’s been a lack, will start increasing,” he continued.

“We will start coming into some bottlenecks which were very much there a year back when they (NOCs) couldn’t get the skills set they wanted.”

He said a key way to address the problem was by taking steps to make NOCs’ existing workforce more productive.

“It’s more about lost time and how do you make things work more efficiently,” he said. “Especially in oil fields, you find there’s a lot of lost time. A lot of its goes back to planning, you will never get rid of it entirely but you can reduce it significantly.

“We’ve seen opportunities to get up to 40 percent improvement in productivity, this is a step change.”

Oil prices have endured a tumultuous year, reaching a record high of over $147 per barrel in July last year before collapsing towards $32 in December but then more than doubling.

Benchmark US light crude oil futures were trading around $71.50 per barrel on Friday.

International management consulting firm Celerant opened an office in Abu Dhabi In April to initially focus on the energy sector in the region but to expand into chemicals and government consulting.