It was June 2014 when the oil and gas industry started to experience a downward market. Oil prices fell sharply to around $70 per barrel by November 2014, and this marked an end to a four-year period of price stability above $100 per barrel. Besides the geopolitical and economic factors responsible for the drastic change in oil prices, the prominent factor for the crash of oil prices was the unbalance between supply and demand.
According to the December 2014 monthly update of the United States Energy Information Administration ( EIA ), there was an increase in supply of liquid fuels by 1.8 million B/D to 92 million B/ in 2014, whereas demand did not keep pace. The global demand was low due to high oil prices for too long and low economic activities. On the other hand, supply was up because of U.S. shale oil boom, and the return of Libya’s production. Decreased demand and increased supply directly leads to low oil prices.
It was expected that the Organization of the Petroleum Exporting Countries would play its conventional role of protecting the oil prices by reducing its quota to balance the supply and demand as it always did. However, what OPEC did was totally the opposite. OPEC decided to not cut production in a new strategy to protect its market-share. Consequently, the O&G industry was dealt a crushing blow. The crash in oil prices has led to many layoffs, spending cut backs, project deferrals, service price deflation, renegotiation and significant delays at major projects and this officially announces that the O&G industry is in a downturn.
What the Downturn Means for Recent Grads?
The crash in oil prices especially after November 2014 -when OPEC decided to stick to its market-share strategy- has led to many layoffs from both operating and service companies along with a slowdown in the hiring activities or completely putting a freeze on hiring. As a consequence, many O&G professionals have lost their jobs and fresh graduates are finding it extremely hard to secure a job in an industry they spent four years earning an entry ticket to.
The increase in the number of people seeking jobs -both due to the current layoffs that left many professionals unemployed and recent graduates- accompanied with few or no job postings from O&G companies has undoubtedly made 2014 as a pivotal point where a transition in the market type from “candidate-driven market” to a “client-driven market” took place.
In a client-driven market where demand for jobs is much more higher than what is being offered, the competition is extremely high and the possibilities of securing a job is much lower especially for recent graduates. Job applicants with experiences and job training are more preferred than recent graduates in such a market. This is due to the fact that the value they add to the company comes much faster than what fresh graduates do, and this is due to the longer time required to train fresh graduates.
Even in the case of fresh graduates job openings; in a client-driven market, O&G companies are at an advantage of having a chance to choose the best candidates with even less salary. This is due to the fact that in a client-driven market, many applicants compete over few job openings unlike in a candidate-driven market where prospective candidates are currently working, and there is a need for new workforce which gives an advantage for any applicant to get the job with less competition.
Low oil prices and its consequences on the hiring activities has also driven many petroleum related courses’ graduates to either divert into different industries -sometimes not even related to their field of study- or spend their time at home doing nothing other than killing the time waiting for the market to recover. It is true that fresh graduates and professionals who lost their jobs due to crash in oil prices are experiencing a bad time, but this is the price to keep the industry going and guarantee an even-keeled revenue stream and business sustainability.
How To Survive The Oil Market Downturn?
It is important to keep in mind that the oil and gas industry is boom and bust by nature, the curent oil market downturn is not the first and definitely will not be the last. A similar downturn occurred in the late 1980s through the 1990s and the most recent downturn occurred in 2008. Downturns are harsh realities that can not be avoid as it is the nature of this business, what you can only do as a recent graduate -passionate about this industry- to navigate the industry during the downturn is the following:
1- Keep in mind that it will get worse before it gets better as the current events in 2015 are indicating signs of no price recovery such as the continuous increase in production from Iraq, Iran and Libya and few others countries, China’s dramatic slowdown, refining maintenance season which is about to begin soon, Greek crisis and lifting sanctions from Iran. Knowing that things will get worse will ignite the fire within you to take the following advice seriously and work hard.
2- Get informed about the current events in the oil and gas industry. Know where layoffs happened, which sectors are more affected and which are still having employment activities and apply for it. Besides, knowing where new projects are taking place will help you to increase your possibilities of getting a job by applying for jobs in response to the need.
3- Diversify. This means keeping your petroleum engineering skills board. It doesn’t matter what your focus is, and what was your final year project, you should learn about other engineering discipline, and read more. It also means cultivating news skills that will surely set you apart from the rest of your peers.
4- Widen your connections. This is a very crucial point not only for getting a job, but also for your career development and success. Create a LinkedIn profile if you do not have one, make it professional, start adding people and network with them. Attend conferences and events related to your industry. All those will help you widen your network, which comes with an advantage of increasing opportunities.
5- Volunteering. Volunteering during a downturn has a career benefits. Apart from enhancing your industry network which surely can help you get a job, it develops your leadership skills, provides a résumé boost, and it gives you access to technical information. Never underestimate the outcomes of any volunteerism activity even if it is not related to your field of study. Just go for it, and learn. Chances are, it will pay you back later.
6- Get a job that will help you be independent and support you to make a living. It does not matter where, as much as you work, and make money. And in case that you can afford to further your education, do so. This add value and increase your chances of getting a job later especially if you further your study in business administration, finance and so on.
The downturn is going no where at least for the end of 2015, and it is your decision how to react to that. If O&G industry is your passion, I trust you will fight and win the battle. But before that happen, a lot must be done, so start now.
