The Best Business in the World

I have heard the following quote attributed to both J.D. Rockefeller and John Paul Getty, although I have been unable to verify its actual source.  Not that it matters, as it’s as true as true can be:

The best business in the world is a well run oil company.  The second best business in the world is a badly run oil company.

Many people probably labour under the impression, as I once did, that oil companies represent the most efficient, well-managed businesses going.  How else would they make profits running into the billions year on year?  Anyone who’s worked in an oil company will quickly learn that nothing could be further from the truth, and perversely it is their very success which makes them so inefficient.

Oil companies make money by opening a spigot and flogging what comes out.  What comes out is extremely valuable, so they make an awful lot of money very quickly.  But if it is so easy, why isn’t everyone doing it?  Because to get into a position where you own the spigot and what comes out of it you need to have invested an enormous amount of capital, which few people have.  By far the greatest contribution of western oil companies to any given development is their stumping up enormous amounts of the necessary capital.  Their secondary contribution is to manage the expenditure of this capital in an efficient and responsible manner.  Of course, the criteria for that last one is that the oil company must be more efficient and responsible in matters financial than either a kleptomaniacal tin-pot dicator or anyone else in the position of owning an oil well, who thankfully for the western oil companies all happen to be kleptomaniacal tin-pot dictators.  Or Russians, who have even less clue than tin-pot dictators how to spend money wisely.

Anyway, the upshot is oil companies throw lots of money at a development and make lots of money in return.  LOTS of money.  If you are making lots of money, what is your incentive to do something differently?  There isn’t one.  If you are making lots of money, what is your incentive to do something which is not only different but a right pain in the arse as well, like sack an idiot, launch an efficiency drive, or refrain from airfreighting scaffolding tubes around the world?  None whatsoever.

Contrast this with an engineering company providing services to an oil company.  How do they make money?  Well, they convert manhours into drawings and sell the drawings.  Sometimes they even sell the manhours and hope the oil company won’t notice no drawings have been produced.  They do so on a margin of somewhere between five and ten percent.  In other words, if an employee of an engineering company goes to the toilet, makes a coffee, picks his nose, or surfs the ‘net for 3-6 minutes an hour, the company loses money.  Which goes a long way to explaining why most of them do, unless they happen to have a subsidiary in Jakarta or Chennai stuffed full of people who go home at weekends to till the family farm with a buffalo.  For engineering companies, time is money and people are vital.  For oil companies, oil is money and people are involved for some reason, but nobody’s sure why.  The difference can be appreciated by observing a typical first day of work at both companies.

When you join an engineering company you get instructions to present yourself at the office no later than 8am.  You walk through the front door bypassing the empty receptionist’s desk (being an overhead she starts at 9am), and find your manager’s office.  You know who he is because he interviewed you last week.  He will run at you as if he has discovered there are only 24 hours in the day instead of the expected 30.  He’ll grasp your hand and, taking you by the shoulders and wheeling you around, propel you to an empty desk outside his door.  There you will be plonked into a seat opposite a computer which is already booted up, and has a Post-It note stuck to the screen with your username and temporary password.  Before you’ve caught your breath your boss will have plonked a pile of papers on your table, splurted out the location of a folder on a server you don’t know the name of, and told you to “get up to speed” in preparation for the meeting this afternoon.  By the time you go home at 6pm you’ve delivered a presentation, negotiated a contract or two, reviewed a folder full of drawings, done your HSE induction, been issued with a badge, missed lunch (nobody ever tells you where to get grub on your first day), written a progress report, and feel as though you’ve worked in the company a month.

When you join an oil company you get instructions…actually, no you don’t.  You don’t get any instructions.  Your first day on the payroll is 1st September, and by 18th September you think it may be time to give somebody a call to ask when and where you are supposed to be.  After finding out that the person who interviewed you has now been promoted to Senior Venture Planner in the company’s Rio de Janiero office, the person who has replaced her has no idea where you are supposed to be.  She promises to get back to you.  By October she will probably have called you having been on the receiving end of a phone call from a bewildered engineering manager who thought he was supposed to get a new engineer sometime this autumn.  By mid-October, if you are lucky, you will know where you’re supposed to be and on what date.  If you’re daft enough to turn up before 9:00am you can expect to wait outside the door for a while, staring helplessly through the glass at the empty reception desk beyond, or the plastic square against which you will one day press your badge to gain entrance.  Once everyone else arrives and somebody lets you in, you’ll speak to the receptionist at the front desk.  She will take you through to an admin. girl whose job is to…well, nobody is sure.  But she will give you a blank look as the receptionist skedaddles back to her desk before she can get roped into doing any more work today.  The admin. girl will um and ah, um and ah, and when she sees you’re not going away she will pick up the receiver of her phone and stab a few buttons.  The conversation that will follow, if you can call it that, is akin to that which takes place between an employee at a job centre and a smack-head who has been told to show up or else lose his dole cheque.

After a lot of pouting and snorting, the admin. girl will take you down the corridor, into a lift, up a few floors, out of the lift, down another corridor, and into an office containing a Human Resources department and more incompetence per square metre than anywhere else on earth.  A sour-faced harpy will bark at you for having come to the wrong office on the wrong day less than a minute after saying she doesn’t know who you are and she’s not the one dealing with you.  She will then ask you where you are supposed to be working, perhaps not realising that you are stood there hoping she might be able to tell you.  She will make a few phone calls, grumbling that her busy day has been disturbed and she might not be able to book herself on the training course in Paris before lunchtime.  She will put the phone down, look up at you, and say something along the lines of “Okay, you need to go to Churchgate”, as if its meaning and location were self-evident.  If you ask where it is you can expect an impatient snort, a wave of the hand, and no useful information which might help you get there, so you’re better off wandering down the corridor poking your head in the offices as you go and finding the nearest expat.  He’ll tell you where Churchgate is.

Unfortunately, when you get there the bloke you’re supposed to be meeting will be on leave.  The department admin. girl, different from the other one in name and appearance but identical in all other aspects including manners and competence, will plonk you at an empty desk and tell you to wait until he comes back.  From his three-week skiing holiday?  Apparently yes.  By this time it’s 11am and everyone is starting to think about lunch.  You know this because since you’ve been sat down half a dozen people have wandered aimlessly past carrying mugs of coffee and engaged you in idle chit-chat, and the admin. girl has already left.  By the time you’ve explained to everyone where you’ve been working previously it’s actually lunchtime and you join a jolly throng of twelve of your new colleagues on their way to the staff canteen.  Over three courses and an hour and a half you get to know everyone, but alas nobody has the faintest idea of what job you’re supposed to be doing.  “Maybe you could ask HR?” they advise kindly if not a little naively.

The afternoon is spent trying to find out when you will get your computer, when you will get your badge to let you in the front door, and when you will be doing some work.  The answers do not come easily, but through toil and perserverance the results come in and are, respectively: at least a month, at least a month, and loud guffaws with one request not to swear.  By the time you go home at 4pm you’re thinking one thing only: thank f*ck I left that engineering company!


Agency Trouble

I’ve received an interesting email from Orion Group, one of the largest manpower supply agencies in the oil and gas business.

Dear Engineer

Important information regarding ‘QED International (Oil and Gas) Nigeria Ltd’

“Before you accept any potential assignments with them, I thought you should know that Orion Group have issued invoices to QED International (Oil and Gas) Nigeria Ltd totalling a sum over $700,000 dating back to February 2009 which remain unpaid.”

Alan Savage, Chairman, Orion Group

This doesn’t surprise me in the least.  I spent a lot of time over the past few years watching these agencies, and even had a spell working for one of the largest (not Orion) last year.  In my opinion, they are often represented by the industry equivalent of the second-hand car salesman.  Typically, you will sign up to their website and post your CV.  You will apply for one or two of the positions advertised and never hear anything about this again.  However, a month or two later you will get an email or phone call from them about some job in Saudi Arabia, details of which are non-existent.  They can’t even tell you who the client is, what the rotation is, or give even a basic job description.  But they will ask you for your expected salary and your current salary.   If you give them the details and “apply” for the position, it’s almost certain you will never hear anything again.

That’s probably because the position doesn’t exist.  These companies do a lot of market research masquerading as recruitment, harvesting CVs against which they can put a rate to help their clients – the oil and gas companies and service providers – gain knowledge of the labour market.  The request that you submit an expected rate accompanies almost every email, and is asked at every preliminary interview without fail.  If you respond with “Well, what are they offering?” you will never, ever get a straight answer.   You’ll get some guff about how they don’t have all the details yet, but they need to know what rate you want just in case your expectations are “miles out”.  Even used car salesmen don’t ask people to say how much they’re willing to spend on a car they’ve not even seen.

I get the impression these companies are forever trying to solve the chicken-and-egg conundrum.  They need lots of CVs on their books in order to get contracts with their clients, but they need jobs from their clients to get the CVs in.  One way to get lots of CVs in would be to invent a load of jobs and encourage people to apply for them, and then go to a potential client with a barrowful of CVs to show how great they are at attracting talent (and nailing down market rates).  I don’t know if this actually happens, but I suspect it does.  I’d be willing to bet that over half the jobs posted on the websites of oil and gas recruitment agencies are not actual jobs in the way you or I would understand it.  An engineering company bidding for work on a project would need to submit CVs and calculate labour rates, and what better way to do it than advertise the positions, submit the CVs that come in, and use the day-rates provided?  And if the company doesn’t win the work, then never mind.  The only people whose time has been wasted are a few dozen professional engineers and an agency lackey or two.  You might also get an oil company vaguely thinking about maybe doing a project at some point in the future, a skeleton team is put together which includes an engineering manager who has nothing to do but think about how he will staff his organisation in the unlikely event that the project clears the two years of financial wrangling and approvals, and before you know it a load of jobs appear on an agency website.  The reason the agent can’t give you a proper job description is because he hasn’t been given one by his client, and the reason his client never gave him one is because he hasn’t the foggiest idea how to write it, let alone get terms and conditions such as salary, accommodation, and rotations specified.  Then you’ve got the engineering companies who are hopeless at retaining people and daren’t stop advertising for positions in case they lose yet another engineer and they don’t immediately have a candidate to replace him.  Never mind if somebody applies for a job and the position is not yet vacant, he can just hang on until we need him.

I’m not saying that Orion are exactly like this, if anything they are one of the better agencies out there.  But what I talk about above almost certainly happens with all of them to one extent or another, and you’d be forgiven for thinking that they might take a bit more care to establish a relationship with their clients such that they are not posting adverts for non-existent jobs and wasting everyone’s time.  But this would fundamentally misunderstand the role the agencies play in all of this.  The agencies do not merely charge a finder’s fee for anyone they recruit, they actually serve as the employer who then seconds the employee into the client organisation, for a percentage fee of the salary.  The one and only goal of the agencies is to get as many employees seconded into a client organisation as possible whilst expending minimum effort.  Given that it takes almost no effort to forward an email from a client regarding some vague job somewhere to a couple of hundred people on a mailing list along with boilerplate body text about submitting their expected rate, and should they be successful in seconding somebody for this position they would stand to make several thousand dollars, you can understand why the agencies have little interest in ensuring the jobs they advertise are real.

And unfortunately this attitude doesn’t end at the recruitment, it continues all the way through the employment.  It takes almost no effort to start up an agency, I reckon you’d need a desk, a computer, a phone, and an ability to bullshit for a few months.  Stuff like preparing contracts, arranging visas, etc. you can work out later.  And you don’t need to know anything about the jobs being advertised because, let’s  face it, the HR manager in the client company didn’t have a clue when he or she sent the thing and chances are the engineering manager doesn’t really know either. Having worked through an agency for a company which failed to give job descriptions for people who had been working there for 6 months and had little idea what to expect of them, I speak from experience.  Anyway, quality control amongst recruitment agencies is not as high as it perhaps could be (putting it politely).  And once an agency has got its foot in the door with a client, there is no way they are going to upset the apple cart by asking silly questions from potential recruits, and once its got a contract in place and is seconding people in there is even less way they are going to be asking even sillier questions on behalf of their employees.  I have had somebody in one of the agencies admit to me that they are terrified their client will move to another agent who will charge a smaller percentage fee, so they are careful not to make any waves.

What this means in practice is the employee gets the run around.  For example, an employee will arrive in-country on a deal which supposedly includes full medical cover.  When he gets there he finds he is only covered for emergencies, but as he is there 70% of the year he is not too happy that for all non-emergency treatment or consultations – which he gets for free back home on the NHS – he now has to pay for himself, and it is far from cheap.  So he speaks with his agent and asks why his medical cover is less than expected, and the agent will whine that “this is the deal we’ve signed up to” as if that’s actually an explanation instead of merely an alternative to a gormless silence.  When the employee will ask that he gets given proper medical cover as promised, the agent will whine that “we can only recover the costs that the client will agree to”.  So the employee speaks directly to the client, who says it is nothing to do with them and they must speak to the agent.  And the agent will not take the matter up with the client because they will not do anything which might jeopardise the money that is rolling in.  So an employee is not properly covered for medical expenses?  Who cares?  Not the client, and not the agency.  Expand this across such issues as pay for travelling time, per diems, laundry bills, visa runs, airport transfers, etc. and you end up with a lot of aggravation.

To be fair, this isn’t always the case.  If the contract between the agency and client has been set up properly and nobody is trying to skim off a margin here and there, the system can work quite smoothly (it all depends on being honest up front: contractors will put up with anything provided they are told well in advance).  But far too often the client company decides to outsource all its employment responsibilities to an agency who has no power – or rather, no inclination – to solve the typical personnel issues an employee might have.  The result?  The good engineers get annoyed and move somewhere else and the client companies end up employing the wrong sort of people, leading to grumbles about not being able to find the right people.  The agencies make a little money and the companies save a little money, all to the detriment of the industry as a whole.

All of this brings me to my point, which regards the email I received today from Orion.  Agencies seem to take no interest whatsoever in the nature of their client, and demand nothing from them by way of honesty, clarity, or anything else which would normally underpin the relationship between employer and employee.  So I’m hardly surprised to see that an agency has found itself contracted to a client which hasn’t bothered to pay its bills.  Perhaps if agencies weren’t so keen to jump into bed with anyone and slavishly entertain their every whim, you’d find this sort of thing wouldn’t happen (and I’m sure this is not the only case like it).

This is not to say that the agency system is broken beyond repair, it is not.  Indeed, the agency system is vital to the industry, not least in keeping an awful lot of good engineers employed.  And not all agencies are rubbish, and not all client companies are bad.  But there are certain client companies which discharge their responsibilities in return for no questions being asked and an easier life, and some agencies appear to be all too happy to oblige, usually at the expense of the employee.  This does nobody any favours in the long run, especially in an industry which is forever complaining of a shortage of good people and the difficulties of recruiting them.  What is needed is for the major agencies to step up and be a lot more discerning about the jobs they advertise and the companies they do business with, and to be open and honest with their employees and represent them on issues of genuine grievance.  But more importantly, the client companies should ensure that they work with the agencies openly and honestly and do not use them as a mere vehicle for screwing down rates, dodging personnel issues, and hoodwinking engineers.


New Job

Having been unemployed for 3 months and 15 days, today I was offered a job.

In Nigeria.

Which I have accepted.

I suppose you’ll want to know why I’ve agreed to go there.  I can assure you I don’t particularly want to, I have never had any inclination to visit Africa, let alone live in one of the continent’s most violent corners.

The reason is that the offer has come from a large and well-known international oil company who has agreed to employ me in a staff position, complete with all the perks and benefits, with the aim of giving me a full career.  If this works out, I will have a secure, well-paid, interesting job with real prospects of training, career development, and promotion until I retire.  Relative to my previous jobs, this is like me playing Sunday league football and then Manchester United coming along and offering me a 10 year contract with the likelihood of renewal for a further 15.  In the oil industry this is about as good as it gets, and way beyond what I could have dreamed of getting when I got sacked in February.

So the price of entry into this highly prized position is an acceptance that I could be sent anywhere and that anywhere is Nigeria, for 2-3 years at least.  The good news is I am guaranteed to be posted somewhere else next time, so there is no danger of my being there permanently.  But I have put in time on the Burgan field in Kuwait (the most boring place on earth) and Sakhalin Island (both the best “hardship” location in the industry, and the best kept secret) so I am not in the least bit worried about being sent to Nigeria for a while.  The days of my worrying about being sent to work in a weird environment are long gone, and I am sure this was not lost on those who interviewed me.

So how did I get this job?  An old boss called for me?  A friend put my CV onto the desk of somebody in the company?  No.  I got the job in a manner which is known to be impossible in the industry: I applied cold on the corporate website.  I had a preliminary telephone interview, and then was summoned to Singapore to undergo three separate interviews.  For the first time in my life, and this is easier to say in hindsight than it was before today, I was sitting in front of people confident that I knew what I was talking about and my experience was pretty good considering my age.  They made me sweat for a few months, during which time I was offered not one other job, although I did have an interview for a contract position with another major oil company who gave me the impression they were a bunch of cowboys before not getting back to me to say if I got the job or not.

I am due to start sometime in September, but with contracts being prepared and visa applications this might shift rightwards somewhat.  I will be doing some travelling in the meantime, to Dubai and Lebanon in July and then Sakhalin in August, assuming I can get a visa.  My wife will not be coming with me to Nigeria, instead staying behind in Phuket to tough it out in our apartment, which is all of a sudden looking a lot nicer.  I will get six trips home (or anywhere else) per year so I’ll still be putting in time in Phuket, plus a couple of holidays somewhere else.  I am sure I will have much to blog about when I get to Nigeria, and I fully intend to do a similar job of reporting on local conditions to that which I did during my first year in Sakhalin.

I might also write a little bit more about the circumstances surrounding my sacking in February, which might serve to explain why I am able to get a senior position staff position in a major oil company but am seemingly not good enough for a third-rate outift masquerading as an engineering company which, as far as I could tell, had not managed to complete a single project in three years.  It’s time I started naming and shaming some people.


Australian Projects: The Time is Now

From the ever-informative Upstream Online we get this report of the potential problems the planned Australian LNG projects are likely to face:

“Securing access to resources necessary to develop Australia’s growing LNG industry will not be easy,” Reuters quoted Adi Karev, global leader of oil and gas at consultancy Deloitte Touche Tomahtsu, telling an industry conference in Brisbane.

“Competition for engineers, project managers will be heightened and project finance and raw materials will be strained given the competition for other LNG and large-scale infrastructure projects.”

According to a forecast by the Chamber of Minerals & Energy of Western Australia, even under its most pessimistic forecast, the state needs to recruit some 10,000 extra workers through 2011, rising to 37,000 by 2012 when LNG construction reaches it peak.

“With a skills shortage widely recognised throughout the industry, LNG projects that come in at a later date risk facing much higher costs,” Karev said.

I have long maintained, uncontroversially I might add, that the greatest restrictions to oil and gas developments are not technological or geological but political.  The Australian projects are no different, and there have long been complaints about Australia’s lethargy in getting its projects going forward in the face of umpteen, ever-changing environmental issues, indigenous claims, and daft political ideas like slapping a 40% tax on coalbed methane projects at the 11th hour.

And I fear it is politics which is standing in the way of owners of Australian projects addressing the enormous manpower shortages they will certainly face, as highlighted in the quoted article above.  As somebody unemployed in the oil and gas job market, naturally I have considered Australia as a good place to look what with several huge LNG projects on the horizon, and indeed there are hundreds of jobs being offered across dozens of positions.  However, following several applications, I have had a number of phone calls from recruiters in Australia all asking much the same question:

“I don’t suppose you have residency rights in Australia, do you?”

To which the answer is no, I don’t.  But I am perfectly willing to relocate and become a full tax-paying resident of Australia if a company is willing to sponsor me (actually, I’m contemplating going unsponsored, but that’s another story).  Unfortunately, all the recruiters give the same response: they are not yet allowed to sponsor foreigners to come and work; they have been told to recruit only those who already have working rights in Australia.

On the face of it, this might sound sensible: give jobs to the unemployed in Australia first and then bring in foreigners to fill the positions that are left.  However, on deeper inspection this policy is pretty damned stupid.  Firstly, from what the recruiters are telling me, they do not have enough suitable Australians to fill these positions right now, which is why they are calling me up in the vain hope I’ve negelected to mention I have Australian work rights.  Secondly, unemployment in Australia appears to be regional, mainly because people from Sydney or Melbourne are generally not prepared to up and move to the barren coasts of Western Australia.  The oil towns themselves have very little unemployment, and those that are unemployed in such places, as in Sakhalin, are usually in that predicament for good reason.  What the projects are facing is not a shortage of people in Australia, but a shortage of suitable people who are willing to relocate to Perth or one of the remote oil towns.  Thirdly, oil and gas requires not just anybody but people with certain skills and experience.  It is all very well pointing to the unemployed of Sydney or Melbourne, but unless they have the necessary skills and experience to get stuck into an oil and gas project, they are not much use unless as an apprentice somewhere.  And it is this third problem which is the biggest that Australia faces: even if all their expatriate workers came home and started happily paying tax as Australian residents, they would still be facing massive shortages in a year’s time.  Australia does not have a big population anyway, and they simply do not have the numbers to man up the projects without bringing in foreigners.

Now, all the recruiters recognise that at some point the Australian government is going to have to relent and let the project operators sponsor foreign workers, and I’m sure that will happen in a year or so.  But the Australians are going to make the same mistake almost all the oil industry does with tedious, cyclical regularity: wait until the market is booming and the very last minute before launching and all-out, desperate, recruitment drive in order to get the project staffed properly.  The likely result?  Twice the price for the wrong people who stick around only half as long.  With the way the oil price is going, and with other large projects creeping into view, conditions in the job market are improving rapidly, and within a year or two there are likely to be good times again, especially once the numbers of those retiring or already retired are properly felt in the market.

Currently, most people in the oil and gas business are employed in one way or another, albeit often with shoddy outfits. People who lost their jobs during the last oil price crash and found themselves working in companies like this are often far from happy and would leap at the chance to move to a more competent outfit with brighter prospects and not managed by somebody who, for instance, probably should have stayed playing Hooray-Henry in the officers’ mess.

Now is the time for Australian operators to recruit the extra bodies they will need to man their projects, while rates are relatively low, availability is relatively high, and they are in the position to offer longevity and stability to potential employees.  By the time they relax the laws to allow foreigners in they might find the overseas labour market a very different place, and it won’t have changed in their favour.


Unrealistic Job Advert #6

This for a project construction engineer:

Ideally Degree educated, with over 10 years experience on similar onshore construction projects, prefer previous Gulf experience, should have a background in Mechancical (sic), Electrical, Piping, Structures, QA QC and HSE disciplines.

Erm, that’s four core engineering disciplines and two secondary ones.  You want to give my old mate Des a call?


Unrealistic Job Advert #5

This one is for a senior reliability engineer:

Required qualifications

– Russian citizenship

– 10+ years experience in reliability sphere

– Knowledge and application experience of reliability and integrity management systems and analysis is essential.

And where do they suppose this Russian obtained his 10+ years of reliability and integrity management?  In Russia?!!


Unrealistic Job Advert #4

A project engineer, based in Milton Keynes:

Fluency in Arabic and English is essential, along with prior experience of working with the Iraqi Ministry of Oil.  Additional experience of working in Iraq in a commercial environment and a demonstrable knowledge of local culture and working practices is a distinct advantage.

Candidates must be from the European Union.

I’m sure there are lots of Arabic speaking Europeans with experience of working in Iraq just queuing up to apply for a job in Milton Keynes!


Unrealistic Job Advert #3

This one was emailed to my wife:

We are looking for translators to translate Russia city names from English to Russian (Cyrillic alphabet). For the person who wins the project, we need a guarantee that you can complete this within 5 weeks but the earlier the better. Further, you should guarantee your work to be error free for up to 1 year. When our customers find translation errors, you agree to fix it within 10 days or less.

There are 190,418 cities in Russia that need translation.

The bid will be won based on cost and experience (the lowest bidder with the most experience wins the project so give us your best price). Please give us a project price, not a per city cost. We are looking for someone who can get started right away. Tell us about your translation experience.


5 weeks maximum.  190,418 cities. Assume a 60 hour working week, excluding breaks.  That gives us 300 hours to complete all 190,418 translations, which equates to one every 5.7 seconds.

Dream on.  They need a computer programmer, not a translator.