Could you brief our readers about the MNR’s workforce capability development program?
Our goal is getting more Kurds employed in meaningful roles in the oil and gas industry in order for them to develop technical skills and for Kurdistan to develop a workforce with the technical capability to manage the industry. Workforce development is a key component of regional development: the oil and gas sector is poised to generate significant value, and we want to retain the maximum share of that value that we can within the region. So this project is not just about getting more Kurds into the industry. It is vital that we develop a skilled competent workforce.
We heard that 63% of the Kurdistan-based workforce for oil and gas companies is made up of locals.
True, and this data does not include service companies. From a survey we did a couple of years ago, we know that the percentage of local staff in the service companies is higher than in the oil and gas companies. So the real answer is higher than 63% - more than two-thirds of those directly employed by the oil and gas industry right now are local staff. But to understand the challenge better, you need go to the last MNR monthly report where you will see a chart that breaks down the IOC workforce by seniority from executive down to unskilled. This shows a high percentage of expats at the senior and high-skilled end diminishing in expats down to the unskilled level, where you see the inverse. So this single percentage measure hides the real challenge.
How would you define the key phases of the workforce capability development program?
I believe we need to first address getting people into the industry in entry-level positions. This is not so straightforward since the industry finds that school leavers and graduates are not well prepared to meet the demands of this industry. We are developing foundation training to provide a better supply of employment-ready young people. Once employed, recruits have to be trained and developed. I call that the apprenticeship phase. This is a structured training and development period that takes maybe five years to get someone from novice through to being somewhat skilled with meaningful qualifications. The third phase, competency development, is then mastering that job skillset, where you become truly competent in your field. That is one perspective of the overall project.
Our goal is getting more Kurds employed in meaningful roles in the oil and gas industry in order for them to develop technical skills and for Kurdistan to develop a workforce with the technical capability to manage the industry.
The other involves breaking the project into job families. Production Operations is one job family, for example. Drilling is another. I started establishing training boards made up of industry representatives to address the specific problems of recruiting, training, and competence development in each job family. This approach is intended to break workforce development down into more bite-sized pieces, so you have people of the same job family focusing on what they can do to get more Kurds developed in that discipline.
How does the lack of this skilled workforce affect the industry?
The immediate impact is cost. It is an impact on the industry, but ultimately, it is an impact on the Kurdistan government. Oil and gas is a global industry. Skilled personnel are readily available in this international market. If you set up a company tomorrow and you need to run a seismic program, you can go hire a seismic expert by the end of next week. So oil companies can easily get personnel, but at a high price. So the lack of local personnel does not actually impede companies doing their work, and moreover, this high cost may not ultimately be a concern to them. Kurdistan uses “cost recoverable” contracts, so while all the costs are at the company’s risk until it makes a discovery, once a discovery is put into production, the company is allowed to recover what it has spent from the revenue generated, before its profit oil is allocated. That does not create a great incentive for the oil companies to reduce costs, which I believe translates into lower incentive to develop lower cost local staff.
You also focus on working with universities. What sort of cooperation will there be in this field?
I am talking to the universities, but a representative of the oil and gas industry, to discuss how universities can better prepare students for our industry. I typically bring about six oil and service companies to the table to discuss what the industry wants from the universities, and vice-versa. We have now established a number of Liaison and Advisory Boards to formalize this dialogue. At this stage it is mainly about understanding what the industry’s requirements are.
Does the MNR support the universities here to open departments dealing with natural resources?
The MNR does not need to be intervening in this manner. A recent survey we commissioned shows that the number of graduates from natural resources programs is already forecast to increase four fold in the next four years. The concern now is the quality of these programs. Through the university liaison I mentioned before we are trying to encourage improvement in university program design, content and delivery.
So what is the status of the project?
We started designing a number of programs. Unfortunately, most programs are not yet launched due to a lack of resources and funds. For instance, we designed the Foundation Training Program to take unemployed graduates and put them through a pre-employment program that helps them understand how the industry functions, what a business is, what expectations are on them as an employee, how to work together with people (cooperating as opposed to competing), etc., but this is currently suspended, albeit temporarily. Other programs are taking time to reach a consensus within the industry as to what should be done. Oil companies have generally proven to be hesitant in really getting behind the project; certainly none are willing to demonstrate unilateral tangible commitment.
So is the main challenge funding?
Yes, my initial estimate is that we need to be spending about $20 million per year on a significant capability development program. A minor part of that is in management, resources and administration, and obviously, a bigger part of it is in training delivery. However, half this funding is needed to establish a training academy– initially something as simple as a facility with classrooms so we can actually run these training programs. Then we can get into some of the vocational training facilities like welding workshops and electrical labs.
I am not saying the government needs to fund the project. A lot of the training is for people who are already working at the industry, and companies will pay for that training themselves. A significant amount, however, is for taking school-leavers and graduates straight from university and putting them in foundation and apprenticeship programs to build the talent pool in Kurdistan ahead of the industry. This is where government support may be needed.
I believe the industry should be more willing to pay for the project, because this workforce is being developed for the industry and will be replacing more expensive expats. I also expect the oil and gas companies to be more ready to work together to invest in building that future talent pool.
How do you structure the priorities of the program?
Foundation Training as mentioned before is a priority. Within the job families I have focussed on competency development in certain key functions. The production operations training board is the most vital to me. Some 4,000 positions will be created in production operations in the next five years. That is a lot of skilled jobs to be created. That, in itself, makes it worthy of attention. The other thing is that those jobs are quite critical in terms of operational risk. These are the jobs involved in operating the facilities that produce, process, and transport oil, gas, (and especially dealing with sour gas). These are critical tasks, and nobody wants another fatality, fire, explosion, or oil spill. What we are trying to do here is to also protect the people of Kurdistan and Kurdish assets. The best way that you can ensure that there will not be an incident is by having competent people running those facilities. Drilling operations are a also a highly dangerous part of the business, so this job family is also a high priority. The health, safety, and environment (HSE) professionals are an essential part of maintaining the integrity of all oilfield activities so that discipline is a focus area also. The other priority job family is graduate engineers and geologists who fill high skilled roles but also because they are the managers of tomorrow. In the oil and gas industry, most managers are either engineers or geologists. Training tomorrow’s leaders is vital.
Does the lack of vocational training schools pose a challenge for workforce capacity development?
In terms of workforce numbers and overall economic impact, vocational trades– welding, electrical, etc.– are very important. And there is a dearth of training infrastructure in the Region. For example there is only one small Kurdish welding school. Historically most welders came from Mosul or the south. To benefit fully from industrial growth in Kurdistan requires that we develop a regional capability for these basic trades. Service companies employ the welders so this requires a different collaboration. One of the challenges they face is that it can in fact be advantageous to hire qualified welders from say Sri Lanka than it is to hire local welders. Part of the reason is wage expectation, part is output, and part is quality. However we can readily copy a welding program because there are models in other countries, but it needs funding. I am sure that If we set up a welding school, companies will hire the students coming out of it. We also believe that there is a commercial opportunity to provide such a training facility; the government does not have to fund the establishment of that school.
Do you see a trend in that direction in Kurdistan?
I do see a desire by some private companies to build training infrastructure. They are certainly looking for an incentive. To have private companies fund the whole workforce project would be ideal but I also understand that it may be a bridge too far. Something that has evolved since I started this is that I have come to put a lot more focus on developing occupational standards. I now think that is the means by which we are going to bring about faster and better capability development. Technical and vocational standards need to be collaboration between industry and government, but once agreed they become the industry’s yardstick. By defining what the acceptable standard is for working as a welder on an oil and gas pipeline in Kurdistan, for example, we drive the employers to have workers who meet those standards. If you also have a school that is developing students to this standard, then that human resource supply chain starts to function better.