Oil companies to dig deeper into their pockets to pay skilled workers

PHOTO | FILE Tullow Oil engineers work at the oil rig at Ngamia One Well in Turkana County in 2012.

What you need to know:

  • In its full-year results of 2013, British explorer Tullow Oil Plc indicated that it has agreed with the Kenya government to begin development studies after the company hit 600 million barrels of oil discoveries in the tertiary rift basin where it operates.
  • “In January 2014, as a result of the significant discoveries made to date, Tullow updated its estimate of discovered resource to over 600 million barrels. Given the significant volumes discovered, Tullow and its partner have agreed with the government of Kenya
  • Another company, Canadian Taipan Resources, in February estimated that the Mandera exploration basin contains 1.6 billion barrels.

Companies operating in the oil and gas sector in Africa will pay 10 per cent higher in salaries this year as discoveries gain momentum.

A study conducted last month by British firm Oliver Kinross Ltd, the organisers of the Africa Oil and Gas Expo 2014, revealed that the increase in wages is driven by rising demand for skilled workers in the continent’s rapidly growing sector.

“We carried out a study with more than 30 organisations that are recruiting in the African oil and gas sector, including oil and gas operators, service companies, and recruitment agencies.

The study revealed that the number of vacancies being advertised in African oil and gas has grown steadily in the past year,” said Neil McKenzie, managing director of Oliver Kinross, in an email interview with the Nation.
“Over 95 per cent of those surveyed expect to recruit more new employees in the next 12 months.”

In addition to increased resource discoveries, the study also links the rise in wages to the shortage in skilled labour and commencement of production in a number of countries.

Jobs in the sector, particularly in East Africa, are expected to increase once Uganda begins production of its oil, which has already been proved to be viable for commercial development.

This will be accelerated by demand for workers in Kenya’s nascent oil and gas sector, with increasing discoveries of oil expected to lead the country to production.

In its full-year results of 2013, British explorer Tullow Oil Plc indicated that it has agreed with the Kenya government to begin development studies after the company hit 600 million barrels of oil discoveries in the tertiary rift basin where it operates.
Development studies
“In January 2014, as a result of the significant discoveries made to date, Tullow updated its estimate of discovered resource to over 600 million barrels. Given the significant volumes discovered, Tullow and its partner have agreed with the government of Kenya to commence development studies,” read part of the statement accompanying the financial results.Tullow estimates that the tertiary rift basin contains more than one billion barrels of oil.

Another company, Canadian Taipan Resources, in February estimated that the Mandera exploration basin contains 1.6 billion barrels.

Development of Kenya’s oil resource means construction of the related infrastructure such as the planned export pipeline between Lokichar and Lamu, which is scheduled for completion by 2016.

Tanzania is already producing natural gas, which has been channelled to generation of electricity and consumption of the resource is set to increase with the planned expansion of the country’s power generation capacity.

But even with the emerging opportunities in the growing oil and gas sector in Kenya, there are fears that most of the population and companies may not be able to benefit as they are yet to comply with the standards required before working in the sector.
Standards

Such standards relate to safety, minimum skills requirement, and certification of equipment to be used in the sector.

“There is a lot of ignorance as many people and companies have not aligned themselves to the requirements needed to participate in the oil and gas sector,” said James Mbote, the managing director of logistics firm Oilfield Movers Limited.

“There will be the need for heavy investment in human resource and capacity building and awareness on what is required to qualify to work in the sector.”