After the recent two week high in oil prices, OPEC’s president has said that the group will hold informal talks in Algiers, with members of the OPEC engaging in constant deliberations to stabilise the market after news that crude prices are expected to rise in the latter part of 2016.
Oil prices have been one of the pivotal issues of 2016
It is expected that the oil price drop will be one of the pivotal issues of 2016. Oil prices are incredibly hard to predict but there is every indication that they will not rise significantly and may drop further during the course of the year. But perhaps not for long! Countries based in the Middle East, like Saudi Arabia, were once able to handle these ever variant prices, but with OPEC agreements have now lost some of their ability to do so because of counterparts. If prices were to go up, this will surely re-energize US shale entrepreneurs who have cut back investments due to low oil prices.
What happens if oil money runs out?
Geopolitically, the impact of low oil prices is concentrated in the Middle East, where political structures are brittle and based on oil wealth-supported patronage. Across the region, there are immediate and direct security threats without any social, political or economic reform processes in place to address the challenges these regimes face from the inside. So what keeps these countries together – as well as those that rely on them for support – when the oil money runs out?
If the oil and gas industry is to effectively re-deploy capability once oil prices rebound, it must learn from its past mistakes and not engage in short-term expediencies. Looking back to the global drop in oil prices that gripped the industry in the mid-1980s, oil and gas companies responded by reducing a large percentage of their workforce and severely constraining the hiring of new graduates. They also curtailed training programmes for oilfield professionals; a trend that carried on through the 1990s. Workforce reductions were an unfortunate but necessary response. Abandoning the development agenda, however, was a mistake – one not to be repeated.
During this same period, the industry made great advances in technology, with new equipment and services in reservoir evaluation, drilling, completions, and production.
So what skills do the Middle East need to work on?
The Middle East is focused on addressing a shortage of skilled and experienced and original chemical Engineers. Many companies have started to implement training programmes, like Weatherford with their NextGen programme, as well as equipping Engineer’s intuitive software tools to optimise across all areas. Software accelerates professional development of junior Engineers whilst maintaining a corporate knowledge base that survives percentages and retirements.
With more and more companies offering vocational training opportunities in house, this will hopefully encourage millennials to take up the ever increasing opportunities within the oil and gas sector, thus creating a talent pool of skilled workers for progressive times ahead.