Sector News

Saudi Aramco’s Clever Strategy To Scoop Up America’s Best Energy Talent

April 7, 2015
News
Saudi Aramco, the national oil company of Saudi Arabia is now gearing up to take advantage of the turmoil in the US shale oil patch. According to Bloomberg Businessweek, Saudi Aramco is looking to hire US oil workers even as many unconventional producers are shedding employees. Career network site LinkedIn lists openings for petroleum engineers and geologists with the company even while layoffs in the domestic oil industry have skyrocketed.
 
Saudia Aramco’s strategy is clever and represents a clear shot across the bow of US unconventional producers. The average energy industry employee makes almost $110,000 according the US government figures, so as oil firms lay off workers the lost income is likely to have a bleed through effect on other parts of the economy. That effect may already be observable in the surprisingly weak job figures.
 
By all accounts, Saudi Aramco has always wanted access to the best oil and gas talent that they can find. Oil and gas resources are useless if they cannot be extracted in a cost effective fashion and this is especially true in the case of unconventional reserves. As a result, unconventional production growth outside the US has been considerably slower than growth in the US. One issue Saudi Aramco faced is that the harsh climate and foreign culture of Saudi Arabia has made attracting employees difficult. Now, thanks to the decline in oil prices and the resulting layoffs across the industry, many skilled US energy employees face as difficult task in finding comparable employment and the Saudi job offers look more appealing. Postings by Saudi Aramco on LinkedIn are consistently drawing dozens of applications for each opening.
 
The poaching of US workers by Saudi Aramco is ironic but also presents a serious issue for the long term health of the US energy markets. The irony is that the current downward spiral in oil prices took on its greatest urgency last November as OPEC nations met and declined to cut production. While OPEC has not said as much, this decision was almost certainly driven by Saudi Arabia as the block’s only major swing producer. Now with oil prices having crumbled amidst the avowed willingness of Saudi Arabia to tolerate a price war in the interest of maintaining market share, US energy workers are feeling the brunt of the blow.
 
Today’s oil and gas companies are high tech organizations employing advanced technology and many highly trained workers. If oil prices stay low long enough, then numerous small energy companies and service companies will fail.
 
The employees of those failed energy firms will have to either find new employment in other industries or move abroad to work for firms like Saudi Aramco or Statoil that have national government backing and do not need to earn a profit. Over the course of a few years, this would erode the industrial base of the US energy industry and put American oil production into permanent decline even if oil prices bounce back.
 
If this sounds far-fetched, just look at what happened to the manufacturing base in the US. Liberalized trade, three recessions since 1990, and economic incentives by foreign nations pulled US manufacturing abroad. Now, even as wages rise in third world nations and US retailers complain about a lack of American made goods, manufacturing has not come back. The skilled workers in the field have all moved on, and the companies that made up the supply chain have moved abroad or gone out of business for the most part. The future is not written in stone, but the US energy industry of 2040 could look a lot like the manufacturing industry of today.
 
Saudi Aramco seems to be playing a long term strategy against US oil firms. Those firms would be wise to see that and respond accordingly.
 
By Michael McDonald 
 
Source: Oilprice.com
 

comments closed

Related News

August 23, 2019

The higher purpose of being a CEO

Borderless Leadership

LinkedIn Twitter Xing EmailWhen I left my second large company experience to become President of a small manufacturing company I did so driven by ego; I fancied the title. Soon […]

August 23, 2019

As Brexit nears, Britain’s drugs, devices and pricing regulators seek the exit

Life sciences

LinkedIn Twitter Xing EmailFirm details on exactly how the U.K. will regulate new medicines is still to be decided after it leaves the EU later this year (caveats on timing […]

August 23, 2019

The Simply Good Foods Company acquires Quest Nutrition for $1bn

Consumer Packaged Goods

LinkedIn Twitter Xing EmailThe Simply Good Foods Company, the owner of Atkins-branded food products, has secured a deal to acquire protein snack maker Quest Nutrition for $1 billion. Quest, which […]

How can we help you?

We're easy to reach