Every Sunset Brings a Promise of a New Dawn

The Talent of today have a perception, and thanks to media, there is enough hype created about few sectors which they believe are sunset sectors. One such sector being Oil & Gas.

Few major reasons why the above perception has been created:
• The need and the pressure to decarbonize is increas ng – The Green revolution
• Awareness and implementation of ESG is on the up
• Technology and digitization
• Fiscal discipline and access to capital – A definite shift in investments
• Future Growth and Talent availability

Let us understand few trends which will shape the future of the sector:

• The need for Reliable and affordable Energy (Green Energy): Decarbonisation
While there are challenges, the world will still demand reliable and affordable energy. The industry is considered a villain whenever oil prices increase, ignored when prices go low and a threat to environment and climate change. World over governments are trying to enforce decarbonization, but this journey won’t be easy and will take time and cost trillions. While there is a definite push towards renewable energy and electric vehicle adoption, the impact on oil and gas demand remains imperceptible.

Population and economies are growing, there will be increasing demand for reliable and affordable energy. Until fossil fuels are displaced at scale, oil and gas demand will grow alongside.

• ESG will define future business strategies:
The rising awareness and need for a formidable ESG strategy is a must for every organization. ESG will define the future valuations of organisations.

Oil and Gas companies have adopted these challenges as opportunities, are viewing this as a competitive advantage and are working towards creating a robust ESG offering. The companies are simultaneously working towards evaluating opportunities to invest in decarbonized energy, hydrogen, wind, solar, carbon capture, utilization and storage, geothermal, energy storage etc.

• Digitisation, the new trend:
ESG has digitization at its core. While technology enablement of operating processes was a need at a point ESG has brought in a whole new focus on digitization. Transparency and openness around key critical carbon emission data has become a norm. Now organisations are focused towards realtime carbon emission reports. They monetise those emissions and trade them via block chain. The whole idea is to move beyond reporting to being proactive, transparent and with intelligent data.

• Fiscal discipline and access to capital:
Access to capital is definitely going to define the future growth of the Oil and Gas sector. Balancing fiscal discipline and progress on ESG issues, while meeting growing demand and shareholder expectations are going to be key to their future. Capital providers are aware about the sustainability risks and are calculating their exposure and analysing their clients emissions both on absolute and intensity basis. They are also aware of the capital needed for the energy transition. Realistically many are struggling to determine the measure of funding required to meet mid-century and interim emission targets. In the last 3 years itself Oil and Gas companies have invested close to $10bn in renewable energy projects.

The market demands post the pandemic have been very encouraging. While there is reluctance from the capital investors to put money in the traditional Oil and Gas sector but there is a definite under supply of oil and gas commodities. Earlier it would mean great returns but now times have changed.

The times ahead seem exciting for the sector which is at a cusp of a massive transition. The backbone of a successful transformation journey is the Talent which makes that happen.

Traditionally the sector has been blessed with some of the most loyal and committed employees. But with changing times there is a definite need to have a relook at the talent base. With ESG and the focus on digitization the need to have a tech savvy, digitally aware workforce which brings in innovation and speed as a core competence:

• Technology and digital transformation: a definite need for upskilling
ESG has brought about a definite change in the organisations digital thought process. Employee life cycle management and adoption of other engagement, productivity digital platforms have been a norm across companies. Use of AI, AR IoT is common. Data analytics and Dashboards make data interpretation and Data representation skills a must. Few have started moving towards Metaverse and Robotics for few of their functions.

Reskilling and Upskilling of the current talent pool is extremely critical for the future of the sector.

• Aging Work force and shrinking Talent pool:
The average age of the Oil and Gas sector is 43 yrs and that is a major area of concern. Technology upskilling and adaptation is becoming a challenge. The Top management and middle management have not seen a transition for long periods and there are very few being attracted to the sector at the entry level. Agility of the sector is highly impacted and hence is slowing down the sector.

• Diversity:
The Oil and Gas industry has always lacked diversity in its workforce. Research supports the fact that Companies with multicultural and diverse workforce are the most productive and agile. Oil & gas companies need to take a clue from this fact.

There sector needs to shed that fat and embark on a journey of transformation. From being an unattractive sector to a sector which is on path to a transformational journey.

The sector needs to equip itself with a diverse workforce which is young, dynamic, digitally savvy and future focused.

The need of a complete overhaul is required.

Here are few thoughts:

• Employer Brand:
Create an employer brand which is future focused and a culture which is welcoming for the youth. Building a story around the transformational journey which the sector is about to embark upon in the near future. Improve communication across inhouse and outside.

• Skilling and reskilling the workforce:
Creating Digital citizens Skill and reskill the workforce to adapt to changing times. Digital and technology awareness becomes an integral part.

• Young policies and organizational processes:
Rewrite the rules of the game. Make them new, fast, digitized and attractive for the GenZ.

• Flatter organization, Grow Younger Talent faster: drop the average age of leadership
Design a flatter organization and fast track career paths. Have younger leadership at the top and the middle levels.

• Create an attractive entry level hiring package:
Focus on entry level hiring. Have an attractive entry level package which has descent compensation, great flexibility and a superfast career path with opportunities to enhance skills and acquire qualifications.

• Diversity hiring:
A clear focus on diversity (at all levels) hiring (social, economic, disability, cultural, sexual and ethnic backgrounds).

The sector is unique and the above measures are what I believe are the so called “Success profiles” to make that change happen.

Communication is key to change management. Communicate strongly the secret sauce with distinctive value proposition to make this transformation happen.

This sector is on the verge of a huge transformation and I see that happening soon. The next 10-20 years would be defining that journey. Today seems difficult but there is still a long way to go. So just don’t write off the sector yet. I remember this quote from Ralph Waldo which fits in beautifully “Every Sunset brings a promise of a new Dawn”.

- Kaustubh Sonalkar, Board Member, Vantage Circle, USA