HR challenges in the Indian oil and gas sector

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There are major implications for the oil and gas sector in terms of the growth path it has charted. Some of them are:

  • The introduction of the New Exploration and Licensing Policy and the subsequent entry of MNCs in the exploration and production sector have given impetus to the country’s oil and gas sector. Unexplored sedimentary area of 50% in 1995–96 reduced to 15% in 2009.
  • The refining sector is expected to see large investments for capacity augmentation, quality upgrades, clearance of bottlenecks and the revamping of various refineries. India is likely to boost its refining capacity by 45% by 2011–12 as against 2008.
  • Demand in the petrochemical sector is expected to touch 10 million tons by 2010, thereby witnessing annual growth of 9–10%. Existing capacities in this sector are likely to double in the next five years.
  • The government’s emphasis on clean fuel is expected to lead to a marked increase in the city gas distribution business.

Despite all the rapid development taking place in the sector, there is still some concern.

  • The oil and gas industry in India currently faces talent shortage: Our study suggests the industry is likely to require around 25,000 additional professionals in the next five years due to business growth and retirement or attrition in the sector.
  • Aging workforce is a cause of concern: In line with the global trend, the average age of workforce in the Indian oil and gas sector is high. Around 50% of employees have more than 20 years of experience, and the majority is due to retire in the next 5–10 years.
  • Employee retirement in the sector is expected to peak over the next five years: Around 11% of the current workforce is estimated to retire in the next five years. This is likely to significantly reduce experienced talent in the oil and gas sector. The sector may also face 34% of employee retirement at the middle-management level.
  • Attracting right talent has become a challenge: Another cause for concern around the loss of industry talent is that skill sets in this industry are highly specialized and difficult to develop and acquire. Thus, the impact of losing industry professionals with five or more years of experience is likely to be of high magnitude.

The trend in the Indian oil and gas industry compares with the
global trend
. This report analyzes the HR issues the industry is facing and how important it is to overcome those, in the light of the industry’s growth.