Implications of Crude Oil Price change on Managing Human Resource in Oil and Gas Organizations: A Focus Group Study

Since ۲۰۰۰, the global oil and gas market has witnessed extreme price volatility in the crude oil market. The crude oil prices jumped from as low as US$۱۶ per barrel in November ۲۰۰۱ to a high of US$۱۴۴ per barrel in July ۲۰۰۸ (EIA, ۲۰۱۸). Subsequently, oil price fell by ۷۴% from US$۱۴۴ per barrel in July ۲۰۰۸ to US$۳۷ per barrel in December ۲۰۰۸. The Crude oil price fell by ۶۰% during June ۲۰۱۵ and January ۲۰۱۵, and by ۶۱% during May ۲۰۱۵ and January ۲۰۱۶ (EIA, ۲۰۱۸). There have been multiple instances when crude oil prices fell by more than ۵۰% in a short span of time, as shown in Figure۱In ۲۰۱۵, global E&P spending declined by ۲۴% year on year owing to the decline in crude oil prices (EY, ۲۰۱۷). Continuing with the ۲۰۱۵ trend, CAPEX spending declined by ۲۷% year on year to US$۱۰۳ billion (Jones, ۲۰۱۷).The volatility of oil and gas prices have resulted in changes in the oil and gas sector, which has had a strong impact on existing manpower and manpower planning. The Big four oilfield service companies- Halliburton, Schlumberger, Baker Hughes and Weatherford – plan as many as ۴۹,۵۰۰ cumulative job layoffs in ۲۰۱۵ (Bertrand Pierre, ۲۰۱۵)Halliburton reduced its workforce by ۱۰% in six months in ۲۰۱۵ due to declining crude oil prices (Wray, ۲۰۱۵). Sixty thousand direct and indirect jobs were hit in the UK in ۲۰۱۶, and in subsequent years more people saw the exit door. (“Oil job losses ‘worse than expected’ - BBC News,” ۲۰۱۷). Oil major Royal Dutch Shell reduced its workforce by ۱۲,۵۰۰ in ۲۰۱۶ owing to weak oil prices (Reuters, ۲۰۱۶). A report by Graves and co. states that about ۴۴۰۰۰۰ jobs have been lost in oil and gas companies (globally) since Fab ۲۰۱۷. (Jones Valerie, ۲۰۱۷). Alberta oil ( Canada) lost some ۶۰,۰۰۰ jobs when the oil prices plunged, many of the retrenched workers have taken up jobs in non- renewable sector (Gerster, ۲۰۱۸). Schlumberger cut almost ۷۰,۰۰۰ jobs in less than three years as its revenues plummeted ۵۰% due to the downward pricing trend (Blum, ۲۰۱۸). A study ( global survey) by the University of Houston confirmed that out of the total workers laid off ۲۵ % had moved to another industry, and ۵۵% are considering it. (Hampton & Williams, ۲۰۱۷). A report by rig zone has stated that many experienced and old people in oil and gas have stated their frustration on being asked to leave work to take place for the younger population.