Skills shortage to slow down LNG sector

AUSTRALIA'S skills shortage is taking its toll on the country's liquefied natural gas industry with the shortage fast emerging as a major constraint for ambitious growth plans, according to Macquarie Private Wealth.

Macquarie said with Australia accounting for many of the world's LNG projects in the design and construction phases, operators and contractors were having to fight harder to attract and retain staff. 

"UK recruiting firm Hays recently found that Australian energy companies are paying engineers, geologists and other contractors 35 per cent more this year than last," the firm said. 

"Hays also found that professionals in the Australian oil and gas industry look set to earn 90 per cent more than the global average this year. 

"These labour shortages and the ensuing wage inflation are a growing concern for the industry."

The Australian Petroleum Exploration and Production Association recently said $88 billion worth of LNG projects were already under construction around the country while an additional $100 billion worth of projects are on the drawing board. 

In Queensland alone, around $50 billion is expected to be invested in the state's coal seam gas to LNG industry.

Two CSG-LNG projects in the state are currently in the construction phase, representing $31 billion in committed capital expenditure. 

Around 5600 people are currently working on the two projects – Santos' Gladstone LNG and BG Group's Queensland Curtis LNG, while the sector has the capacity to create 18,000 direct and indirect jobs. 

The latest report from Hudson, which surveyed 4852 employers Australia-wide, found the resources sector continued to experience the highest level of employer sentiment with 59% of employers intending to increase headcount during the July-September quarter. 

This will no doubt put increasing pressure on a sector already suffering skill shortages. 

Macquarie said that while the government was moving in the right direction with a suite of initiatives to address the skills shortage, the firm believed that allowing operators and contractors to import labour as required was the only viable solution. 

Hudson regional Australian executive general manager Neville Andrews said that while it remained to be seen if the government's initiatives would be sufficient to address the skills shortage, the issue intensified the need for talent management programs to be well thought through and selection procedures robust in order for employers to find and retain employees. 

Meanwhile, Macquarie said Oil Search, a partner on ExxonMobil's PNG LNG project, continued to be the best placed to manage the skills issue, while Woodside Petroleum, Santos and Origin Energy, which are developing projects in Australian LNG hotspots, are likely to be exposed to the skills shortage.

"While operating in the PNG highlands brings its own set of challenges, PNG LNG does not face the labour shortages and powerful unions looks set to hamper progress in Australia.

"Furthermore, PNG LNG's superior economies should place it in a better position to absorb cost overruns and schedule slippage.

(http://www.energynewspremium.net/)