SECTION ONE SALARY OVERVIEW

SECTION ONE SALARY OVERVIEW Confidence is returning to the market two thirds of employers surveyed intend to award salary increases in the next 12 mon...
Author: Esther Harrison
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SECTION ONE SALARY OVERVIEW Confidence is returning to the market two thirds of employers surveyed intend to award salary increases in the next 12 months.

Oil & Gas Salary Guide 2010 | 06

Salary overview

Average annual salary for permanent staff by country Results from our survey indicate those working in oil and gas are well paid. With an average permanent staff salary of more than $75,000 globally (based on the combined total of local and imported labour) those in this industry are earning a premium compared to most other industries. There is however still a vast divide between those countries at the top of the table and those at the bottom and for this reason it’s not hard to understand why easily transferrable skills continue to migrate around the world in search of higher returns. Of all the countries on the list only three pay less for skills they import compared with what they pay their local resident employees - Norway, Canada and Australia. All other countries import skills from overseas at a premium, and in some cases at a significant premium. There does not however appear to be any correlation between home salaries and those imported, with Indonesia being at the bottom of the scale in terms of the average salary for local workforce, however it is the second highest payer for those it imports. The same can be found in Azerbaijan. At the other end of the spectrum, Oman pays its local workforce an average ‘mid table’ rate of just over $58,000. However it is the lowest payer of imported labour on the list. (With a highly concentrated

number of employers there is some evidence that this is a reflection of an efficient overseas recruitment policy). If we combine both figures for each country - the five highest paying countries are Australia, USA, Azerbaijan, Canada and Netherlands. Those paying the least are Kuwait, Oman, Libya, India and Kazakhstan. Background Only where the sample size is large enough have we listed countries in this table. Permanent staff salaries are the figures returned by respondents as their package in US dollar equivalent figures excluding one-off bonuses, pension, share options and other non-cash benefits, and for those working on a monthly or yearly payroll. Those on a weekly or daily payroll are extracted and included in the figures for contracting overleaf. The first column represents the average salary for respondents based in their country of origin, the second column for those who are working in that country although originate from another. Where not enough responses were received, entries are returned as N/A.

Salaries Country

Local Labour

Imported Labour

Average annual salary

Average annual salary

Europe

UK Norway Netherlands

92,200 114,700 104,200

94,200 101,000 112,000

Russia & CIS

Russia Kazakhstan Azerbaijan

65,600 30,700 53,300

105,700 88,100 144,500

Middle East

UAE Saudi Arabia Qatar Oman Kuwait Iraq Iran

50,200 67,600 35,900 58,400 N/A 32,600 37,300

88,500 86,400 91,400 67,800 83,500 N/A 89,300

Africa

Libya Angola Algeria

46,000 53,600 33,800

78,700 118,900 107,800

North America

USA Canada

117,900 112,800

128,100 112,500

South America

Venezuela Brazil Argentina

72,300 72,500 65,000

113,700 125,200 N/A

Asia

Vietnam Singapore Malaysia Korea Japan Indonesia India China

N/A 56,700 43,100 N/A N/A 32,000 50,000 51,600

N/A 102,900 131,000 144,100 N/A 136,300 77,800 102,900

Australasia

Australia New Zealand

138,100 99,700

133,700 112,700

Notes: All figures are base salaries, quoted in US dollars.

Oil & Gas Salary Guide 2010 | 07

Salary overview

Average annual salary for contract staff by country With an average annual contractor salary of more than $95,000 for those working locally and more than $168,000 for imported labour, there is a considerable premium placed by employers on this method of working. However it should be noted that this figure and all other salaries listed assume that the individual works a full 240 days a year (or 48 weeks) which is clearly not always possible, or in many cases desired.

The other observation from the figures shows that the discrepancy between contracting rates and equivalent permanent salaries is most pronounced in those countries with extensive permanent employment legislation i.e. The Netherlands. Here we can assume that this valuation of contractors is driven by employers avoiding expensive permanent employment costs.

Clearly the trade off between security and guarantee of work versus an increase in rate for contracting is very much at work in the oil and gas industry. This is further accentuated where candidates work overseas on contract with the average return increasing to an impressive $168,500 per annum. In all but two cases, countries are employing contractors from overseas at a premium (it can be assumed the skills required do not exist or are not available in the local workforce).

Background Contractor salaries are those working on daily or weekly payroll. The annual salary equivalent assumes they work for 240 days a year, or 48 weeks respectively. Where not enough responses were received, entries are returned as N/A.

Whilst Australia’s imported rate for labour is marginally below that for local staff, the UK shows a clear differentiation between the two. This may reflect a trend in the UK to import cheaper labour to combat margin decline in a difficult market. As the market improves however, it will be interesting to see whether the UK remains in a group of its own, or if they are joined by other nations seeking similar savings.

Salaries Country

Local Labour

Imported Labour

Average annual salary

Average daily rate

Average annual salary

Average daily rate

Europe

UK Norway Netherlands

163,800 222,300 186,500

630 850 720

134,900 226,900 210,300

520 870 810

Russia & CIS

Russia Kazakhstan Azerbaijan

146,000 76,300 129,200

560 290 500

203,600 191,500 202,500

780 740 780

Middle East

UAE Saudi Arabia Qatar Oman Kuwait Iraq Iran

78,600 55,100 N/A 60,500 N/A 53,000 60,800

300 210 N/A 230 N/A 200 230

123,900 103,700 166,300 183,200 125,700 178,500 159,000

480 400 640 700 480 690 610

Africa

Libya Angola Algeria

83,800 73,200 84,000

320 280 320

188,000 169,100 166,300

720 650 640

North America

USA Canada

214,300 205,400

820 790

220,800 206,700

850 790

South America

Venezuela Brazil Argentina

106,300 159,000 N/A

410 610 N/A

154,000 176,000 N/A

590 680 N/A

Asia

Vietnam Singapore Malaysia Korea Japan Indonesia India China

82,800 71,700 134,500 N/A N/A 51,900 58,400 78,600

320 280 520 N/A N/A 200 220 300

163,500 175,800 160,200 201,500 84,400 203,200 166,200 189,800

630 680 620 770 320 780 640 730

Australasia

Australia New Zealand

207,400 155,300

800 600

204,000 182,700

780 700

Notes: All figures are base salaries, quoted in US dollars.

Oil & Gas Salary Guide 2010 | 08

Salary overview

Average annual salary by experience By discipline area Those working within subsea/pipelines, production management and geoscience came out on top in this survey, with subsea leading the way on an average of $109,000 per annum. Downstream operations management, reservoir/petroleum engineering, piping, mechanical and technical safety were the lowest paid, with an average annual salary for downstream operations management of $65,800 per annum. Apart from the abovementioned, all other discipline areas came in with an average salary between $70,000 and $90,000. These figures also allowed us to track how experience is valued, and in some disciplines it is greatly; notably, subsea, production management, marine/naval, estimating/cost engineering and logistics. These areas all showed accelerated salaries as the experience grew. Project controls, reservoir engineering and HSE showed less than average growth in salaries as experience levels increased.

By company type When comparing by company type, figures were consistently between an average salary ranging from $78,000 to $87,000. Equipment manufacturers and suppliers fell below this level, with an average annual salary of $63,700. Those working with a contractor were rewarded most for their increasing experience while those in their first four years with an operator were remunerated above their peers in other company types when first embarking on their career. Background These figures are based on permanent staff salaries returned by respondents as their package in US dollar equivalent figures excluding one-off bonuses, pension, share options and other non-cash benefits, and for those working on a monthly or yearly payroll. Those on a weekly or daily payroll have been extracted from this comparison.

Salaries Years of experience 0 to 4

5 to 9

10 to 19

20 +

Discipline area

Business development Construction/installation Downstream operations management Drilling Electrical Estimating/cost engineering Geoscience HSE Logistics Marine/Naval Mechanical Piping Process Production management Project controls QA/QC Reservoir/petroleum engineering Structural Subsea/pipelines Supply chain/procurement Technical safety

47,800 47,200 40,000 43,500 46,800 37,500 52,300 49,400 45,000 54,100 42,700 48,900 43,900 50,500 45,000 41,700 39,700 39,900 57,300 43,500 46,800

61,900 76,900 53,600 55,100 58,800 53,700 73,700 62,300 59,500 68,600 60,600 56,500 60,000 77,600 58,000 60,600 59,200 53,700 75,800 56,800 66,800

98,500 100,500 79,100 91,500 85,800 110,600 110,700 91,900 85,700 99,900 94,400 80,200 93,200 133,800 99,300 90,600 79,700 94,200 141,300 90,900 83,800

126,600 119,900 90,500 135,500 122,900 140,400 138,900 121,500 133,700 140,400 107,700 111,900 122,600 154,200 120,100 127,200 109,000 136,200 162,700 121,800 113,600

Company type

Consultancy Contractor EPCM Equipment manufacturer/supplier Global Super Major Oil Field Services Operator

47,000 39,600 37,100 34,300 51,800 50,500 60,700

73,300 53,100 64,900 48,300 65,900 66,400 78,400

96,400 100,600 83,300 75,600 102,500 82,300 88,100

114,200 145,800 131,400 96,800 119,000 115,500 121,600

Notes: All figures are base salaries, quoted in US dollars. EPCM - Engineering, procurement and construction management; HSE - Health, safety and environment; QA/QC - Quality assurance/quality control.

Oil & Gas Salary Guide 2010 | 09

Salary overview

Salary trends The last 12 months The recession of 2009 was clearly reflected in the fact that 12 per cent of respondents indicated their salaries were reduced over the last 12 months. Those most affected worked with consultancies and contractors, were in the 0 to 4 years experience bracket and had been in their current role for less than one year.

The next 12 months A more positive trend is appearing in the forecasted salaries returned by employers for 2010 with two thirds expecting to increase salaries, and very few expecting any decrease. Those working within oil field services could be the big winners with many employers in this area indicating they expect salaries to increase by more than 10 per cent.

Whilst the majority of employers preferred to keep salaries static (44%), there were some signs of market improvement with an equal number of employees receiving an increase (16% + 28%).

Retention of key staff through careful salary management is likely to become a prominent issue for employers this year.

Of those that received an increase of more than 5 per cent over half were permanently employed and have been in their current role for 3 to 5 years.

Background Only employers were asked to provide their intentions with regard to salaries in the next 12 months, whereas the figures for the previous 12 months were taken from the employees experience.

Salary trends In the last 12 months has your salary:

12% 28%

Reduced 44%

16%

Remained static Risen less than 5% Risen more than 5%

In the next 12 months, do you expect salaries to:

4% 19%

28%

Decrease Remain static

23%

Increase up to 5%

26%

Increase more than 5% but less than 10% Increase more than 10%

Oil & Gas Salary Guide 2010 | 10