HAYS OIL & GAS GLOBAL JOB INDEX Q hays-oilgas.com. Hiring outlook generally favourable, particularly in Asia, the Middle East and South America

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1 HAYS OIL & GAS GLOBAL JOB INDEX Q4 Hiring outlook generally favourable, particularly in Asia, the Middle East and South America hays-oilgas.com

2 GLOBAL INDEX Welcome to our fourth quarter Global Job Index. ended with mixed results. As you ll read in the following pages, from a Job Index standpoint some markets, like South America, Asia and the Middle East, were hot as projects began, meaning the overall sentiment is buoyant. In other places, such as Australia, the macroeconomic conditions and concerns about cost escalation and financial viability of certain projects has put a damper on this year s outlook and therefore hiring plans. Our newly released Oil and Gas Salary Guide indicates global average salaries were flat to slightly declining globally which reflects a pause after several years of high capital investment and escalating salaries. However, this was not a uniform decline as some skills are still in high demand and can command salary increases. Nevertheless, those of us who have been in the industry for a long time know that a flat market is no bad thing, as activity and salaries can rise only so far, so fast before they become unsustainable. From a Hays standpoint, we are optimistic about the global economic recovery. As the global economy continues to emerge from the recession, we increasingly see a more positive sentiment being established in more and more countries and industries. Over the last five years, businesses in many industries have been preoccupied with managing through the crisis and recruitment has not been a priority on their agenda. This is now changing and with a more optimistic outlook, many organisations in a wide range of industries are reinvesting in their businesses and looking to recruit the skills they need to grow. At the same time, confidence is returning to the employee base and an increasing number of candidates are now looking to move to further their career. The consensus view is that the US will continue to experience good economic growth and the economies of the UK and other parts of Europe are poised to have improved years. Australia may also have hit its bottom as China s manufacturing output and therefore demand for coal and metals rebounds. In this scenario, energy prices should continue to remain within a relatively narrow band between $ per barrel, perhaps with upside, which would drive increased spending in 2014, perhaps on the order of five per cent over levels. Assuming this happens in 2014, we would expect salaries to rise in the five per cent range, but with a wide variation between disciplines and countries, and a continued and perhaps increased competition for critical talent. We have recently released our 2014 annual Oil and Gas Salary Guide partnered with Oil and Gas Job Search. Find global oil and gas salaries and industry trends at hays-oilgas.com. What is the job index? The Global Job Index is a quarterly publication featuring news and updates affecting the oil and gas employment market. It provides an insight into fluctuating job numbers, as well as local events which affect employment demand making it a unique and informative resource for the industry professionals. Background Finding a new job via an online medium is now the norm for any job seeker looking for work. This trend has of course led employers to rely on their web presence, either direct or indirect, to source, attract and drive candidates to apply for their jobs. The oil and gas industry is no stranger to the use of online media to attract candidates, with globalisation and remote work locations meaning the vast majority of roles in the industry are now resourced using online portals. These sites range from a company s own online web pages to large recruitment groups, specialist job boards focused on specific geographies, and those dedicated to the oil and gas industry in all its guises across the world. These global boards have grown considerably in the last few years and now contain many thousands of jobs and resumes of users eager to access their next opportunity. Methodology Our team of analysts and researchers measure the numbers of live jobs posted on all the major job boards that are specific to the oil and gas industry. These are collated into regional figures and compared against a datum of 0 taken from October At this time the industry had largely recovered from the global recession, and the oil price reflecting this recovery slowly edging upwards over $80 bbl. Capital had flowed back into the industry boosting exploration, project starts and profits. Recruitment had recovered steadily since the start of 2010 in line with the increase in revenues although there were no significant skill shortages at that time. With expectations of a growing recruitment market through, October 2010 appeared to be an ideal point from which to set our benchmark for the Global Job Index. Each month since this date we have measured job posting activity on the same sites making sure we are consistent in how and what we measure. From time to time the sites themselves will change the way in which they post and maintain jobs, and this is closely monitored to ensure that this does not alter the results of our research over and above the specific measure of job posting activity we are seeking. This data is broken down further to give a measure of regional activity and the trends within those regions. This further analysis is essential to oil and gas recruiters that scan the world for available talent. All salaries in the Job Index are listed in US Dollars. The Results Hays Oil & Gas publishes its results on a quarterly basis producing the Global Job Index along with dedicated figures for each region; Europe, Africa, Middle East, Russia and CIS, Asia, Australasia, North America and South America.

3 GLOBAL OVERVIEW Job index by region 2.5 Asia Middle East North America Europe Africa South America Australasia CIS Yearly comparison of Q4 job index index score 0.0 EUROPE AFRICA CIS MIDDLE EAST ASIA AUSTRALASIA N. AMERICA S. AMERICA Q Q4 Q4 Q4

4 NORTH AMERICA Power Engineers in Canada Average salary in North America $120, Engineers with enhanced oil production and recovery experience in the US Average salary in North America $120,698 LNG green light in Canada to generate jobs for 2014 The fourth quarter in North America saw a slight upswing in recruitment activity, although this was curtailed somewhat, as usual, by the holiday season in December. In Canada, this increase can most likely be attributed to the eventual, and much anticipated approval for a number of major projects most notably the Northwest Liquefied Natural Gas (LNG) and Fort Hills projects. With the Northern Gateway pipeline project also receiving a positive recommendation, many companies have returned to hiring mode after having been in a holding pattern for the majority of the year. The US market has continued a steady climb in recruitment activity throughout the year, with most activity focused on onshore non-conventional projects. This is a good indication that the offshore market will flourish in There have been modest salary increases this year, with no significant changes in the final quarter of the year. In what has been a relatively average year in the energy sector, a large part of these salary increases can be explained by the demographic spread of the industry s workforce. As the average age continues to rise and a significant percentage of the workforce nears retirement, salaries are being pushed up has a positive outlook that will most likely see an increased level of demand on an already stretched talent pool. Many companies are already implementing strategies to identify supplementary talent pools to get ahead of the recruitment curve. One particularly challenging area will be the staffing of the numerous LNG projects under development in Canada. As Canada enters the LNG market, the specialist knowledge required will either have to be imported or learned and will most likely include a mixture of both.

5 SOUTH AMERICA 1.20 Business Development Manager Average salary in South America $15,000 per month + 25% annual bonus + benefits Senior Project Manager (FPSO Construction) Average salary in South America $170, Successful licensing rounds for pre-salt leads to increased optimism There were no significant changes to wages in Latin America during the fourth quarter; however, the release of environmental licences and new investments lead to increased hiring in business development, crude trading, social and environmental areas in late. New investment projects in onshore and offshore exploration phases lead to continued hiring of specialised technical staff earning salaries at the top of the pay scale. In response to expected industry growth in coming months, companies are preparing to increase staff levels in order to accommodate this increased business activity. Companies must focus on understanding market behaviour and how professionals are valued in order to attract the most qualified professionals and to gain a competitive advantage in the industry. In Brazil, salaries remained stable over the fourth quarter as a result of relatively flat business activity in. Notable events include high pressure over Petrobras financials, partially caused by the discrepancy between oil prices overseas and the retail price of gasoline. The lack of new exploration areas in the past few years lead to some oilfield services and engineering companies downsizing their teams and releasing highly skilled professionals into the market and therefore restricting salaries from rising. Currently, many companies are replacing expats in top roles such as OIMs, Marine, Maintenance, and Production Superintendents within the FPSO and rigs operations with Brazilians or foreigners with a fixed residency in Brazil. Overall, the outlook for 2014 is promising. Successful licensing rounds for the pre-salt, especially Libra, have led to increased optimism. As a result, geosciences roles will be in high demand in order to investigate the potential of areas acquired.

6 EUROPE Pipeline/Subsea Engineers Average salary in Europe $89,100 Directional Driller Average salary in Europe $67, Increased project activities adding pressure on a skill-short candidate market Despite an upturn midway through the quarter, the year ended with a relatively low volume of vacancies. This is the first time we have witnessed the Job Index dip below levels since our annual Job Index began. Business activity has remained stable in the European region, with European companies continuing to play an important, global role in oil and gas development and joint ventures. Nonetheless, there is still uncertainty around the development of unconventional resources, specifically with the political debate and controversies surrounding shale gas and fracking. December is traditionally a slow month, but early indications show that the new year will be very active. The outlook for 2014 is promising as the economic climate is expected to improve. The demand for professionals in the pipeline, subsea and drilling disciplines has been prominent in Europe, particularly when looking at the increased activity of the pipeline and subsea disciplines within the UK. Many are raising concern over the skills shortages associated with these disciplines and as a result, many UK companies not usually associated with contracting now seem to be going down that route. Many new projects in the North Sea regions are continuing to initiate, putting further pressure on candidate demand. As predicted in our previous update, energy prices did in fact increase leading into the winter; however, unlike the US, many parts of Europe have been experiencing exceptionally mild temperatures, which may affect consumption rates compared to previous years. All in all, the quarter was relatively stable with consistent activity in the majority of disciplines and markets.

7 AFRICA 1.23 Senior Drilling Professionals Average salary in Africa $86,900 Reservoir Engineers Average salary in Africa $105,700 Drilling professionals in demand due to strong upstream activity across Africa The fourth quarter of proved to be slightly stronger than quarter four in, with more oil and gas professionals in demand in Africa. Demand for candidates has been consistently high since May; it reached its second highest peak of the year in November at 1.76, higher than the global job index score. Demand dropped considerably in December following a similar trend to. The increased demand in Africa has been felt across the continent with strong activity in the west, east and north. The disciplines associated with upstream activities are still in high demand, such as senior drilling engineers, drilling supervisors and reservoir engineers. Despite the under-performance of several deep sea projects off of West Africa, the continent as a whole is still one of the most exciting remaining opportunities to exploit unrealised resources. Africa is sitting on eight per cent of the world s oil supply and seven per cent of the world s gas supply. However, political and social instability continues to threaten the development of this potential. Local governments continue to focus on realising resources through local entities and staff, but require funding and niche skills from abroad. Further deals with out-of-region NOCs and independents continue to revive the oil and gas sector by boosting export potential for producers and assuring growing local demands are met. There is a drive to reduce dependency on expatriates, but the local skill supply lags behind industry demand. Investment in local training and educational programmes has continued but will take considerably more time before it will make a significant impact on the dependence on expatriate workers.

8 ASIA Construction Manager/ Senior Project Manager Average salary in Asia $180,000-$250,000 + bonus + package Regional Sales Managers/ Business Development Managers Average salary in Asia $140,000-$200,000 + bonus + package 1.81 High job numbers driving employers to hire low-cost, local talent Rich in resources and targeted as a region for growth by most MNCs, the Asia Job Index has demonstrated a consistently high level of vacancies and continues to grow in comparison to global markets. The year ahead looks to be an exciting time with a resource rich area of exploration in the Asia Pacific (APAC) region which is likely to continue with a particular interest in shale gas and shale oil deposits in China. With existing and new fields in Malaysia, Indonesia and Vietnam (of both conventional & non-conventional reserves) driving the market forward, we expect the region to continue its recent trend of strong growth. In the upcoming year, we will see how the LNG market is impacted by the opening of Singapore s first LNG terminal and the targeting of commencing LNG bunkering operations. It certainly adds another facet to Singapore s drive to become one of Asia s main energy and petrochemical hubs. It is already one of the world s top three oil trading and refining centres. Despite the need to look farther afield for certain rare skills sets and/or candidates with mega project experience, there is an underlying drive from employers in the region to recruit locally ahead of expats. When employers do hire expats, it tends to be on local or local + packages whereby elevated basic salaries are paid, but candidates must take care of their own accommodation, tax, and flights, unlike the traditional expat packages we have seen in the past. From the candidate s perspective, many APAC nationals are keen to return but will only do so if they are able to maintain the same salary levels and career path they can achieve in other regions before they will consider returning home. The rise in salaries for local talent and the drop in expat salaries have been continuing trends for some time now and are most likely major factors in keeping the annual increase in salaries in the region below the global average. With local content requirements and the political landscape as driving forces behind this move, we would expect the gradual convergence of local and expat salaries to continue.

9 COMMONWEALTH OF INDEPENDENT STATES (CIS) 0.89 Reservoir Engineer Average salary in CIS $5,000-7,000 per month Petrophysicist Average salary in CIS $3,000-4,000 per month Hot-spot of business and government investment results in elevated job numbers Over the fourth quarter of in Russia, there has been a burst in activity for oil and gas companies, which is typical for this time of year in the region. This is because Russian climate conditions allow for main construction work on onshore sites to start when the soil is frozen and therefore service companies are able to deliver construction materials and equipment on-site. Activity is being observed in the Caspian basin as a result of a number of major projects associated with the construction of a pipeline. The main player in this region is the Caspian Pipeline Consortium (CPC) which is currently expanding its transportation capacity up to 67 MTA of crude oil with its shareholders approval of a $5.4 billion project to add 10 pump stations and additional terminal facilities. CPC expects to be transporting this volume in Significant news from the year was the notable agreement reached between the Russian company, Gazprom and China s CNPC on gas supplies which will become one of the largest suppliers in the region. In 2014, we expect the Russian oil and gas industry to receive increased government and international investments for the renovation of infrastructure in order to keep the quality of oil produced up to industry standards. From this, we predict an increased demand for civil engineering, pipeline construction, instrument engineering and commissioning professionals in the region.

10 AUSTRALASIA Technical Trainers Average salary in Australia $150,000 package + site uplift Commissioning Engineers Average salary in Australia $170,000 package + site uplift 5 Australia labour prices rank highest globally, yet job vacancies are at a three year low for Q4. It was expected that the much anticipated change of government in Australia in September would lift the uncertainty that had been stifling business confidence throughout. However, this process has proven to be slow. While the new regime has begun, processes to both remove red tape and facilitate acreage releases, the real term effects won t be felt until the House of Representatives catches up with the change of government on July 1st, Labour prices in Australia remain the highest globally. The anticipated future cost-to-profit returns are causing operators to show increased caution in spending. In turn, this has started to cause delays in internationally backed projects across Australia. Examples are emerging across Australia where companies have taken (sometimes) dramatic steps to reduce costs: For offshore projects, the focus remains on increasing production and use of cost-effective floating LNG platforms, or FLNG technology. This saw the emergence of several new projects recently in response to the strength of the Australian dollar and the high costs associated with Australian labour. With the international nature of the industry, foreign investment can shift dramatically with exchange rates. Companies with offshore capabilities view floating (moveable) drilling and storage platforms as a cost-effective solution to infrastructure costs as these platforms can be transported and used anywhere in the world without major decommissioning, rebuilding and commissioning costs. For onshore projects, associated costs are being constantly squeezed and in some instances, contracts have been delayed. For example, a major Queensland based project was delayed owing to the JV Company demanding a rationalisation program. This has caused delays in finalising contracts, impacting multiple contractor companies in the project chain. The current strength of the dollar exacerbates the issues caused by a very well paid labour force. A weakening of the dollar would ease this pressure and help push major projects forward across the country. In the meantime, companies took a proactive stance at the start of last quarter and are being very cautious with all future recruitment in regards to pay increases and associated costs in the salary packages. For example, many companies are amending their policies with regard to FIFO costs to site and a growing number of employers are spending time benchmarking salaries in an effort to limit yearly increases in staff costs. In conclusion, the market is cautious, which is reflected in the Job Index. Efficiency balanced with productivity is the main concern.

11 MIDDLE EAST 2.5 Senior Polyethylene Process Engineer Average salary in Oman $15,000 per month tax free 1.40 Senior Petrophyscisist Average salary in Qatar $17,500 per month tax free Employers confidence in the market set to kick start hiring activity in 2014 Whilst the job index has decreased in the last quarter, its latest position is only marginally below the high of the last two years. Moreover, we have already seen a major increase in vacancies in early Currently, Polymer and Plastic projects are in high demand across Oman and Saudi Arabia. Highly skilled chemical engineering graduates with key experience related to FEED and EPC phases with OPCO experience will be in high demand for the foreseeable future. Senior Petrophysicists and Geophysicists who have IOC experience with either tight or unconventional gas exposure seem to be picking up new contracts and permanent roles relatively easy with an envious selection of roles and locations to choose from. We expect the coming year s Job Index to reach a three-year high, primarily with Operators and EPC s. Our prediction is that early 2014 will re-ignite recent declining activity within oilfield services and oilfield equipment manufacturers. This is supported by a highly positive business sentiment from our clients in the Middle East.

12 HAYS OIL & GAS We serve over 50 countries through our 18 in-country teams. Australia Brazil Canada China Colombia Denmark France Italy Malaysia Mexico Netherlands New Zealand Poland Russia Singapore United Arab Emirates United Kingdom United States Visit us at hays-oilgas.com for contact information, employer resources, news and listings of available jobs. hays-oilgas.com