Discussing the business environment

Energy sector

The upstream oil sector has continued to grow in 2011, says Mike. “The continued strong oil price has encouraged companies to move forward with their recruitment despite the changing economic picture in the world economy. We have seen increased activity in the Australia, Asia Pacific, Africa and both North and South America.

Nevertheless the downturn continues to constrain the wider energy sector with capital, particularly debt, remaining relatively scarce. Larger organisations are pursuing capital intensive developments funded by strong balance-sheets.

“In Gas & Power, these are times of distinct uncertainty” says Graham “with so many global variables wreaking havoc on even the most sophisticated of market models. While this has resulted in some recruitment schedules being adjusted to incorporate more time to wait and see, recruitment levels throughout these sectors remain buoyant in the short term and are expected to grow significantly in the mid to long term.”

“The underlying economics for gas are undeniable and its potential as a fuel is only just beginning to be tapped with new technologies having the potential to completely change the global resource landscape. Horizontal drilling and fracking are opening up vast, previously technically and commercially unviable gas deposits; while floating liquefaction has the potential to access otherwise stranded reserves as well as help to minimise offshore flaring. At the same time demand is booming thanks to emerging economies, Japan’s tragic new demand parameters and new downstream applications including using gas to power ships and land vehicles. All this comes at a time when the widespread turmoil seen in so many of the world’s oil producing regions is driving high oil prices that are threatening global economic stability and growth as well as inspiring politicians to put resource self sufficiency firmly on the agenda.

Gas looks set to become the fossil fuel of the future and is increasingly the fossil fuel of the present.

LNG continues to grow well with a number of new players entering the fray. There has been an increasing level of activity on the spot market caused in part by the availability of significant uncontracted volumes and there have been some success stories in banks and trading houses. The rise of Singapore as a global hub for LNG has dramatically increased interest in talent with genuine regional expertise. Floating regas has been a real spur in opening up new markets and increasing liquidity, a trend that is certain to continue. While US re-exports continue, one of the biggest questions for the industry concerns how the planned US export projects will pan out. Cripps Sears has been involved in many of the moves seen in global LNG.

The new Cripps Sears office in Singapore is already involved as much development continues to focus around the Asia Pacific region.

All use of fossil fuels has a damaging effect on the environment but while renewable technologies remain largely unsophisticated and un-economic, and while nuclear power carries its own environmental risks as well as a topical political stigma, the gas lobby has a real opportunity to take a bite out of oil and coal.”

Trans-national trading in Western Europe continues to evolve with less developed markets continuing to develop significantly in the east. The continued rise in semi-autonomous utility backed trading entities is changing the trading landscape as they become increasingly attractive to traders by developing competitive reward mechanisms and making available some potentially very lucrative assets to trade around.

The Gas, LNG and Midstream practice works with other practices to ensure that knowledge and strategy flow smoothly throughout the firm. These other areas include Upstream, Operations, Engineering, Infrastructure and Transmission & Distribution.

From a recruitment perspective, resource abundant nations in Africa and emerging markets in South America and Asia will represent a significant personnel draw.  The Asia Pacific region including Australia will be very active with Singapore continuing to rise as the region’s preeminent hub.

In Europe, transnational infrastructure development as well as new build power plant will be a focus for recruitment, including Eastern Europe.

After the events of last year, oil and gas companies have looked to enhance their HSE functions considerably. The drive for this change has come in part from investors looking to limit their risk exposure to incidents similar the Macondo, and from operators looking to blaze a trail for regulators to follow. Interestingly, the mining industry is beginning to follow suit and looking to the oil and gas sector for HSE expertise. Cripps Sears has been doing a substantial amount of work in HSE and expects this trend to continue.

Infrastructure Sector

The overall sentiment among investors and owners is improving and this continues to bring good opportunities within the energy sector for infrastructure companies, such as nuclear, offshore wind and other renewable resources. There have been positive signs of new opportunities being created through the development of the power infrastructure (transmission and distribution) and the related investment in the ports and maritime sector to reflect a rising interest in offshore wind, LNG and biomass.

Although the traditional building and construction areas of the sector are dealing with public-sector cut-backs, many geographies (North America, Latin America, Africa, Australia and Far East) show activity levels where demand for resource is greater than supply

The mining sector has provided significant opportunities as the prices of minerals and metals remains high.  An increasing demand for getting the resources from the pit to port continues to provide challenges.  Far East companies are competing and winning work at higher levels than previously achieved, which is squeezing margins in certain geographies.

The desire for leadership competencies in project management remains high.  As a Programme or Project Director, the competence to bid, win and deliver major projects, balancing key stakeholder and shareholder requirements is always in demand.  Few have genuinely achieved this, particularly on an international platform.

Regulated industries are looking to entice more commercially oriented people to help drive them forward, where we see demand increasing with both public and private sector.   With a significant amount of policy restructuring in UK and across Europe, those with both political and commercial networks will be in demand.

With an increase in M&A activity within the utilities sector across Europe, we also envisage greater necessity for senior management to be mobile across the regions as new investors look to realise their strategies in line with market expectations.

Professional Services

There continues to be robust activity with legal, accounting and consulting organisations developing in the Energy space.  Activity has increased with these organisations seeking energy and infrastructure experienced staff and Partners. There is also a need to provide on-the-ground expertise in the key global energy geographies which parallels the growth of the Cripps Sears representation.

With the outlook for energy companies looking very positive there is demand for senior back office appointments at FD & CFO level, General Counsel, particularly with a commercial bias and HR Manager and HR Director roles to support and lead companies into the next phase of recovery and growth.”

Our clients in the consulting space are still keen to attract subject matter experts across energy & power where their knowledge of market behaviour compliment the inherent technical skills of the firm. Law firms have, in the main, been strengthening their positions in energy & infrastructure with some making significant lateral hires.

Within our finance practice, investors have been quick to indentify and attract senior Industry professionals (particularly from within Utilities) to enhance their deal and asset management capabilities, with a particular focus on Southern Europe.

For some time now we have been seeing steady growth across all energy-related sectors and in particular in the East, Africa, and the Americas.  In the infrastructure sector the energy and power segments are the areas where sustained activity is likely to be seen but, as most investment activity is, by nature, long-term and strategic, there will still be good on-going opportunities plus an opportunity to find the right leaders when consolidation and optimisation is required.

Changing demand for professional services continues to be a leading indicator of significant investment; there are good signs that there will continue to be good and growing demand in this key sector.