And what about…. careers in SE Asia in the future?

The downturn in oil and gas is a global phenomenon, but how does it vary across different regions? We asked Colin Marshall, an O&G Business Development expert based in Indonesia, for his views on its impact on careers in SE Asia:

Dramatic changes are occurring in our industry with knock-on consequences to staffing in oil and gas in SE Asia. Darwin’s theory of evolution is not that the strongest and fittest survive – it is that when the environment changes, the creatures best able to adapt (compared to their competitors) will survive. What sort of environment must Asia-based professionals adapt to?

A particular characteristic of the SE Asian market has been the role of expatriate managers in big IOCs. This is changing, driven by local and global factors:

The local factor
• Local capabilities, especially in Indonesia, are developing at a very impressive rate, dramatically reducing the need to hire expatriates. This is coupled with increased restrictions on the employment of expatriates – especially at the junior level, as countries are reluctant to act as a training ground for foreign managers for the likes of Shell, Chevron, BP, Exxon etc.

The global factor
• In majors in particular, many staff (especially expatriates) in-country spend a lot of time on processes relevant only to the company – work that could be done in the head office. In addition, reviews, cut-backs etc directed from head office may mean that local projects in far-off markets are shelved or postponed, reducing the need for expatriate management.

• This is demonstrated by the shrinking number of local deals involving the majors: even the mid-sized companies (Hess, Anadarko, Murphy) have retreated from SE Asia upstream to the North America “production line” unconventional space. A rapidly growing percentage of the upstream deals in recent years have involved “new” non-upstream companies, like Saka (affiliate of PGN, the Indonesian gas distributor), SupurKencana (Malaysian services company), Bangchak (Thai refiner), Fosun (Chinese conglomerate).

There are two other changes in the local oil and gas business, which may influence how firms and individuals “adapt”.

• Gas is becoming a more attractive investment than oil. Most countries have established reasonably competitive gas markets and reduced (somewhat) oil subsidies. In Indonesia, a gas price of $7/mmBtu is pretty typical in modern contracts, equivalent to about $42/bbl. – close to the current oil price, but more importantly much more stable than oil prices. Improved LNG infrastructure across SE Asia is also supporting gas demand.

• Historically, majors were the only source of “technology and cash”. Smaller companies can easily hire experts from engineering and service companies (for example Synergy Engineering) to solve technology and budget estimation challenges and to get credible CAPEX/OPEX numbers. These small companies can also raise funds through markets and financial institutions for most projects, provided that these projects are well formulated in terms of risk, NPV and organization.

So what does this mean for career development in SE Asia?

• The drive to build local capability will step up a gear. Local firms – especially NOCs – need to invest in developing staff to take on the opportunities that lie ahead when the market recovers.

• As majors continue to reduce their presence in SE Asia, they will rely more on local management rather than expatriates. In fact, majors who are seen to be developing local talent with training or even overseas postings, are likely to be viewed favourably by governments.

• Smaller (often local) companies, some new to upstream, will take up a greater proportion of the opportunities. These companies will require experts in various roles, as contractors and consultants, more likely on limited duration projects. This is where expatriates may still have a role to play.

• Cross-industry expertise will become more valuable, especially with gas growing faster than oil. Experience in gas developments will be highly prized, and an understanding of the overall energy value chain will be essential for any aspiring manager.

As always, we’d like to hear your views – do you agree with Colin, or do you have a different perspective?

We will be in Jakarta and Bali in 2016 with our MBA course and new Risk Management, Project Management and Leadership courses – join in the discussion by coming on one of our local programs.


  1. Anonymous says:

    That’s an interesting analysis from Colin. Indonesia in particular has certainly experienced a fast-dropping expat count. Some of this can be explained by market forces. But set against this, there is an unwillingness in some government quarters to trust – or even understand – the market mechanism.

    Instead of “ Indonesians are cheaper and fully competent, so as foreign employers we should use them”, we hear more about compulsion, economic nationalism and threatened confiscation, with micromanagement and over-regulation backing that argument up.

    In contrast the departure of Hess, Anadarko and Murphy (while Murphy is still huge in Malaysia) is largely market driven – simply because economic terms are so harsh in Indonesia, the country falls to the bottom of many rankings. When activist shareholders demand action, Indonesia is sadly the victim.

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