Sustainable economic growth in Iraq is dependent on a high-performing energy sector led by Iraqis. But decades of conflict, political instability and declining education and training sectors has slowed the development of the native oil and gas profession and prevented Iraq from exploiting its vast oil wealth. But with Daesh now pushed back and production increasing, the time is right for international oil companies (IOCs) and private training providers to all work with the new nationalist government to build a strong oil and gas profession in Iraq.
Greater participation of Iraqis in the country’s energy sector is a good thing. It creates jobs both directly in the sector, and indirectly in those firms servicing it. Success rests on three key things: the balance between native and foreign workers in the sector; the strength of the education and vocational training sectors and the strength of the private training market.
First, the native-foreign worker balance. Iraq is the second largest oil producer in the Organisation of the Petroleum Exporting Countries and has some of the largest reserves in the world. 99% of government revenue is generated by the energy sector. Yet historically Iraq’s energy sector has been dominated by IOCs. In the first half of the 20th century European and American oil companies controlled exploration, extraction and production and paid government royalties for the privilege. It wasn’t until the 1950s and 60s that the revolutionary governments began to push back through nationalisation.
The government established the Iraq National Oil Company in 1972 to oversee exploration and production, and introduced laws to take back control of IOC concessions and boost training for local workers. These efforts went some way to establishing a nascent Iraqi oil and gas profession, but were not enough to reduce the reliance on foreign expertise. As a result, IOCs continued to dominate Iraq’s energy sector.
Second, the strength of the education and vocational training sectors. These sectors are crucial as they are meant to provide the technical and managerial skills for the energy sector. Before the wars of the 1980s and 1990s Iraq had one of the most developed education systems in the Middle East. Nationalisation of the oil sector and high investment in education up until the end of the 1980s helped to develop a nascent oil and gas profession.
But in the last few decades conflict has caused the education sector to decline, and particularly so after invasion in 2003 and recent war against Daesh in which educational institutions and teachers were targeted. The government also failed to effectively implement longer term strategies to align the education and Technical and Vocational Education and Training (TVET) sectors with the needs of the energy sector. Science, mathematics, management and law graduates, as well as vocational oil and gas technical skills have all been in short supply.
And third, the strength of the private training market. This market in Iraq is largely made up of in-house IOCs training facilities, specialist private providers, and overseas universities. But recent conflicts have meant that only a few private training providers operate in Iraq, and up until recently most training has been delivered outside of Iraq. Furthermore, the absence of an effective national skills frameworks for the energy sector has made it difficult for IOCs and private training providers to standardise training in line with international benchmarks across the sector.
So how can Iraq build a stronger oil and gas profession? Firstly, the government must start by doing a better job at designing and – crucially – implementing strategies that align the education and TVET sectors with the skills needed by the energy sector. This requires key ministries to work together – and not in silos which historically has been the case – to conduct skills reviews and then develop policies designed to fill them. The government must also encourage IOCs to invest more in local talent development through better enforcement of local content regulation.
Additionally, it must work closely with skills bodies to develop and implement national-level skills frameworks to bring standardisation to the sector. Finally, more funds from oil revenues should be invested in education/TVET facilities and teacher training to reverse the previous decades of decline.
The good news is that some of this is already happening. With oil and gas production in Iraq on the increase, IOCs want to employ more Iraqis. Not only are they cheaper than foreigners, but IOCs are also beginning to recognise their talent. A number of IOC training centres for native oil and gas workers have been established. Shell, BP, LukOil, Gazprom, PetroChina, TAPO and Restrata all provide on the job training for Iraqis in areas such as engineering, testing, completions and language skills.
At the same time private technical training providers such as UniHouse, Pertroskills, Petrofac and Atlas Knowledge are providing technical, managerial and language training to Iraqi oil and gas professionals working in IOCs and the Ministry for Oil. Training is typically delivered directly by the provider or in partnership with universities in Middle East, Europe and US. The Ministry for Oil now sends a lot of its young talent to UK universities for further technical and managerial training. And skills bodies such as OPITO are now working with the Ministry of Oil to help develop talent and standardise training.
But of course much more needs to done in all these areas. Iraqi participation in the energy sector is just 1%. But with Iraq seemingly moving towards greater stability, and a new nationalist government in the making, the conditions might just be right to push on building a strong oil and gas profession that is so important for the country’s future.
