Sectoral perspective for HR –Oil and Gas: 10th June 2011: Energy Sector: OPEC decides not to increase output: Bloomberg Panel discussion with OPEC Secy General.

From the latest developments it appears that the sector has lot of potential for long term investments. For starters OPEC has exposed its real interests long term that it is only looking at reasonable returns for its member nations for the efforts their member nations are putting in to the sector in terms of fresh investments for more extraction and sales consequently. The volatility in the prices and OPEC has accused West and US for its inability to control market speculation which has no basis on actual production, supply or demand statistics, is not helping the OPEC in controlling the production and keep its member nations satisfied and induce them to make further investments in this Sector. During early quarter this year the prices went from 50 to 160 and close to 200 and then within 2 months fall to 30 dollars and again within 2 months went up to 70 dollars and again came down to 50 dollars etc etc. The oil prices and volumes of trade indicate that there is an underlying market demand for oil and supplies are not catching up and hence prices per barrel are flaring up. But the reality is not so. The supply or production output is in excess of demand in as much as some member nations are finding it difficult to sell their crude output. In such a scenario the OPEC cannot ask its member nations to further increase output. Also member nations are shying away from making further investments as markets are becoming difficult to get into. The speculative prices are in no way indicative of the real supply and demand economics. It is just indicative of surplus money floating around and fewer commodities or investment avenues available for speculators to play around. What is lacking is again lack of control or inability of western markets US and Europe to control this speculation in the market. There is another bubble like housing market in making… nothing else. Gold, crude oil and commodities market is going to be next victim except that this time there are going to be much wider social and economic repercussions as commodities have a direct bearing on inflation rate and social living conditions worldwide.
That being so, the developments gives pointers to the inherent strength the market holds for long term. First: OPEC fels there is considerable scope for exploiting oil reserves for meeting world crude demand for another 50-100 years. So far it appears that only 1/3 rd have been exploited and already there is twice as much established reserves lying. This is without taking into account new markets and developed but idle markets like Iraq, Iran gas etc. Also with Libyan crude, though being the best crude is out of supply. Secondly, the energy mix is growing giving more space to alternative energy sources like wind, solar etc. Thirdly, nuclear energy is still considered as a viable alternative despite the Japan tsunami incidence and green peace movements. Even though Germany and France have decided to limit further expansions in this area the technology is very much being shared and transferred to new emerging markets like India etc. Fourthly, new producers like Khazakthan etc have entered into oil and gas production. Fifth, there is an awareness and political recognition to transport gas by pipelines from Russia/CIS and Caspian Sea area to Europe. This is expected to help European countries to have a control on the energy spend over decade, encourage more effective utilisation of crude energy and reliance on low cost transportation network and thereby low gas prices for home use. Governments in EU in turn will get freed of rising crude subsidy burden and debts to help come out of the economic turmoil they are into. The European political landscape is slowing becoming congenial for effective pipeline network infrastructure building from Caspian base to Europe. Sixth, in emerging markets investments into hydro, nuclear sectors are coming up very much in next decade; though with strict regulation and assistance of technology from Europe and west industries. 7th ; the recent developments in shale gas, in US has added necessary fillip to the gas demands in US and a viable alternative to energy security there. 8th: In India more investments are coming in to Coal Sector as coal based gas is seen as a viable alternative to its power sector. Also in the next decade several hydro projects are getting commissioned as India had during last decade missed the hydro energy bus unlike china.
All the above pointers helps to recognize that there is considerable scope for growth in this sector and enough players around. The sectors that will remain rugged for sustainable growth in revenues, economic value addition and sharing of gains are therefore crude oil refining sector, lng , hydro , coal, nuclear, wind, solar, shale gas and new gas finds. For HR , the industry backdrop will help it to reach further heights.

value based hr practices

organizational values are often reflected in hr policies and practices. conversely hr policies and practices need to re-iterate those values and encourage employees' subscription to those values. The employee 'Brand', non tangible as we perceive, will then gain visibility in market place. It is a whole new paradigm , a perspective that can re-engineer hr processes considerably; be it in area of talent search, work culture, performance, compensation or even separations. Communities will start looking at such organizations and their products with more respect and regards. A recent listing of most ethical companies worldwide had few Fortune 500 top rankers !