Annual Report 2010

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OUR PEOPLE The talent and skills challenge facing the oil industry Lundin Petroleum and the wider oil industry face many demanding challenges across 2011 with regards to people, capital, and technology in today’s global oil and gas business. Changes in the supply and demand dynamics, social and environmental pressures, and ever changing demographic shifts, are transforming and reshaping our industry at an unprecedented rate. The intense demand for key specialist and professional people, with world class capabilities across all working areas with in the industry, will intensify as the oil price goes beyond USD 100 per barrel. Coming through the period of the recent economic downturn has not changed the acute competition to retain and attract the very best of the available skill, talent and expertise from an ever shrinking pool of industry qualiﬁed professionals. With too few people entering the industry workforce during the past 25 years, an acute shortage now exists of employees with between 10 to 15 years of experience, capable of fulﬁlling the additional positions required by the current industry economic upswing. There are very limited opportunities to hire people with ten years plus experience across the areas of geo-science, drilling and reservoir and petroleum engineering. This shortage of experienced personnel is expected to intensify over the next ten years as the number of experienced technical professionals retiring from the industry is expected to exceed that of new graduates coming in. The issue of the age proﬁle of oil industry professionals has intensiﬁed. Many studies such as National Petroleum Council (NPC) study1, acutely illustrate the problem where the average age of oil industry employees is 46 to 49 years and that the average retirement age in the oil and gas sector is 55 years. The 2007 NPC report predicts an ever growing supply and demand gap for mid career technical professionals aged 30-39 for the oil industry going forward. The three key people issues facing the oil industry today are: » the ever aging workforce in the sector » too few new entrants to the geo-science/ technical roles » intense competition for all E&P employees of tomorrow The anticipated skills gap will be profoundly felt by the industry during the next ﬁve years as senior, highly skilled geo-science and technical specialists retire from the industry. Only those companies that are wholly committed to employee retention and engagement will overcome this huge skills retention challenge. Lundin Petroleum recognises that people will remain its most integrally important asset. In Norway, for example, the attraction and retention of seasoned and highly experienced industry professionals has been pivotal in acquiring the essential skill and experience base required to deliver on our exploration and production develop commitments to date. However, we need to ensure that our older employees have suﬃcient time and incentive to transfer their specialised industry knowledge and experience in mentoring our younger employees coming in. Lundin Petroleum’s approach We are fully committed to further developing and improving our business and technical processes to allow greater collaboration, teamwork, and knowledge transfer from all of our business locations and activities. Higher productivity and greater time allotted to value-added work will continue to be achieved from all parts of the Lundin Petroleum business. In achieving this, we will continue to oﬀer; » A working environment that is Health, Safety and Environment (HSE) focused, promoting a healthy work life balance for all. » Lundin Petroleum encourages its employees to pursue and seek further responsibility, engagement and entrepreneurship in our business processes. » Lundin Petroleum must remain competitive in an ever tighter and diminishing skills market regarding remuneration, with an ever greater emphasis on variable reward linked to pre-determined performance criteria for all and a Long-term Incentive Plan (LTIP) that aligns long-term reward aspirations of employees to the long-term value creation for shareholders alike. » A leading and world class, medium-size exploration and production working environment that is continually seeking to expand and grow a portfolio of licences and exploration and production activities, that are organically grown, commercially viable and professionally challenging but rewarding for all who participate. MID CAREER SUPPLY AND DEMAND North American and European demand for mid career technical professionals aged 30-39 5,400 5,200 5,000 4,800 4,600 4,400 4,200 2004 2005 2006 2007 1 Demand Gap Supply 2008 2009 2010 2011 2012 Source: NPC Global Oil and Gas Study, Paper 23, 2007 16 Lundin Petroleum ANNUAL REPORT 2010

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