Wednesday, March 23, 2011

PDO unveils its response to the striking/protesting Oil and gas workers; PDO staff form new Trade Union and secure regular meets with Minister Rumhy

Petroleum Development Oman - the dominant producer of oil and gas in the Sultanate and 60% owned by the Government - sent an email to all staff a few days ago detailing the managers' and shareholders' response to the protesting and striking employees: Yep, you guessed it, lots of new benefits! (These benefits will, of course, be paid by the people of Oman through immediately reduced oil and gas income, BTW.)

The protesters also got the annulment of the previous (and pathetic) 'Trade Union' and will elect a new one. AND HE Dr Rumhy, Minister of Oil and Gas, agreed to meet their representatives for a personal chat on a quarterly basis.

I was sent a few copies of the email, and thought it would be of interest to readers to see what the details were of the 'EVP' revamp [that's Employee Value Proposition in management speak].

The email is typical of why Oman has done so well getting a partnership with Shell at PDO, and why so many other businesses in the Sultanate have been stealing senior Omani PDO employees for years - quality talent. The EVP improvement plan is clear, specific, and gives a transparent timeline of the way forward. A good solid engineering approach chaps. If only the rest of the country could have such clarity...

The email's failing IMHO is that it says precious little about what the employees will do in return for such largesses: I would have recommended the removal of the right to strike as a pre-condition. As discussed earlier, PDO is the life blood of Oman's entire economy, and the ability to hold the nation hostage to blackmail your way into additional perks should not be acceptable.

The danger is that this may set a high bar for similar negotiations at other places in Oman. OIB (Oman International Bank), owned by the rich and mysterious Omani businessman Dr Omar Zawawi, for example, has effectively shut down for more than a week and staff there are in danger of killing off the very business they are employed in.

The Omani owners of businesses comprised of Indian staff must be laughing: so far there is no sign of the subcontinent workforce protesting nor of getting proper Trade Unions. No EVP revamp for the vast majority of Oman's workers then. Benefits like those below will simply make hiring an Omani even more of a stupid idea for businesses. It will, as now, be seen by many business owners as yet more red tape and tax to burden the business with, while most of the work gets done by expats. This will therefore further strengthen the big companies of the Oligarchs and hammer another barrier onto the SMEs that are the only hope Oman has of working itself out of oil and gas dependency.

Hey, but the PDO staff are OK, so that's alright. Hopefully they will be also be able to get petrol, as no-one else can with the tanker drivers on strike and rationing in effect...

Here's that goodie bag:


Photo: Not Santa, but Mr Raoul Restucci, Managing Director of Petroleum Development Oman. While he is an expat on secondment from Shell, his managing executive committee are all Omani, BTW.


MDC [UD: Managing Directors' Committee] Update on EVP Commitments

Dear Colleagues,
Recently, the MDC and I have had a number of staff engagements with you and have taken on board your feedback and demands to us. And today, we are pleased to outline our commitment, and timeline, to address your issues and a number of immediate improvements to staff members’ Employee Value Proposition (EVP).

Today
The HD Circular PDO.HD.09.11 will be issued concurrently to this note and will provide greater detail to these EVP improvements that we are providing staff:

EVP Improvement
1. Consistent with Government directives, all Omani staff will receive an increase of RO 50 for Salary Group (SG) 1 & 2; RO 60 for SG3 - SG6; RO 80 for SG7 - SG10; RO 100 for SG11 - SG15, as a cost of living adjustment effective 1st April 2011.

2. All Omani female employees can take the option of retiring at the earlier age of 55 years with a reduced discount of 2% per annum as requested;

3. TOPs trainees [UD: young operators of the oil field equipment], during their field training, will move to a “2 weeks on / 2 weeks off” shift cycle, inclusive of current holiday leave entitlement;

4. The hardship loan that staff can draw on once every three years will increase to RO 3,000;

5. PDO will pay 100% of Government hospital accommodation in private rooms for all employees;

6. Operating field staff attending HLD trainings during their rest days will receive days in lieu and accommodation in MAF camp will be provided for those travelling from our operating fields to attend a coastal-based training.


In addition to the above, today we also confirm the following:

· The MDC has set up a working team to engage with various groups to support the formation and elections of a representative PDO Trade Union. Those members include: Amran Marhubi, Ibtisam al Riyami, and Salim al Aufi, including HRR5 members Saif Shuaily and Ismail Raisi.

· In addition to the recently advertised 200 scholarships that PDO will be awarding to communities in our operating areas, PDO will also increase secondary school leaver scholarships to 50 in support of the country’s development.

· We have agreed to increase the number of technical college graduates from the current level of 90 to 180 per year for our TOP programme. This will help to accelerate our Omanisation plan and support business needs. We will also add a number of trainers to support this programme.

· We will continue to strengthen the participation and involvement of key operating staff in project design reviews as required.

· There will be a cross-PDO/Contractor team led by Saif al Hinai who will work to ensure that there is the right and consistent level of service and quality of life in all camps. This team will also work with OPAL to ensure that minimum standards are established across our industry and especially across the sub-contracting community, under our Duty of Care and value for Oman vision.

Further details of these initiatives will be communicated in due course on the PDO Intranet.

We are also actively working towards progressing additional improvements and changes. This is what you can expect from the MDC and I before the summer.


By the end of next week, we will:
· Complete the review of our operating field car fleet and provide (best estimate) replacement vehicle timings and targets to our staff;

· Provide details of the MDC Staff Engagement Plan in order to provide staff with greater transparency and increased engagement with all the MDC members. The goal of this engagement plan is to enhance discussion on key issues and opportunities and to improve the consultation process ahead of developing and communicating changes in company policies. The MDC and I will share market survey results, promotion process and outcomes, training aspirations, selection and outcomes with Trade Union staff elected and representative of PDO employees, as and when this information is available and representative bodies are established. Additionally, all emails/queries to the MD web-page will also be copied to Trade Union representatives so that they are aware of all submissions and associated replies.


By the end of April, we will:
· Review all proposals concerning the housing loan and where appropriate submit recommendations for approval by the PDO Board;

· Publish the Subject Matter Experts (SME) and Technical Expert (TE) roadmap, identifying and progressing targets in each function, and communicate the recognition package;

· Create a new web page within PDO Intranet featuring the roles and responsibilities of each MDC member, showcasing the corporate and functional committees, and communicating the State Audit plans. This website content will develop based on additional and appropriate requests for transparency;

· Strengthen the “Whistle Blowing” process, establishing investigation teams that will report directly to the MD and we will share (non-personal) matters and outcomes with the PDO Trade Union representatives and across the organisation where key learnings are identified.


By the end of May, we will:
· Complete the post-implementation review of the Improved Medical Benefit and launch agreed further improvements, including any applicable coverage for eligible family members.


Let me repeat that the MDC and I are dedicated to supporting excellence in our people and creating value for our stakeholders and Oman. We do this by engaging with you, our staff, as well as engaging with our communities, our contractors, the Ministries, and our shareholders. The result of these engagements is not time wasted nor words lost, it results into actions and plans that help us progress towards a sustainable future. We’re all in this journey together and in times of difficulty, we need to continue to set the role model across our industry and for Oman.

Rest assured that we will continue to seek your suggestions for improvement; for example, through MD lunches, MDC engagements and Trade Union representatives. We will also continue to assess our competitive position in the market to review and adjust base salaries and other terms where appropriate.

Later today, the MDC and I will engage with a very large number of contractor CEOs with the aim to resolve the debilitating industrial action which has resulted in production deferment and to progress in an aligned fashion in order to realise our goal of an additional 1,000 Omani jobs per annum. We will also aim to address salary and working condition improvements for over 20,000 contracting staff working in our operating fields and we have invited all upstream operators to join us.

In closing, let me restate that I need your help and commitment to support Oman, no more than at this time, and to fulfil our privileged position to produce Oil & Gas in support of the Nation’s prosperity and ambitions.

Early in the year we commenced on our journey to make PDO the one and only place to be. Together with our contractors, MoG, MoM, and the PDO Trade Union, we will address how best to realize this to support Omanisation, the excellence in our people and value creation for Oman.

The MDC and I remain steadfast that we must all work together – as one PDO – to continuously improve our business performance and to deliver on the promises to stakeholders and Oman.

Regards,
Raoul Restucci
Managing Director

22 comments:

  1. Various western countries have gone bankrupt, and others are on the way thanks to fiscal irresponsibility of this sort. And now said western countries are beginning to fix their mistakes (witness Mr. Cameron in the UK).

    The Arab world, being backwards, has the benefit of hindsight. We should look at what mistakes other countries made and not repeat them.

    But no. Lazy irresponsibility abounds. It's sad and infuriating, although frankly at this point I've learned to expect nothing more.

    -Omani in US

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  2. Omani in the US - the system in the UK was flawed as it is impossible for welfare to sit side by side with acquisition for the few. Look at the Northern European countries, they have a better balance.

    However, the current situation seems to be based on a few desperate to keep power at any cost and that will have huge consequences.

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  3. UD

    Quick calculation re how long before the country is bankrupt?

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  4. Oh great. What a brilliant message to send out to the working Omani's... *sigh*

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  5. Bankrupt!!

    thats y the strickes going on! it is not only increasing the money!

    it is also becouse mostly we now the many things happining below the tables!!

    do you think H.M remove those ministers only becouse of strickes!! if you think so, than u should really look for the truth of these strickes!! millions r missing in the budgets and never came back!! + cant forget the oil co. that steels the oil as recently one of the bigger co. were doing
    the prob. co, never hear from their employees-specially Omanies- becouse of under estimating their skills, this is a short period wakingup thing that it will change co, trends in listening to their Omani emp. N the future,, everything needs a wakingup activity, and now it is Oman turn,, which was highy expected to happen based on many things happend in the country n the last few years but i guess the
    governemnt was sleepy 2 notice

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  6. Indian CEOs and HR Managers should be fired out of big corporations and competent Omanis should be placed in their place especially big corporations like, PDO, Omantel, Dhofar Power, Oman Air, Dhofar Bank, Bank Muscat etc

    CEOs , HR managers and senior directors positions have been occupied by Indian expats in these companies where as I know so many competent and experienced Omanis including me sitting as advisors without any active role in the companies

    Ya Baba Qaboos, this is us Omanis request to you. I am sure this message will be delivered to you through this forum. Please look into these companies that I have mentioned here.

    May ALLAH bless u and Oman with prosperity and success

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  7. How many individuals are baking their personal breads(Khoobs?!)in the heat of the protests?! Evidences are mounting..UD you are expected to break this story too!

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  8. Nadia, u may not publish my comments of sending the indian expats back home, but u cannot stop times of oman from publishing it.

    Guyz u may wanna look at the following link

    http://www.timesofoman.com/innercat.asp?detail=42514

    ReplyDelete
  9. Yes Anonymous - even the papers are sick of the demonstrations.

    Started with 100 people going down to 40.

    And this is Undercover Dragon - not Nadia who is Dhofari Gucci

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  10. Why are so many expats there in Oman? ....guess.... because Oman doesn't have enough skilled people to take care of their own industries.
    Lets try to follow 80/20 rule here. 80% of work in any organization is done by 20% people...true! Who are these 20% people? ......guess....expats (with few exceptions).
    Most of the new generation born after 1971 doesn't have the habit of getting things with 'hard-work', they have never seen 'hardwork'. Because they got everything very easily; courtesy their great HM. For them expats are only worth to be maids and manual labours. As per them all expats have snatched the high positions and very few Omani's are there at the those designations. Who are the owners of these companies?.....guess....Omanis! Why have they chosen expats to be at those positions?....guess.....you know the answer!
    So, instead of asking for easy money...ask for more educational institutes and make more engineers, doctors, skilled labours etc...not just for degree but quality education.....then why would you need expats?....be self dependent. Don't hate these expats...they are here because there are jobs available for them, if no job would be there....obviously they will not come here.

    ReplyDelete
  11. You call this a bag of goodies?
    It is way short of what PDO Omani staff are demanding. The 2 things that Omani PDO staff want are education support for children and medical insurance coverage like in any decent Oil & Gas producing company the world over, but PDO has fallen short of meeting this demand.

    And UD, Shell and other private shareholders in PDO contribute 40% of PDO`s operating budget, that is any increase on cost due these or any other benefits will be split 60/40 between the government of Oman and the other private shareholders, but the bulk of Omani packages will be spent in Oman. I see that Oman will benefit be increased benefits to PDO staff, and this is why.
    Up until 3 years ago, most Omani talents leaving PDO were heading to the likes of OXY, Daleel Petroleum, MB and other companies in Oman, but lately, a trend has developed where Omanis with very rare skills are leaving not just PDO, but the whole country and heading to KOC (Kuwait Oil Company) and QP (Qatar Petroleum), plus few that went to Iraq, and as far as Norway.
    These extremely talented Omanis are replaced by people who are as skilled, but expatriate, and the expatriate will cost at least 3 times as much as the Omani, and will not spend half as much as the Omani would have spend in the Omani economy.
    This is what Raul is talking about, the SME (Subject Matter Experts). Keeping Omani SMEs will not be easy, if this is the approach PDO is taking.

    ReplyDelete
  12. Karim,
    Your analysis is too simplistic I'm afraid. Yes, the private shareholders own 40% of PDO and thus initially pay their 40% share of increased operating costs. But this is a tax deductible expense, and so is immediately taken off their pre-tax income. The effective tax rate is so astronomically high that they therefore get that money back almost straight away, paid out of the total oil revenue.

    Any costs associated with producing oil and gas are all ultimately paid out of the production, and directly reduce the net income of the country.

    I'll do a post soon to try and explain this - and the other staff demands - in more detail.

    UD

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  13. "The 2 things that Omani PDO staff want are education support for children and medical insurance coverage like in any decent Oil & Gas producing company the world over, but PDO has fallen short of meeting this demand."
    I'd love to know which oil companies in Britain pay these allowances to their local (UK) staff!!
    No education support
    No medical insurance cover
    No car loan (senior grades get a car ,but it's taxable)
    No home loan
    No 13 month pay every year !!
    (and no month's bonus for the Queen's diamond jubilee)


    Al

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  14. PDO, Omantel, Dhofar Power Company, Oman Air, Dhofar Bank, Bank Muscat etc

    All these copanies have Expat CEOs , CFOs and HR managers,

    Reuqest to HM is to remove them especially the Indians out of these and appoint Omanis in there place

    ReplyDelete
  15. Shot yourself in the footMarch 28, 2011 at 9:09 PM

    Listen - it's the sound of investment walking away...

    http://www.zawya.com/Story.cfm/sidZAWYA20110328073843/Worried%20Over%20PEIE%20Directives,%20Firms%20Plan%20To%20Leave%20Oman

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  16. Karim - Why would an Omani business owner bear a cost up to "three times as much as an Omani" for an expat? Why? Because they like giving expats money? Because they think they are going to make too much money by employing the Omani in that postion? Of course not...in both cases. It is simply supply and demand. You have to deal with the supply issue, the demand is there. And the supply can't be fixed by mandates. If Oman wants to become a competitive thriving economy it needs to have citizens willing to compete. Compete in knowledge, competence, work ethic, and ambition. It is so easy for an Omani to shine...but it happens rarely...even though all of the private businesses have Omani owners at some level. People shouldn't expect promotions just becasue they have been somewhere for 3 years or 30 years for than matter. How about just the ones that can actaully take on the responsibilty and deliver? Bonuses should not be by everyone and anyone just because they are Omani...how about the top performers only. Where is the incentive to achieve otherwise?

    When you start to understand why a given expat may be valued financially at 3 times the cost of an Omani...you will have started down the path of figuring out how to get Oman less dependant on expats...which is the best thing that can happen to Oman and Omani's!

    (But if you try to do it by mandate...you may not like the result. Although you may find yourself as captain...it will likely be on a sinking ship.)

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  17. I've just discoverd this blog site and I find it fascinating. How can I register for an automatic update of the latest blog entry by "Undercover Dragon"

    ReplyDelete
  18. UD

    Hope you finish your Blue City Trilogy soon so that you can answer me as promised.
    Unanimous1
    I said decent Oil & Gas producing companies, the likes of ADNOC, QP, KOC, ARAMCO. All these decent companies provide medical insurance and education support to ALL their staff, not the apartheid way PDO is doing.

    Unanimous3
    The reason is that all Local Currency Staff (Omani, Indians, Phillipinos..etc i.e. none white and/or blonde) pay is different from Western Direct Hire and/or shell secondees. The latter receive a pay that is at least 3 times more than the former, and also receive medical insurance & education support, this is how the company share holders decided, and this is how it is.
    Why would the share holders want to pay an blond blue eyed European 3 times more where they can get an equally qualified Omanis less, go and ask them, and gooood luck.

    ReplyDelete
  19. Karim,

    Your nationalistic desperation to see only what you want to see is pretty clear. LMAO. Maybe you are actually not as talented/qualified/high performing as you think?

    Quick explanation.
    1/ Your 'decent' O&G companies are all 100% Government companies in resource rich countries: Saudi (largest reserves anywhere, more money than anybody), Kuwait (lots of oil, few Kuwaitis), Abu Dhabi (lots of oil, few AD Emiratis), Qatar (more gas than anybody, almost no Qataris). Their production costs are probably 10% of Oman's, their reserves/production ratio much, much higher. The companies are run as employment generators for locals and they pay them a lot because they can afford to. Do a similar comparison between these countries and Oman with respect to Government employees salaries and you'll see similar deltas. Oman is not anywhere near as rich as these countries. Omanis will have to work, and the oil money will hopefully pay for enough infrastructure and education to enable you to compete with India.

    2/ Medical care and education in Oman is free for Omanis. Remember? Plus the company hands out free medicine all the time at their clinics.

    3/ Shell staff are secondees to PDO, with a contract with Shell and under Shell expat terms. As most of the senior management of PDO is Omani, and the Government are always trying to reduce the number of Shell expats, there indeed must be a reason why they get more money, and it isn't because some of them have blond hair.

    If there really were all these 'equally qualified Omani' they would already have been promoted, and probably to levels beyond those qualifications. If these unrecognised and maltreated Omanis you imply are so "equally talented", perhaps they should just go and get an oil and gas job in the real world.

    For another comparison, you should look at what European/US expats get in Saudi Aramco! A few years ago, I know if an Expat completed a 5 year posting they got a UD$1 million cash bonus, earned salaries of 10k+ rial/mnth, plus the usual free housing/medical/flights/etc.

    In the end, Karim, if Omanis at PDO are not happy with the package they should quit and go do something else, talented as they are.

    I'll get back to you soon as promised.

    UD

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  20. UD

    Keaving PDO they do, in hordes, and most are replaced by very expensive blonds with blue eyes, I kid you not. It doesnt make sence to replace an Omani with an expat, I witnessed this first hand, one of my Omani engineers left for OXI just because pdo HR system wont allow him a promotion, not because he is not qualified or hard working, no, he was denied promotion because his basket was full.

    And gues he was replaced with whome. A ginger head from the UK.

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  21. UD

    I am still waiting for your explanation on why increasing local currency staff packages (ie the ones with no blond hair and/or blue eyes) will be good for Oman, as the government of Oman will not foot the entire bill, and the increase will go directly into the Omani economy.

    ReplyDelete
  22. Humility & HumblenessNovember 16, 2011 at 11:58 PM

    I love Oman, i just want to sugest to the Ruler of Oman to look at his people and make a mandate to agresively impose Omanisation, there are lots of Omanis i know that they are working in other gulf countries, why not invite them to come back to serve thier country. Just recently i visit Shangri la hotel, i really do appreciate those Omanis roomboys, bellboys, and to those who works in the restaurant, I SALUTE YOU YOUNG OMANI GUYS continue the good start, I am proud of you. BE CAREFUL OF OUTSIDERS THEY MAYBE COMING TO SHOW YOU GOOD THINGS BUT THE TRUTH IS THEY ARE SURVYING THE COUNTRY ON HOW THEY WILL OCCUPY YOU, there is an empire today that promote this, to occupy and dominate others, its a politics that very few knows it. OMANIS be observants, protect, love, depend, & take care of your country it is the only one you have. GOD BLESS OMAN.

    ReplyDelete

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