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South-East Asia’s oil and gas industry navigates headwinds caused by covid-19
11/11/2021
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Oil and Gas production and exploration in the gulf of Thailand
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Shani Alexander
Shani Alexander, Senior reporter

From the volatility in crude prices, to supply chain disruptions, and health and safety issues, employers in South-East Asia’s oil and gas sector are used to navigating risks. Amid the covid-19 pandemic, however, the industry must arguably tackle some of its biggest challenges to date: workplace vaccinations, staff shortages, and employees’ preference for long-term remote working, while also keeping a watchful eye on workers’ mental health.

In January 2020, Thailand became the first country outside of China to confirm a case of covid-19. While Europe and the Americas fought to control the spread of the novel coronavirus, lockdown restrictions across South-East Asia were seen as instrumental in keeping the disease at bay. The shutdown of production platforms, retrenchment of workers, and deferral of projects did, however, significantly impact the oil and gas sector. Now, despite a recent surge in infections across the region, South-East Asian countries are keen to get oil and gas workers back to work.

Malaysia is one of the biggest oil and gas producers in the region, and following the rollout of the country’s vaccination program – and easing of government-imposed operational restrictions on businesses – employers are looking to the eventual return to the office, says Brian Chia from Wong & Partners, a member firm of Baker McKenzie. “In particular, employers appear to be keen on implementing workplace vaccination and testing requirements as a pre-requisite for employees to enter the workplace.”

That vaccination remains largely voluntary in Malaysia is causing problems for some companies. A directive from the industry regulator, Petronas, as well as local authorities, states that oil and gas companies, particularly those operating offshore, must ensure all their employees are vaccinated before they are permitted to enter oil and gas facilities, says Fariz Aziz, partner at Skrine.

This has led to “tension between those employees who are unwilling to be vaccinated and their employers who are unable to deploy such persons to their place of work, due to the directives which the employers are subject to,” Aziz explains. “Malaysian law currently does not provide clear guidance on how employers are to deal with such an issue leaving employers in limbo as to next steps,” he adds.

This does not seem to be a problem for employers in Singapore where the government has decreed that, from 1 January 2022, only vaccinated individuals may return to the workplace. However, that does not mean operating in the Little Red Dot is without its challenges.

The city-state is home to two shipyards, Sembcorp Marine and Keppel Corp, which build oil and gas facilities. Sembcorp said recently that it would continue to face uncertainties arising from covid-related measures including border controls, workforce supply, and quarantine restraints.

The shipyard stated it “is seeing the slower than expected recruitment of additional skilled labour; continuing attrition of skilled workers; and work disruptions, including stop-work orders, resulting from measures taken to address covid spikes”. As a result of measures taken in Singapore to control the spread of the virus last year, Sembcorp temporarily reduced its workforce from around 20,000 to 850.

Harassment and bullying and other toxic behaviours used to be seen as going hand in hand with having a job

Elsewhere, employers in Thailand’s oil and gas sector continue to focus on workforce reduction, employee vaccination, as well as returning some staff to the office, advises Baker McKenzie’s Suriyong Tungsuwan and Nam-Ake Lekfuangfu, while, in Indonesia, measures are being implemented to ensure workers have been vaccinated before they can return to work, says Alvira Wahjosoedibjo, associate partner of HHP Law Firm, a member firm of Baker McKenzie. In Jakarta particularly, only staff who have been vaccinated can work from an office, with the rest forced to work remotely.

Remote working is not without its challenges, however. As with many other industries, those in the oil and gas sector are conscious of the need to monitor employees’ performance and ensure workers can execute their roles in a suitable environment, explains Wahjosoedibjo. For example, an employee should have a good internet connection and also ensure confidential information is not accidentally exposed. Indeed, in most countries, employers have to navigate the security challenges of workplace data safety as workers want flexible or fully remote working arrangements to continue in the post-pandemic era.

Indonesia is the oldest and biggest oil and gas producer in South-East Asia and, following covid restrictions, needs its skilled labour force back at work. Many are ready to return, but they will still face covid-safe requirements, such as quarantines, that will extend their time on site, explains Narendra Adiyasa, a partner at Hiswara Bunjamin & Tandjung, an associate firm of Herbert Smith Freehills.

With this in mind, the sector’s employers are installing better facilities, such as improved internet connections, to ensure workers can stay in touch with their families. “They have also hired dedicated healthcare providers to ensure that a minimal quarantine period can be achieved,” Adiyasa adds.

Mental health impact

Accelerating a global trend that many employers have otherwise paid lip service to, the pandemic has brought to the fore the importance of mental health and wellbeing at work. Regardless of the industry, employers can no longer ignore mental health concerns, but must now proactively make employee wellbeing part and parcel of a company’s culture. This is as true of the oil and gas sector as it is in finance or manufacturing.

“The pandemic has made employers more aware of the importance of mental wealth and some companies are taking steps to manage these challenges,” says Ng Zhao Yang, the local principal at Baker McKenzie Wong & Leow in Singapore. “This represents a change in philosophy for most employers, especially if they have to do so remotely. Nevertheless, most of the clients we speak with take a simple approach of making sure that they check in with their employees on a non-work basis to ensure that they feel valued and appreciated.”

The awareness of mental health is also prevalent in Indonesia, advises Wahjosoedibjo, who highlights the weight of pandemic fatigue on workers and their families. “Many employers we know are providing in-house counselling support as part of the employee assistance programme to help them deal with the stresses arising from having to work from home, while also dealing with their family members, especially those with young children.”

With oil and gas workers operating in remote areas where there is little access to information or public facilities, it is of little surprise that staff mental health would be a concern for employers. That some companies, especially in Thailand, are now providing anonymous hotlines for their employees to seek advice seems a no-brainer.

“This is why oil and gas companies often have employee assistance programmes to support employees when they're under a lot of stress,” says Adiyasa. “They are also given rotational working periods that allow workers to come home after a few weeks on site.”

The trend continues in Malaysia, where Chia explains: “Employers appear to be providing dedicated in-house counselling support, or implementing virtual employee assistance programmes designed to assist employees with their daily stresses and mental health concerns.”

Aziz argues, however, that while some steps have been taken by international firms to put more focus on the issue, “we have yet to see any significant developments in this regard, by local oil and gas players”.

While isolation at home or on remote worksites can affect employees’ mental health, the toll harassment and bullying can take on workers’ wellbeing should not be overlooked.

“Harassment and bullying and other toxic behaviours used to be seen as going hand in hand with having a job, and as an Asian society deference to seniors means that at times such behaviours are not called out,” says Ng. “However, we see an upward trend of employees, especially those who are younger, becoming less willing to accept such unacceptable behaviours and call them out.”