Virginia, US
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| Simon Haag

Australian Immigration Reforms: What This Means for Oil and Gas

Changes to the occupation lists will have a significant impact on the use of overseas employees in the Oil and Gas sector. Notable among the removed occupations are:
 
  • Petroleum Engineers
  • Drillers
  • Gas or Petroleum Operators
 
There are a number of other occupations relevant to the industry which have also been removed:
 
  • Chemical Engineer                              
  • Civil Engineering Technician
  • Electronics Engineer
  • Geophysicist   
  • Helicopter Pilot                        
  • Hydrogeologist
  • Maintenance Planner
  • Materials Engineer
  • Pressure Welder
  • Procurement Manager
  • Production Manager (Mining)
  • Production or Plant Engineer
  • Safety Inspector
  • Ships Engineer
 
Statistics held  by the Department of Immigration and Border Protection (Department) show that the numbers of new 457 visa grants to Petroleum Engineers , Drillers and Gas or Petroleum Operators has decreased in recent years relative to those who arrived during the resources boom, when projects that are now in production mode were in their exploration and then construction phases. Nonetheless, Petroleum Engineers and Drillers constitute one of the largest cohorts of 457 visa holders affected by the list change.
 
Use of 457 visas in the Oil and Gas sector
 
The Oil and Gas sector has historically utilised subclass 457 visa holders in a number of ways, but we touch on two below. This was particularly relevant where there was significant global demand to meet large scale project delivery deadlines in multiple countries.
 
Companies with worldwide operations – including large Australian players in this sector – have seen their global workforce as one pool, rather than being siloed country by country. Skilled workers are moved around the world on assignments to different projects as those projects demand. The pattern of engagement of overseas workers is by intra-corporate transfer from, and then to, another of the company’s overseas sites.  Australians working for such companies also move around the world as part of this resource planning strategy.
 
The other pattern of use is linked to the project-based nature of works in the sector. Projects often need a high number of people all in the same occupation (for example, 300 drillers) but only for a relatively short time (for example, six months). This type of engagement in remote locations can present challenges for attracting sufficient Australian workers. Of course economic conditions have changed considerably since the height of the resources boom and many roles can be filled by local workers, who are more willing to work away from their home location.  It remains to be seen whether the domestic skills base is sufficient for project needs as other FLNG opportunities progress, as well as subsea developments and unconventional gas to LNG collaborations.
 
The Oil and Gas industry under scrutiny historically – has this also prompted changes?
 
There has been continued legal battles over foreign workers in offshore resources worksites since 2012. At present, all foreigners ‘in Australia’ require a visa to enter and remain  - and one which allows work if that is their intention. Although well out to sea, oil rigs and other facilities attached to the seabed in Australian territorial waters  are deemed to be ‘in Australia’ for migration purposes, requiring foreign workers on those installations to hold an appropriate work visa. The legal issue put forward by the Australian Maritime Workers’ Union was whether resources facilities that are floating, rather than fixed to the Australian seabed, should also be considered ‘in Australia’ for migration purposes (the High Court of Australia seems to have settled this in the affirmative, at least for now).
 
The sector has therefore been a focus of national conversation about the extent of use of subclass 457 visa holders. This attention itself was perhaps enough for the core occupations in this sector to be implicated in any sweeping reform of Australia’s work visa programs.
 
Labour Agreements
 
The decision to remove Oil and Gas occupations from the 457 program suggests that the government is looking to manage future genuine demands for these skills by way of the Labour Agreement program. Labour Agreements allow businesses to sponsor occupations which are not eligible for a subclass 457 visa in the standard program. Labour Agreements can also be negotiated to provide for permanent residency transition.
 
In recent years, we have seen an increase in Labour Agreements approved for on-hire companies that supply labour to Oil and Gas. The Department intends to honour any existing Agreements, even where they cover occupations that have been removed from the standard 457 program. These Agreements, which may be valid for up to another three years, will become a critical source of Oil and Gas professionals. Holders of these Agreements are able to renegotiate their annual quotas with the Department, based on a demonstration of genuine need in the industry.
 
Labour Agreements also provide a pathway for Oil and Gas companies to sponsor and employ these occupations directly. The Department has been prepared to approve such Agreements where the occupations and numbers requested are linked to a large scale project with a demonstrated need for certain skills that are in shortage.
 
Options for Oil and Gas
 
The government has indicated that the MLTSSL and STSOL will be reviewed and amended in July 2017. This presents an opportunity for companies in this sector to demonstrate to the Department that there is a genuine skills shortage that cannot be filled solely with domestic workers.
 
Companies directly impacted by the removed occupations should review their current 457 population to consider whether any current employees affected by the changes are able to apply for permanent residency. Consideration should also be given to negotiating a Labour Agreement with the Minister to allow access to removed occupations in the 457 and employer sponsored permanent residency programs, bearing in mind that this process can take several months to finalise.
 
In the meantime, labour on-hire firms with access to removed occupations will be an important resource for this sector.
 
Forthcoming large scale Oil and Gas projects will challenge both the Australian labour market’s capacity to provide the required skills in the numbers needed, and Oil and Gas companies’ ability to supplement its Australian workforce with overseas workers to meet project demands. It appears that for now at least, the government will be requiring Oil and Gas to pass the more stringent criteria of Labour Agreement negotiation in order to have access to its core occupation categories.