Subcontractor Hourly Rate Rules for Offshore Workers

Contracting is becoming more popular. Contract and agency labour employment has increased dramatically across all industries and service sectors. Hundreds of millions of agency employees work across sectors in almost all the thriving industries in the world and work outsourcing to contractors and service providers has exploded. These tendencies are well observed in the oil and gas industry. Contractor businesses are working in the upstream exploration, drilling, production, building, transportation, and catering industries. They have a significant presence downstream in refineries, where they also assist in the planning, construction, equipping, and maintenance. 

Contractor: Definition in the Offshore Market

The term “contractor” is a bit of a misnomer. Its meaning varies from nation to country and industry to industry. This variety reflects the breadth and complexity of today’s job connections to some extent. The ILO’s stakeholders have paid close attention to this topic in recent years. Those criteria apply to contract workers in the oil and gas industry, even if their working circumstances aren’t typical. Throughout the working paper, the peculiarities of this industry are studied. Contracting is widely used in the oil and gas industry. However, its realities are exceptionally complicated, and they differ significantly from those in other businesses. Similarly, contract employees in the oil and gas industry are not typical of contract and agency workers in other industries.

One thing to consider is the link between oil and gas firms.

Some companies focus only on exploration and production (E&P). In contrast, others focus on refining and distribution, and still others integrate the entire process from the oil or gas field to the end customer. Some companies are solely contractors that offer specialised services to operators. Construction, exploration drilling, well logging (analysing and documenting the features of the formations penetrated by drill holes), shaft-sinking, and laboratory analysis are only some of the jobs available, as are maintenance, transportation, catering, and security.

Contractor: Rates and Rules

Oil and gas industry jobs are frequently well compensated. These are, at least in the core vocations, industries that need a high level of ability. However, mistakes may cost a lot of money in terms of human lives, lost income, equipment damage, and environmental cleanup.

As a result, while pay, recruiting, and training limits are not uncommon in the business, many E&P companies consider them to be a waste of money. This may be less of an issue with peripheral services (such as food or transportation). Refining also has wider wage disparities than E&P, where contract employees already dominate several job categories. Pay disparities between locally recruited labour and ex-pats are a problem in nations outside the OECD. The importance of labour expenses in the product’s pricing will have a medium-term impact on wage setting in any business. For most oil and gas operations, this does not appear to be a significant issue. Payroll expenditures are often a tiny component of an oil and gas company’s budget.

Eni’s payroll and related expenditures were €4,004 million in 2008, out of €80,412 million in total operating expenses (Eni, 2009). Pay appears to be high in the Norwegian offshore business, with operating firm workers (who make up around 25% of the workforce) doing slightly better than contractor personnel. Operator personnel offshore earned an average annual salary of 634,000 Norwegian kroner (NOK) in 2009, while contractor employees earned an average annual salary of NOK530,000. Both were much higher than the national average manufacturing wage of NOK3 54,000. Wage patterns in the oil business have remained relatively unchanged since 2000. The Norwegian annual offshore pay rates would have been valued at around US$112,730 (operator workers) and US$94,300 (contractor employees) at 19 November 2009 prices. Although wages in Norway’s oil and gas sectors are not directly connected to productivity, several businesses do provide performance incentives. Most oil rig employees have their salaries immediately transferred into their bank accounts once or twice a month. Oil rig employees make roughly $100,000 per year on average, with entry-level workers earning around $40,000, and the majority of their pay is made in cash to their bank accounts, with fewer tax deductions. On an oil rig, there are no monetary expenditures because the corporation covers their lodging and board and transportation on and off the rig.

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