The Plight of Australian Offshore Workers

Offshore petroleum exploration in Australia has plummeted. The driver of the decline in offshore exploration is of course the 70 percent decline in the price of oil, and the impact on the offshore industry has been the deepest and most sustained ever experienced in Australia. 

Industry sources report that more than 1,000 seafarers have lost jobs in the downturn.

Mermaid Marine Offshore, an ASX listed operator and probably the largest in the local camp, has reduced its headcount by 50 percent. 

Farstad’s Australian business is also suffering a severe downturn, recently announcing the closure of its Melbourne headquarters and the consolidation of HQ activities to Perth along with a reduction in HQ staff from 65 to 30. 

Tidewater, also present in Australia, recently reported that crew costs for the group were down from $92 million to $56 million. These numbers suggest large numbers of crew have been let go.

Although there are many Australian-crewed and flagged ships in the offshore sector, the surge in exploration and subsequent construction phases over the last decade created a new demand. More support vessels were needed as well as large and sophisticated construction and subsea platforms. The increased demand quickly highlighted the shortage of Australian marine and specialist crew so the government, to the chagrin of local unions, allowed qualified personnel entry into Australia on special visas to meet the demand.  

Later when specialist ships were brought into the market to work at sea, but within the Australian Economic Zone, foreigners without visas were allowed to carry out the work.
The maritime unions objected to the governments’ measures and, for a couple of years protested and objected at every opportunity about these foreign workers. 

In August, the Maritime Union of Australia took their case to the High Court of Australia; the highest court in the land. The court found that the Ministerial Determination made by the Immigration Minister was invalid and that the workers concerned should be required to hold visas designed for temporary and skilled workers. Applicants for the visas will have to meet formal criteria for before they are granted. 

The aim of the visas, though often flouted, is to ensure that Australian citizens have an opportunity to fill the job or role if qualified. Although it will create complications for employers, it’s an important decision with some implications for the broader maritime industry in Australia for foreign employees.

A spokesman for the lobby group Australian Mines and Metals Association said that whilst its members would always obey the country’s maritime, migration and employment laws its longer term concern was concern was that there would be a cumulative impact of additional regulatory costs on Australia’s competitiveness as a resource economy. For the moment though, he said with most of Australia’s offshore resource projects having moved beyond peak construction, the impact of the decision is not as pressing or widespread as it would have been two years ago.

Without doubt the driver for recovery from this episode is the price of oil. Some of the larger quality operators are, whilst they wait for that rise, cutting deep. They are refinancing debt, selling vessels and in many cases achieving improvement from regional diversification. As always it will be the fittest left standing after this tough game.

Peter Bremmer is Director of Strategic Marine Group in Australia.