Managing labor supply chain in the oil and gas sector

Managing labor supply chain in the oil and gas se...

KPMG report comparing the burden of tax compliance and related cost of employment in Australia, the UK and the U.S. in the oil and gas sector



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Multinationals operating in the oil and gas sector face dealing with tens of thousands of workers based in some of the most remote locations in the world every day. With the need to recruit and retain the very best for diverse, and yet often specialist, roles it is a huge challenge. Coupled with the risk of potential instability in a number of locations and an absolute priority on safety, it becomes clear that the challenge requires managers to engage with a vast array of critical issues in a timely and efficient manner.

Whether a project involves exploring for oil and gas on the UK Continental Shelf, extracting bitumen in the US, hydraulic fracturing (fracking) in Australia or producing and retailing biofuel in Brazil the complexities involved are immense. It requires close-knit teams operating in accordance with strict and precise protocols, respecting the environment, engaging positively with the local community, harnessing the best available technology, valuing the workforce and ultimately, returning profit to shareholders.

The issue of taxation is a key consideration given that operations can be conducted in upwards of 50 or even 100 countries worldwide.  From local corporation tax to social security contributions, and whether impacting on the corporate, employees, expatriate workers or sub-contracted labor, each country will have its own rules and regulations.  If the rules are broken, aside from financial penalties, the business may also suffer significant reputational damage by finding itself the subject of a front page news story.

This article focuses on the labor supply chain in the oil and gas sector and compliance issues around employment taxes. We cannot hope to cover the position in each and every jurisdiction and so we limit ourselves to comparing and contrasting the issues in just three, albeit major, locations: Australia, the U.K. and the U.S.

It will touch on recent developments and more longstanding issues affecting the sector in these countries and how businesses are addressing them.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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