According to industry reports, the average age of workers at major oil companies is between 48 and 50 years.

As retirement looms in the next five to seven years, the potential loss of industry expertise may threaten the sustainability of this sector as a whole.

Workers aged between 35 and 45 - the middle management - are now in short supply. Due to massive layoffs during the oil bust in the 1980s and early 1990s, this generation viewed the energy sector as a dead end and pursued other interests such as banking and engineering.

In the US, for example, enrollment in oil-related undergraduate programs fell 85 percent from 1982 to 2003, severely depleting the industry of an entire generation of management.

While textbook knowledge is important, work experience in the business is absolutely crucial.

Industry experts believe that approximately 10 years' experience in various disciplines is needed to make autonomous decisions on oil projects.

As oil becomes harder to find, rig workers are being required to oversee projects in more dangerous locations.

When you live in the middle of the ocean on an oil platform, experience gained from real life and death situations means more than anything else.

This is important because Saudi Aramco, the largest state-owned oil corporation in Saudi Arabia with the most proven crude oil reserves, could be facing an experience deficit.

As senior managers begin to retire in the next few years, close to 60 percent of Aramco's oil engineers will have less than 10 years' experience.

With oil prices averaging US$72 per barrel in 2007 and touching a high of US$147 so far in 2008, many oil exploration and drilling companies are expanding their production capacity.

Though new workers, especially in emerging markets, are beginning to join the industry, experience and the labor shortage should persist in the foreseeable future.

For example, when a new drilling rig comes online, it takes approximately 150 workers to service a station. With two shifts each day, a rig needs to employ at least 300 people.

That said, it is not just the rough and buff oil men that a company must hire.

The need for people covers many aspects of the business, from petroleum engineers to construction laborers, and from geoscientists to reservoir engineers.

As the old adage goes, people are the most important asset for any company. In the oil business, people without experience and talent can be a liability. Though we might see new blood entering it, without much experience the industry could bleed.

Ronald Chan is the founder and chief executive of Chartwell Capital, a private investment company.

e-mail: ronald@chartwell- capital.com.hk