UPDATE 1-People, not fuel or rigs, key oil industry shortage

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By Maryelle Demongeot and Luke Pachymuthu

KUALA LUMPUR, June 11 (Reuters) - The oil industry's most pressing shortage is not fuel, or rigs, or even access to fields in increasingly protective nations, executives say.

It's people.

Asia's state oil companies with ambitious growth plans in particular are feeling the pinch as they lose staff to peers with deeper pockets, raising safety and expansion risks as the industry's most experienced workers head into retirement.

"It is human capital that will truly drive the future of the oil and gas industry," Malaysian Prime Minister Abdullah Ahmad Badawi told the Asia Oil and Gas Conference in the Malaysian capital.

The spike in demand for trained engineers, geologists and other technical personnel has been evident for several years as the trebling in oil prices to $70 a barrel fuelled a surge in drilling at the same time as a shortage of world refining capacity prompted a wave of investment in the downstream sector.

While the industry has responded quickly to the lack of spare oil production and refining capacity, and there appears hope for some easing in the oil equipment sector, executives and officials fear that refilling the people pipeline will not be as easy.

"More than half of the current technical workforce will reach retirement eligibility within the next 10 years," ConocoPhillips (COP.N) Chairman Jim Mulva told the conference.

"In the future, we'll be using new strategies to recruit and retain people, and utilise them in more efficient ways."

A new survey by Citigroup found that the lack of personnel was the biggest constraint on oil exploration and production spending, Argus Media reported last week.

That ranked just ahead of funding uncertainties and the lack of access to reserves, other major obstacles as both state-owned and international oil companies struggle to replace depleting reserves through new exploration.

STATE FIRMS FEEL PINCH

Malaysian state oil company Petroliam Nasional (Petronas) [PETR.UL] was one of only six oil companies last year to discover more oil than it produced, says it's chief executive, Hassan Marican.

"There continues to be a tremendous shortage of human capital throughout the entire chain," Hassan told Reuters on Friday.

"We have been replenishing our pipeline of people continuously, and because of that we have suffered. Suffered in the sense that our talent has been poached."