Iraq Rebuilding Contracts Awarded
By Mark Gongloff
26 March 2003
The first contracts for rebuilding post-war Iraq have been awarded, and vice-president Dick Cheney's old employer, Halliburton Co., is one of the early winners. President Bush Tuesday asked Congress for $489.3m to cover the cost of repairing damage to Iraq's oil facilities, much or all of which could go to Halliburton or its subcontractors under the terms of its contract with the Army.
The Kellogg Brown & Root (KBR) unit of Halliburton, of which Cheney was CEO from 1995 to 2000, said late Monday that it was awarded a contract by the US Army Corps of Engineers to put out oil fires and make emergency repairs to Iraq's oil infrastructure.President Bush Tuesday asked Congress for $489.3m to cover the cost of repairingdamage to Iraq's oil facilities, much or all of which could go to Halliburton or its subcontractors under the terms of its contract with the Army.
Cheney divested himself of all interest in Halliburton, the largest US oilfield services company, after the 2000 election.
Halliburton wouldn't speculate about the total monetary value or duration of its contract, under which it will put into action some of the firefighting and repair plans it outlined for the Army in a study it conducted in November.
"KBR's... contract is limited to task orders under the contract for only those services which are necessary to support the mission in the near term," Halliburton spokeswoman Wendy Hall said.
The Army Corps of Engineers told CNN Tuesday that Halliburton would be paid on a "cost plus" basis, meaning it would be reimbursed for the costs of its work and would get a certain percentage of those costs as a fee.
Since it's still unknown how much damage has been or will be done to Iraqi oil fields in the war, it's difficult to estimate the contract's eventual dollar value.
But its biggest value could be that it puts Halliburton in a prime position to handle the complete refurbishment of Iraq's long-neglected oil infrastructure, which will be a plum job.
Getting Iraq's oil fields to pre-1991 production levels will take at least 18 months and cost about $5bn initially, with $3bn more in annual operating expenses, according to a recent study by the James A Baker III Institute for Public Policy at Rice University, named for the first President Bush's secretary of state during the first Gulf War.
"Certainly Halliburton would have the lead [in the competition for that job], even absent this contract, given the size and scope of their current operations," said Pierre Conner, an analyst with Hibernia Southcoast Capital. "But there's no question they'll start with some footprint there. It clearly puts them in the position where they will know more about the situation and have a bit of an operation there."
Though none of the potential administrators of such a contract - including the Defense Department, the State Department's US Agency for International Development (USAID) and the United Nations - have claimed responsibility for handing out the job, Monday's award and Bush's request for funding seem to indicate the US government will be in charge.
Halliburton said it has subcontracted the firefighting portion of the Army contract to Houston-based companies Boots & Coots International Well Control Inc. and Wild Well Control Inc., a private company.
Hall of Halliburton said all oil fires should be put out within 240 days. Very few oil wells have been set ablaze by Iraqis so far, in contrast to the first Gulf War in 1991, when Iraqi troops retreating from Kuwait set fire to more than 700 Kuwaiti oil wells. Halliburton's KBR unit was involved in putting out the 1991 fires.
Separately, USAID late Monday awarded a $4.8m contract to Stevedoring Services of America (SSA), a private company based in Seattle, to manage the Umm Qasr ports in southern Iraq.
Umm Qasr's ports, where US and British troops have struggled for full control, are seen as critical to efforts to bring humanitarian relief to Iraqis. SSA will handle several tasks, including assessing the need for dredging and repairs to the ports, and unloading and warehousing cargo.
USAID plans to issue seven other contracts, including one for $600m for general construction work in post-war Iraq. Halliburton is among several companies reported to have put in bids for that contract. [SC]
CNNfn's Scott Spoerry contributed to this report.
This article originally appeared on www.money.cnn.com