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