Fluor Gets Longed-For Chance at Iraq Oil Bid
By ANDREW SIMONS
After weeks of uncertainty, Fluor Corp. is readying to bid on two contracts rebuilding Iraq’s oil industry.
The Army Corps of Engineers today is set to issue formal invitations for bids on the Iraqi oil work. Bids are due by Aug. 14.
The two contracts,one for work in northern Iraq and another for work in the south,could be worth $500,000 to $500 million each, according to the Army Corps. They’re set to replace an initial contract awarded to Halliburton Co.’s Kellogg Brown & Root International Inc.
“We would expect this to be a stiff competition,” Fluor spokesman Jerry Holloway said.
Whether the politically sensitive contracts would go to bid at all was put in doubt last month when the Army Corps indicated Halliburton’s contract,awarded without bidding,might last longer than expected because of widespread looting and sabotage of Iraqi oilfields. Officials also expressed doubt about whether a final contested contract could be in place by August.
The bidding is important for Fluor, which lost out in April on a $680 million master contract to rebuild Iraq’s roads, sewers and other basics to archrival Bechtel Group Inc. of San Francisco.
“The focus of that work is heavily humanitarian and civil and more general infrastructure,” Holloway said. The oil contracts are “really a whole different kind of work. It’s an area in which Fluor has a reputation.”
Last month, Fluor Chief Executive Alan Boeckmann (photo) said the company is going after the oil work as part of a strategy of landing more rebuilding work in Iraq in the next decade.
“Our interest in Iraq is long-term,” he told Bloomberg news.
Work for the Army Corps isn’t as profitable as other projects that could play out in Iraq in the next five to 10 years, Boeckmann said.
In April Fluor teamed with London-based AMEC PLC to go after Iraqi oil work. Fluor controls 51% of the venture to stay within federal procurement rules.
Both companies have done extensive oil work in the Middle East. Then there’s the political factor of teaming with a company from the United Kingdom, a key member of the U.S.-led coalition forces.
“Certainly the fact that they are British wasn’t lost on us,” Holloway said.
The awarding of Iraqi work thus far has been cloaked in intrigue and politics. Much has been made of political connections at Bechtel and Halliburton.
Fluor beefed up its lobbying effort in May by naming David Marventano, former staff director of the House’s Energy & Commerce committee, as senior vice president of government affairs in its Washington, D.C., office.
Fluor also has a key contact in Philip Carroll, head of the government’s advisory committee for Iraq’s oil industry. Carroll was Fluor’s chief executive from 1998 to early 2002 and predecessor to Boeckmann.
But, so far, Carroll has treaded cautiously, likely because of controversies over contracts given to Bechtel and Halliburton.
Fluor’s lobby effort stresses the company’s experience, Holloway said.
“It’s important that people know who you are and what your capabilities are,” he said. “That’s one of the things the lobbyist does is make sure people know your capabilities.”
Fluor says it has been has been talking with Congressman Christopher Cox but hasn’t specifically asked the Newport Beach Republican for help, Hopkins said.
“We have conversations with Chris as a part of the normal doing business,” Holloway said.
Fluor’s shares saw a runup in March as the Iraq war broke out. They’ve leveled off since April, perhaps over uncertainty about the oil work.
Last week Fluor’s shares were trading at about 35, with a market value of $2.8 billion.
