Fluor Licking Wounds; Ready for Iraq Oil Bid
By CHRIS CZIBORR
Fluor Corp. may be smarting from losing out on a key Iraq rebuilding contract, but it still has good prospects for a big win in the war-torn country.
An upcoming bid for the Aliso Viejo engineering company: handling Iraq’s oil production and distribution rampup.
Two weeks ago, Fluor failed to win a $680 million contract in Iraq infrastructure rebuilding to San Francisco-based archrival Bechtel Group Inc.
The U.S. Army Corps of Engineers, meanwhile, is in the process of drawing up the oil contracts for bid.
The Army Corps still is determining how much work will be needed, how many contracts will be awarded and what they’ll be worth, according to spokesman Lt. Col. Gene Pawlik.
“We’re at least a month away from announcing anything,” Pawlik said.
After the proposals for bid go out, contracts are expected to be awarded relatively swiftly.
Fluor last week said it formed a venture with Britain’s powerhouse engineering and construction company, AMEC PLC, to go after the Iraqi oil work together.
The venture is likely to be one of the strongest bidders, particularly given Britain’s participation in the war. Fluor will control 51% of Fluor/AMEC, with AMEC owning the rest.
Industry observers say the total value of oil and gas work in Iraq could be as much as $5 billion, although they caution it’s unclear how the Army Corps will slice the contracts.
“Obviously we’re interested in the projects, but until we have something definitive to look at it’s too early to speculate on the scope and size of the projects,” said Fluor spokesman Jerry Holloway, who expects it could be several weeks before the Army Corps announces anything.
Pasadena-based Parsons Corp., which bid on the Bechtel contract, is a strong candidate to bid on the oil work.
Another front runner: Houston-based Halliburton Co., which already won a contract to fight oil well fires in Iraq and is Vice President Dick Cheney’s former company.
International companies, which weren’t allowed to bid on Bechtel’s contract, also could be included in the oil and gas bidding.
Army Corps of Engineers spokesman Pawlik said oil field work in southern Iraq likely would include international bidders.
“The guidance we’ve received to date says the bidding will be ‘open competition to all,'” Pawlik said.
Foreign companies that could be in the running: France’s Technip-Coflexip and South Korea’s Hyundai Engineering & Construction Co.
Fluor alone would be a strong candidate for the oil work.
The company has a half-century of experience doing such work in the Middle East, including in Kuwait, where it built a $1.4 billion petrochemical plant in 1997. It still is active in Kuwait.
Fluor also finished a similar $2 billion petrochemical complex in Saudi Arabia in 2001.
The forthcoming oil work would be separate from firefighting work Halliburton is handling in Iraq’s oilfields.
Meanwhile, Bechtel’s contract for road and other infrastructure work was awarded by the U.S. Agency for International Development.
The initial $34.6 million contract, which may be extended to the repair of hospitals, schools and other government buildings, could be worth as much as $680 million over 18 months, agency officials said.
The agency is expected to soon tell failed bidders why they lost.
Another item of interest to Fluor: the reorganization of Iraq’s state-run oil monopoly.
It’s widely believed that Philip Carroll, predecessor to current Fluor Chief Executive Alan Boeckmann, is the Bush administration’s lead candidate to head the production side of Iraq’s oil industry during the postwar transition.
If he gets the job, Carroll would report to retired Gen. Jay Garner, who is running the civil administration in Iraq. Garner and Gen. Tommy Franks both report to Defense Secretary Donald Rumsfeld.
Carroll also is a former chief executive of Shell Oil Co., the U.S. arm of Netherlands-based Royal Dutch/Shell Group of Cos. Fluor’s Holloway said he didn’t expect preferential treatment for the firm if Carroll gets the position.
“We assume that the contract process would be an open process and one that would judge the bidders based on their expertise and the merits of their work,” Holloway said. “We believe we will fare well.”
The Army Corps earlier this month awarded a contingency contract to Fluor for non-oil infrastructure work. The contract guarantees Fluor a minimum of $500,000 up to a maximum of $100 million.
Holloway said the Army Corps is deciding where the work will be,Afghanistan and Iraq are likely possibilities.
