Bids invited for lucrative Iraq oil deals

The United States Army invited bids on Thursday for two new Iraqi oil contracts worth up to $1 billion, opening up the lucrative business to foreign firms previously excluded from such deals.

    US bows to criticism and
    opens field for bids

    The contracts -- one each for north and south Iraq  -- replace a no-competition contract awarded in March to Kellogg Brown & Root  (KBR), a unit of Halliburton, the Texas oil firm once headed by US Vice President Dick Cheney.


    That contract was met with a barrage of criticism in Washington as one company with links to Cheney was getting too much business out of the Iraq invasion.


    “The formal bidding process for these two contracts can now begin,'' said US Army Corps of Engineers spokesman Lt. Col Gene Pawlik in Washington. ''Foreign companies can apply,'' he added.


    The Request for Proposals had been scheduled for release on Tuesday but was delayed until very late on Wednesday after the army made some ''language changes,'' said one defence official.


    The deals


    The government's preference was to award the contracts to two separate companies as the ''geographic areas of the two contracts will not overlap,'' said the bidding notice.


    KBR has indicated it will bid on the new contracts and other companies such as Fluor Corp, which recently set up a joint venture with British engineering group AMEC Plc, has also expressed interest.


    The minimum amount of the proposed contracts will be $500,000 each and the maximum $500 million each.


    The initial phase will cover 24 months, followed by three one-year options. Companies have until August 14 to bid and Pawlik said no formal start-date had been set for the jobs. A pre-bid conference has been set for July 14 in Dallas, Texas.


    The KBR oil contract in Iraq was worth nearly $283 million by July 2 and Pawlik estimated the final figure could reach about $600 million, far less than the original $7 billion ceiling set as a worst-case scenario for the project.


    KBR has also received task orders for Iraq worth more than half a billion dollars under a 2001 contract called the Logistics Civil Augmentation Program.


    KBR which Cheney once
    headed will apply

    The money under the March oil contract was spent solely on bettering the oil infrastructure rather than on any general “reconstruction” activity. The money was used for emergency repairs to Iraq's oil fields, delivering fuel to Iraqis and building base camp facilities for workers.


    The new contracts too focus on Iraq’s oil infrastructure. They include extinguishing oil fires, environmental assessments and clean-up at oil sites, the distribution of oil products, maintaining oil fields and the marketing and sale of Iraqi crude oil and refined products.


    Getting large-scale oil exports up and running from Iraq is deemed essential to Iraq’s occupation forces to get money to “rebuild” the rest of the country devastated by the recent invasion.


    SOURCE: Agencies


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