NEW YORK (CNN/Money) – 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.
The Kellogg Brown & Root (KBR) unit of Halliburton (HAL: up $0.54 to $20.66, Research, Estimates), of which Cheney was CEO from 1995 to 2000, said late Monday that it was awarded a contract by the U.S. Army Corps of Engineers to put out oil fires and make emergency repairs to Iraq’s oil infrastructure.
President Bush Tuesday asked Congress for $489.3 million 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.
Cheney divested himself of all interest in Halliburton, the largest U.S. 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 $5 billion initially, with $3 billion 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.