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Halliburton's Contract in Iraq Will Be Extended

Bush administration says sabotage of oil facilities has delayed deals for work that could total $2 billion.

October 30, 2003|From Associated Press

Halliburton Co. will retain a no-bid contract in Iraq longer than expected, the Bush administration said Wednesday, citing sabotage of oil facilities for delays in replacement contracts.

Halliburton's contract, valued at $1.59 billion so far, will be extended until December or January while the government receives and evaluates revised bids for replacement work that could total $2 billion.

Halliburton's KBR subsidiary has been performing the restoration work under a contract that evolved from emergency firefighting at Iraq's oil wells after Saddam Hussein was toppled to restoration of Iraq's petroleum production.

Democratic members of Congress have said the no-bid contract showed favoritism to the Houston company that Vice President Dick Cheney led before he ran for office.

Cheney's office has said that the vice president had no current ties to Halliburton and had nothing to do with the contract.

They also accused Halliburton of gouging U.S. taxpayers by paying too much for emergency imports of oil from Iraq's neighbors.

Rep. Henry Waxman of California and Rep. John Dingell of Michigan, both Democrats, said the U.S. government was paying Halliburton "enormous sums" -- $2.65 a gallon -- for gasoline imported into Iraq from Kuwait, Reuters reported. Halliburton had no comment but previously denied it was overcharging for fuel it delivered to Iraq.

Separately, Halliburton said that legal costs and lower-than-expected results from joint ventures helped drive earnings down 38% in the third quarter despite a 39% increase in revenue fattened by government work in Iraq by its KBR subsidiary.

The Houston-based oil field services company said earnings were $58 million, or 13 cents a share, including a loss from discontinued operations of 8 cents a share, for the July-September period.

A year earlier, the company reported net income of $94 million, or 22 cents a share.

Revenue rose to $4.15 billion from $2.98 billion a year earlier. Operating profit for Iraq-related work increased $34 million, contributing 5 cents a share to earnings.

Shares of Halliburton declined 56 cents to $23.52 in New York Stock Exchange trading.

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