- WASHINGTON -- The US will
double the value of contracts to repair Iraq's oil sector to $2bn (£1.1bn)
to cover the rising costs of security and sabotage there.
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- The government will also push back the awarding of the
new contracts again, to as late as December.
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- That delay will swell payments to Kellogg, Brown and
Root, the Halliburton subsidiary that has already reaped more than $1.5bn
from the rehabilitation of Iraq's oil industry since it was granted an
emergency "bridge" contract in March without any competition.
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- It will provide further ammunition for critics who claim
that Halliburton, which was run by vice-president Dick Cheney from 1995
to 2000, is profiting at the expense of US taxpayers.
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- The growth of the oil contracts illustrates the difficulties
the US and its allies are facing as they try to stabilise postwar Iraq.
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- US and Iraqi authorities are trying to boost oil production
from current levels of about 2m barrels a day to 2.5m in March next year
and 3m by the end of the 2004.
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- The two contracts, one for the northern part of the country
and one for the south, were originally valued at up to $500m each and were
designed to replace the Halliburton contract this month.
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- But the US Army Corps of Engineers said rising incidents
of sabotage and the poor state of the infrastructure led them to believe
the contracts would run out of funding in three to six months if they were
not increased.
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- "We fix something and protect it and they find a
way to screw it up elsewhere," said Bob Faletti of the Corps of Engineers.
"We are constantly trying to stay ahead of them."
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- In addition to repairing the immediate damage from pipeline
attacks, US and Iraqi workers have been trying to strengthen alternative
routes and facilities to make the system less vulnerable.
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- The maximum value for the northern contract will now
be $800m, while that of the southern contract will be $1.2bn. The bidders,
whose names were kept confidential, will be given seven days to revise
their proposals.
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- © Copyright The Financial Times Ltd 2003.
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