MANAMA/HOUSTON: US oilfield services giant Halliburton Co. said on 11 March it will move its corporate headquarters and its chief executive to Dubai in the United Arab Emirates in an effort to expand overseas.
Texas-based Halliburton, which was led by Vice President Dick Cheney from 1995-2000, did not specify what, if any, tax or political implications the move might entail.
The firm has drawn scrutiny from auditors, congressional Democrats and the Justice Department for the quality and pricing of its work for the US army in Iraq.
The Dubai move drew immediate political reaction.
“This is an insult to the US soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years,” said judiciary committee chairman Senator Patrick Leahy, a Vermont Democrat.
Halliburton chief executive David Lesar said the company also was considering listing its shares on one of the Middle East bourses. It is currently listed on the New York Stock Exchange and has a market value of more than $32 billion.
“My office will be in Dubai, and I will run our entire worldwide operations from that office,” Lesar said at an energy conference in Bahrain. “Dubai is a great business centre.”
Halliburton has long been involved in the Middle East.
KBR Inc., the engineering and military-services contractor unit that Halliburton is in the process of splitting off, is the Pentagon’s largest contractor in Iraq.
KBR has so far booked more than $20 billion in revenues from its work in Iraq and has been the target of several investigations into the company’s billing practices. It has also faced complaints from some US lawmakers about the company’s close ties to the Bush administration.
Halliburton said it would maintain its legal registration in the United States and was not leaving Houston, where it was currently based.
But Lesar told reporters: “At this point in time we clearly see there are greater opportunities in the eastern hemisphere than the western hemisphere.”
An analyst said the move made sense.
“The company as a whole has continued to diversify internationally, and the Middle East is a point that they have targeted,” said William Sanchez, a US-based analyst at Howard Weil Inc.
“They are being opportunistic in putting the CEO in the middle of the action.”
Sanchez said he believed Halliburton’s move to Dubai was not tax related. Instead he viewed it as a strategic play.
During 2006, more than 38% of Halliburton’s $13 billion in oil services revenue was generated in the eastern hemisphere.
Oil and gas service companies have raised prices for their services over the past two years as the sector strains to bring enough capacity on line to meet rapidly rising oil demand.
Many new supply projects are in the oil-producing countries of the Middle East, while Asia accounts for most of the rising demand.
In contrast, a slide in natural gas prices in the United States has prompted investor concerns that oil and gas companies might cut back spending in North America.
Lesar also said he expected the price of oil to stay above $40 a barrel, providing good conditions for future investment in the oil and gas industry.
Alan Laws, an analyst at Merrill Lynch, said the move highlights the growing importance of national oil companies and said it would likely help Halliburton’s position in negotiating large contracts.
Halliburton’s shares closed up 29 cents at $32.02 on Friday. The stock has gained 7% in the past month but has slipped 3% in the last 52 weeks.