WASHINGTON, 14 March 2007 — Halliburton, the oil services company once run by US Vice President Dick Cheney, has provided further evidence that the focus of many big US companies is shifting overseas by announcing plans to move its headquarters to Dubai, the Gulf boomtown where free-market capitalism has been paired with some of the world’s most liberal tax, investment and residency laws.
Halliburton CEO Dave Lesar said his decision to relocate reflected the faster growth in oil exploration and production in the Eastern Hemisphere, as the company’s Middle East operations have been headquartered in Dubai for 15 years.
“This is a strong market for Halliburton and we are excited to position the company in this key business area,” he said.
Texas-based Halliburton, which was led by Cheney from 1995-2000, did not specify what, if any, tax implications the move might entail, but said it does plan to list on a Middle East bourse once it moves to Dubai.
The company said it was making the move to position itself better to gain contracts in the Middle East. In 2006, Halliburton earned profits of $2.3 billion on revenues of $22.6 billion.
More than 38 percent of Halliburton’s $13 billion oil field services revenue last year stemmed from sources in the Eastern Hemisphere, where the firm has 16,000 of its 45,000 employees.
Other top executives, including the chief operating officer and chief financial officer, will remain in Houston. But the move is likely to be seen as a blow to the US oil and gas industry, in which the company has played a prominent role since it was founded in 1919.
KBR, the engineering and military-services contractor unit that Halliburton is in the process of splitting off from its parent company, 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.
The Securities and Exchange Commission and the US Justice Department also are investigating the company over allegations of improper business affairs in Iraq, Kuwait and Nigeria.
Sunday’s announcement of the oil services firm’s move to Dubai has sparked outrage from some US politicians. “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 Sen. Patrick Leahy, a Vermont Democrat. He called the decision to move as “an example of corporate greed at its worst.”
“At the same time they’ll be avoiding US taxes, I’m sure they won’t stop insisting on taking their profits in cold hard US cash,” Leahy said.
Rep. Henry Waxman, chairman of the House Oversight and Government Reform Committee, might hold a hearing on the implications, an aide to Waxman said.
US lawmakers remain openly suspicious of the United Arab Emirates, despite the growing prominence of its bustling financial center, Dubai.
Halliburton has drawn scrutiny from auditors, congressional Democrats and the Justice Department for the quality and pricing of KBR’s work for the army in Iraq.
Dubai is a convenient location for an oil-services company trying to win business from the national oil companies in the Middle East.
“When you look into the future, it’s really going to be these (national oil companies) that are going to control the future production,” Amy Myers Jaffe, a fellow for energy studies at Rice University’s James A. Baker III Institute for Public Policy, told reporters. “Who do the oil service companies work for? They are working for the companies that are producing the oil and gas.”
Jaffe was in Dubai on Sunday to discuss a report the Baker Institute has just completed on the changing role of these national oil companies.
That report points out that these national oil companies controlled some 77 percent of the world’s proved oil reserves in 1995. In contrast, Western international oil companies hold less than 10 percent of the global oil and gas resource base.
“The company as a whole has continued to diversify internationally, and the Middle East is a point that they have targeted,” William Sanchez, a US-based analyst at Howard Weil told reporters. “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.
Alan Laws, an analyst at Merrill Lynch, said the move would likely help Halliburton’s position in negotiating large contracts. Halliburton said it would maintain its legal registration in the United States and was not leaving Houston, where it was currently based.
