Halliburton Relocates World Headquarters to Dubai
What’s this? Halliburton is moving the office of the Chief Executive Officer from Houston, Texas, USA to Dubai, United Arab Emirates (UAE)? Yep, very true.
While the announcement was a surprise to many in the oil industry Halliburton said that the move was part of a strategy announced in mid-2006 to concentrate its efforts in the Middle East. Halliburton is the oil field services and military services contractor company, that Dick Cheney, infamous Vice President of the United States, served as President of from 1995 to 2000.
Mr Cheney is reported to be still close to the company, “blind trust” notwithstanding, and to still receive substantial annual income from Halliburton in the form of stock ownership and deferred compensation payments.
Industry observers and analysis say that the move makes a lot of sense for Halliburton as the center of the universe for oil service companies has shifted from Houston, Texas to the Middle East. The shift reflects the reality that oil fields in the West are mature at best, many are in a state of decline, and that younger oil fields and oil exploration activity in the Eurasian-African hemisphere look to be much more promising for future production and profits.
While the move to Dubai is said to make a great deal of business sense for Halliburton, as it increasingly serves state owned oil companies in the region, there is sure to be some speculation about Halliburton moving key executives, like Chairman and Chief Executive, David J. Lesar, to a country that does not have an extradition treaty with the US. Halliburton is being investigated by the Justice Department and the Securities and Exchange Commission over allegations of improper dealings in Iraq, Kuwait and Nigeria.
Halliburton received according to some reports as much as 16 billion in non negotiated contracts just for Iraq. There are reports of Halliburton routinely over charging for military services supplied by it’s subsidiary KLB. Other reports charge that Halliburton supplied dirty drinking water and contaminated food to US units operating in Iraq as well as poorly managing construction projects.
Halliburton has also agreed to pay billions of dollars in settlements in asbestos litigation for companies that it acquired during Mr. Cheney’s rein at the company.
In recent years Dubai has been very aggressive in attracting business to the UAE. Dubai offers favorable tax treatment, fantastic infrastructure, access to rich markets, and an all around favorable business and living environment. Dubai has become the center for a 1.2 billion population rich market in the Mid East and the home to a large number of multi national companies.
It may well be that Halliburton is moving it’s headquarters to Dubai for only it’s stated reasons. However, in the background the chief financial officer, under the direction of the Chairman, may find that shifting revenues from new contracts and assets to Dubai and keeping expenses and liabilities in Houston may be a temptation difficult to resist.
And what about the 16 billion, perhaps more, in contacts Halliburton received over the past few years for services rendered in Iraq and Afghanistan? Halliburton is trying to spin off the KLB subsidiary that was the beneficiary of the war related contracts. I expect that with the company under investigation for fraud and other evil acts that Halliburton doesn’t expect much in the way of additional contracts for some time to come.
It makes a lot of sense for Halliburton to pocket some 2.3 billion in record earnings in 2006 and to move on to better things expected from the oil service part of it’s business.
Dubai should be a familiar business center to Americans by now. It’s the same Dubai that last year was involved in the effort to manage many of America’s deep water port facilities. This effort was beaten down by the US congress among cries of national security issues.
With the epicenter of the oil business moving from Houston to areas outside of the US in the Middle East, Asia, and Africa, the Halliburton relocation has not created much of a fuss in the United States. It is being hailed as a natural smart move for an oil services firm to make in the new world oil market that is moving from West to East.
If the move also serves other Halliburton interests then all the better for Halliburton and one of it’s largest benefactors, Vice President Dick “Bull Walrus” Cheney.
