Experts: Halliburton's Dubai move makes sense

DUBAI, United Arab Emirates - Halliburton Co.'s decision to shift its CEO's offices from Houston to Dubai puts a key company post nearer to important markets — and further from some political headaches. Industry experts say that makes sense.

The oil services company insists it will gain no special tax or legal advantages from the move, and that Halliburton will keep a big presence in Texas even though its business is now global.

"There's not much oil in Texas any more," said Dalton Garis, an American energy economist at the Petroleum Institute in Abu Dhabi. "Halliburton is in the oil and gas industry and guess what? Sixty percent of the world's oil and gas is right here. If they didn't move now, they'd have to do it later."

Some Americans were startled to hear chief executive Dave Lesar's announcement Sunday that he would lead the company from a new headquarters in Dubai, the glitzy Mideast financial capital.

Halliburton has been a lightning rod for criticism because of the more than $19 billion in contracts awarded by the Pentagon to its KBR unit to be the sole provider of food and shelter services to the military in Iraq and Afghanistan. Democrats in Congress have claimed that KBR, formerly known as Kellogg, Brown and Root, benefited from ties to Vice President Dick Cheney, who once led Halliburton, and congressional Republicans.

The U.S. military now wants multiple contractors to provide those services and KBR is bidding again despite accusations from lawmakers and the Special Inspector General for Iraqi Reconstruction Office that the company abused federal rules in record-keeping on the current deal.

Still, defense analysts predict KBR and a company run by former KBR executives, IAP Worldwide Services, will each win one of the 10-year contracts scheduled to start this year and worth up to a total $50 billion.

"Where is the outrage of my Republican colleagues who treated Halliburton as if it was effectively the contractor of preference for all these years?" Rep. Ellen Tauscher, D-Calif., a member of the House Armed Services Committee, said in an interview.

Halliburton is now in the process of cutting all remaining ties with KBR, which held an initial public offering in November. Analysts have said KBR has been a drag on Halliburton earnings and the split will allow Halliburton to focus on selling oil exploration and production equipment and helping producers manage wells and reservoirs.

Rep. Henry Waxman, a California Democrat, said the criticism of Halliburton's move to Dubai reminded him of another Congressional uproar over the business-savvy emirate, when a Dubai-owned firm bought operations in six U.S. ports last March. Congress voted to force Dubai to sell the U.S. ports, a move seen here as anti-Arab.

But Rep. Spencer Bachus, R-Ala, said the argument that it's wrong to do business with Dubai or for a company to move its headquarters there risks alienating one of the strongest U.S. allies in the Middle East. "We need to consider that Dubai is a strong ally in a region of the world (where) we need strong allies desperately," he said in an interview.

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