Experts: Halliburton's Dubai move makes sense

Halliburton spokeswoman Cathy Mann declined on Tuesday to say how large of a staff Lesar will have at the Dubai office, citing security concerns. But she did say there will be no Houston layoffs and Halliburton will continue to employ roughly 4,000 people there, including the company's chief operating officer, chief financial officer and general counsel.

In addition, company officials said Halliburton, which has operated in Dubai for more than 40 years, will remain a U.S. corporation for tax purposes, incorporated in Delaware, and doesn't expect to reap any tax benefits from the Dubai headquarters operation.

Houston Mayor Bill White, a former deputy energy secretary in the Clinton administration, expressed little concern about the move. He noted that one of Halliburton's competitors, Schlumberger Ltd., maintains principal offices in Houston, Paris and The Hague, and has a large presence in Dubai. Schlumberger, the No. 1 oil services company, moved its U.S. headquarters from New York to Houston last year.

"He understands the global marketplace and the demands on executives," said White spokesman Frank Michel. "He's been there and done that in terms of traveling to places like the Eastern Hemisphere and Russia."

Western businesses have been pouring into Dubai to capture regional energy revenues and take advantage of some of the world's most liberal tax, investment and residency laws. Dubai charges no corporate or income tax and in many cases allows companies no restrictions on repatriating profits or importing employees.

In the Mideast, where U.S. government popularity is at an all-time low, it can be a good thing to be viewed as a locally based company, said Ehsan Ul-Haq, chief analyst of PVM Oil Associates in Vienna, Austria.

"They know that the Mideast is where the opportunities are," Ul-Haq said. "So they might want to get rid of their image as an American company."

The Middle East, home to some 60 percent of the world's proven oil reserves, has been explored and drilled far less intensively than in North America, mainly because producing wells are so large that there was little need to drill more.

But that is changing, Garis said. Rising energy demand from China, India and the United States has kicked off a new round of drilling in Saudi Arabia, Libya, Kuwait, the United Arab Emirates, Mauritania, Chad and elsewhere in the Mideast.

Giant state-run energy companies like Saudi Aramco, the world's No. 1 oil producer, are behind most of the exploration, and form Halliburton's customer base. National oil companies now control 77 percent of the world's oil production, according to Washington-based PFC Energy.

Last year, more than 38 percent of Halliburton's $13 billion oil field services revenue stemmed from sources in the eastern hemisphere, where the firm has 16,000 of its 45,000 global employees.