DUBAI (AFP) – The head of US oil services giant Halliburton, whose decision to relocate from Texas to Dubai set off a political firestorm in the Unites States, defended the move as a reaction to a shift in the company’s business focus to the Middle East.
“If you look at a map of oil and gas reserves, the focus of our business, the focus of the industry clearly is moving to that part of the world … to the eastern hemisphere in particular and the Middle East specifically,” chairman and CEO Dave Lesar told journalists in Dubai.
By eastern hemisphere, he said he meant the North Sea, Africa, the Middle East and Asia.
“Right now, the western hemisphere is still the largest oil and gas drilling market in the world, but we are seeing that shift over time, and it was my view that we really needed to be out ahead of that shift,” said Lesar, who moved to Dubai on Saturday.
“I think there is a really good business reason to be here in this part of the world. Dubai in my mind is the perfect place to run a business from.”
Long term, he said the company envisaged 50 percent of its revenues coming from the eastern hemisphere, compared with 35 percent now.
He noted that the oilfield services industry, of which Halliburton is the US leader, should see 80 billion dollars of business over the next five years. Of that, 75 percent would be in the eastern hemisphere, notably the Middle East.
Halliburton’s announcement in March that Lesar would move to Dubai drew fierce criticism from politicians who questioned whether it was in order to avoid paying US taxes.
Responding to that, Lesar said: “We have been and will continue to be a US-registered company. We’ll trade on the New York Stock Exchange, and the US taxes any US company’s earning on a worldwide basis.
“So it doesn’t matter where I am or where a company’s headquarters is as long as we are a US company … So our tax situation will absolutely not change by the fact that I am here or that we have a corporate office here. Same tax level, same tax regime, same legal structure we’ve always had.”
Halliburton was run by Dick Cheney from 1995 until 2000, when he became vice president of the United States.
The firm and its KBR subsidiary, which is being spun off, have endured several contracting controversies and investigations since Halliburton was awarded a no-bid 2.4 billion dollar contract to supply the US military on the eve of the 2003 invasion of Iraq.
KBR agreed last year to pay the US government eight million dollars to settle fraud claims related to an army supply contract.
Referring to the Iraqi market, Lesar said that, for the time being, Halliburton was going to steer clear of it for security reasons.
“I am not going to put our people at risk,” he said.
Lesar also referred to the company’s announcement last month that it had wrapped up its commitments in Iran and was no longer conducting any projects there.
Halliburton announced in January 2005 that it was shutting-down its Iran operations, but would honour existing “contractual commitments” until they were fulfilled.
“We have severed all of our contracts, concluded all of our contracts in Iran,” Lesar said, “mainly because there is better business opportunities throughout the world.”
Looking to the future in the UAE, Lesar said the company would be looking at a “dual (stock market) listing at some point in time … It’s going to be something that happens in the very near future.”