Gulf Oil and Gas accountACCOUNT

Halliburton Confirms It Received Fuel Waiver from U.S. Army Corps of Engineers

Source: www.gulfoilandgas.com 1/8/2004, Location: Middle East

Halliburton confirmed that it had received a waiver on Dec. 19, 2003, from the U.S. Army Corps of Engineers granting KBR a waiver of the requirement to obtain certified cost or pricing data from its subcontractor for importing fuel from Kuwait to Iraq.

The company said the facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms and in ways completely consistent with government procurement policies. KBR continues to work with the Corps as they fulfill their challenging missions while also carrying out their important responsibility to maintain oversight in the expenditure of funds.

As part of its Restore Iraqi Oil (RIO) contract, KBR was asked on May 4 by the U.S. government to deliver fuel to Iraq's civilian population. The fuel was needed to avert civil unrest after the war, when Iraq's civilian population lacked basic fuels like gasoline and kerosene for everyday uses like driving and cooking.

KBR recommended that a contractor from Turkey be "sourced" as a second fuel supplier, saving the taxpayer money.

The original mission detailed by the Army Corps of Engineers was to find a fuel source in the region. The first fuel source found was in Kuwait. KBR initiated the idea to source fuel from Turkey. KBR presented this idea to its customer, and because of this, saved taxpayers well over $100 million. Most importantly, this plan allowed the Iraqi people to get the fuels they need, while ensuring KBR subcontractors and employees had a less hazardous and closer route to Baghdad.

Turkey currently supplies about two-thirds of the fuel to Iraq, which maxes out their capacity, while Kuwait provides one-third of the fuel products.

The company said the record shows that KBR initiated the idea of relying not just on Kuwait to supply fuel, but also imported fuel from Turkey, which offered more economical gasoline and delivery.

On December 30, the Defense Department said it would transfer the fuel purchasing program to the Defense Energy Support Center, which supplies fuel for the U.S. military services. KBR will continue to transport fuel to the Iraqi people until the Center assumes the responsibility.


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