By Stuart Matthews
Can scandal-dogged Halliburton overcome bad impressions and make a fresh start in the UAE?
A few weeks ago
Oil & Gas Middle East
took part in a survey conducted by a public relations agency on behalf of a prospective client. In fact, two agencies conducted more or less the same survey a few days apart. The client was Halliburton.
The point of the survey was to gauge industry impressions of Halliburton's oilfield services work. But with a brand like Halliburton, which seems to attract bad publicity more easily than good, it was hard to know what to say.
Is it a brand associated with top quality work in the field or scathing headlines on CNN? Is it the first name that comes to mind in the oilfield services sector or as the largest military contractor in Iraq?
The motivation behind these surveys became apparent when Halliburton announced the move of its chairman, president and CEO Dave Lesar to Dubai. Lesar and his triumvirate of titles, one of the business world's more compact acts of corporate governance, will "lead the company's efforts in growing Halliburton's business in the Eastern Hemisphere".
The announcement, made at the MEOS energy conference in Bahrain, has attracted some attention, especially in America. Democrat senators in the US were swift to attack the decision and raise the frequently less-than-fearsome spectre of a Senate investigation. Hillary Clinton was vocal and led the charge, suggesting tax was motivating the move.
"I think it raises a lot of very big concerns and we're going to be looking into it in Washington," said Clinton. "I think it's disgraceful that American companies are more than happy to try to get no-bid contracts like Halliburton has, and then turn around and say, ‘you know, we're not going to stay'."
Lesar dismissed any charges of moving to the Middle East for tax purposes. "Dubai is an excellent place to do business. We have the technology, relationships and business opportunities to operate there," he said.
Halliburton describes the move as the next step in its strategic plan to develop closer relations with national oil companies, significant customers for the company. It also says it wants to concentrate its investments and resources in a region where its business is growing.
"The Eastern Hemisphere is a market that is more heavily weighted toward oil exploration and production opportunities and growing our business here will bring more balance to Halliburton's overall portfolio," said Lesar.
This all seems reasonable, and to be fair Halliburton are not the first to have the idea. Other US companies have done the same, without managing to attract the ire directed at Halliburton. After all, Dubai is a regional hub, offering easy access to massive markets, all within a few hours flying.
Numbers can do some talking for the company too. It says that in 2006, more than 38% of its US $13 billion oil field services revenue was generated from the Eastern Hemisphere. With more than 16 000 employees in the ‘hemisphere', Halliburton also boasts that 80% are locals.
Look at these numbers and perhaps the rationale behind the move is clearer. But in the tradition of ‘lies, damned lies and statistics', numbers may also leave Halliburton struggling at home. Threats of emerging scandal remain and it will take more than a press release to clear up questions about over-billing for billion dollar sums.
Not all publicity has been bad though. Reaction among the regional business community has been more balanced than in the US. An editorial on
had this to say: "For now we should concentrate on the bigger picture and what matters most, that one of the largest companies in the world, however controversial, has strategically relocated its decision-making structure to the Emirates - one of the biggest coups the region has ever seen."
Admittedly, in the minds of the masses, it will take a lot of positive publicity to make Halliburton synonymous with quality and integrity instead of scandal. In the oil business though, judgements are more likely to be based on results. When the dust settles, plenty will be watching to see what they are.
Congratulations to Hallibuton and Dubai for this to happen. I think it is Dubai business enviornment which attracts big companies to this part of the world. The rules of doing business are quite liberal and easy as far the local tradional rules are followed strictly. Tax is definitely an advantage, but trying to save taxes sometimes takes more time of the senior management, and they are not able to concentrate on business. If Halliburton has done something wrong in the past, they will not be able to escape, whether they are in Dubai or USA. I feel it is a very strategic, intelligent and visionary of Halliburton to move to Dubai and many other international companies will follow soon.