Halliburton Agrees To Leave Iran, Thompson Says

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The New York Sun

New York City Comptroller William C. Thompson’s two-year quest to force American companies to stop doing business in Iran paid more dividends yesterday when oil-field services and construction giant Halliburton formally agreed to sever business ties with Iran.


Mr. Thompson, as the trustee and investment adviser to $74 billion in city pension funds, has been submitting proposals to companies within its equity investment portfolio since November 2002, asking them to review their operations for any business connections to Iran. City pension funds own 1,457,000 Halliburton shares, worth $61.28 million.


A Halliburton spokeswoman, Wendy Hall, said, “We will go through the process to move our equipment elsewhere in the Middle East to work on contracts that meet our current business objectives.” She declined additional comment.


In a letter to the Comptroller’s office Wednesday, Halliburton agreed to “take appropriate corporate action to cause its subsidiaries to not bid for any new work in Iran.” The comptroller’s press secretary, Jeff Simmons, said Halliburton’s letter built on an earlier promise made by its CEO to “wind down” operations there.


Mr. Simmons said conversations between the comptroller’s office and Halliburton had been back and forth, “with varying levels of intensity,” for two years. Though he declined to give a specific reason why the company chose now to commit to leaving Iran, ongoing inquiry by the Department of Justice into the matter probably played a role. The company received its first grand jury subpoena for documents September 16, 2004, according to a Securities & Exchange Commission filing.


A Dubai, United Arab Emirates-based Halliburton subsidiary, Halliburton Products & Services Limited, entered into a contract with Oriental Kish, the Iranian oil company in charge of developing a massive natural gas field called South Pars.The contract will pay the company $30 million-$35 million in fees and run at least two years, according to an internal Office of the Comptroller analysis obtained by The New York Sun. Part of the attraction to working in Iran for Halliburton is the multibillion dollar exploration and development budget of developing the South Pars field – Golden Kish, an Iranian oil company, said 2003 capital expenditures alone were $8 billion.


Halliburton’s leadership has been unusually blunt in discussing their desire to do more business in Iran. The chief executive officer, David Lesar, told Wall Street equity analysts on January 28 that “if The U.S. sanctions are ever lifted in the future, or more of our customers go there, we will return to this market.”


Though a possible $35 million in Iranian oil-field contract fees is insignificant to a company that booked $20.47 billion in revenues last year, the comptroller’s spokesman, Mr. Simmons, said that Mr. Thompson’s campaign was part of making companies commit to “ending the reach of terrorism, since no one knows more about that than New York’s fire and police unions.”


Iran perennially ranks no. 1 on the State Department’s official State Sponsors of Terror list, above Cuba, North Korea, and Sudan.


To date, four companies – Halliburton, GE, CooperCameron, and ConocoPhillips – have agreed to wind down current Iranian operations and stop accepting business.


Chicago-based insurance giant Aon is the lone holdout that has not committed to exiting Iran.


An Aon spokesman, Al Orendorff, said that the company is in the process of evaluating what to do, but that none of its American subsidiaries have failed to comply with any laws. He declined to state what Aon subsidiaries are involved in Iran and how much revenue is generated there.


ConocoPhillips announced it would wind down its Iranian ties in February 2004. CooperCameron, a Houston based oil equipment manufacturer, will have an Iranian joint venture unwound “within the next few months,” said a spokesman, Scott Amann. City pension funds own almost 1.94 million shares in CooperCameron, worth over $106 million.


General Electric announced February 1 that its foreign-based subsidiaries would be refusing all new orders from Iran. A GE spokesman, Gary Sheffer, said the company did about $270 million of its $152.4 billion in revenue last year in Iran. The majority of the business was in the oil-field services sector, he said, although GE Healthcare and GE Hydro did have contracts in Iran as well. City pension funds own 33.22 million GE shares, worth almost $1.19 billion.


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