Amec signs up with US partner to bid for Iraqi oil contracts

The british engineering company Amec yesterday gained a possible toe-hold in post-war Iraq by teaming up with a US partner to bid for the contract to rebuild the country's dilapidated oil industry.

The move ensures that Amec will be eligible to tender when the US Army Corps of Engineers asks for bids for the reconstruction of Iraq, funded through America's $2.4bn (£1.5bn) aid budget. Only US consortia are able to bid.

Amec has gone into partnership with Fluor, the American engineering and construction group. Fluor will control 51 per cent of the joint venture and Amec the remaining 49 per cent.

The joint venture will face stiff competition from two other US contractors – the privately-owned Bechtel and Halliburton, which used to be run by the US Vice President, Dick Cheney. The Bush administration initially planned to give the contract to Halliburton without a proper tender but was forced by the ensuing outcry to run a full competition.

The total cost of rebuilding Iraq is put at anywhere between $20bn and $100bn. Of this, the reconstruction of its oil industry could be worth anything between $5bn and $10bn. Iraq has the second-biggest oil reserves in the world, which could amount to some 215 billion barrels, but only an estimated 20 per cent of its capacity is currently being exploited.

The relationship between Amec and Fluor stretches back to 1998 and the two groups are now working together in several countries including the US, Canada, Angola, South Korea and the Philippines. Oil and gas accounts for about £1bn or a fifth of Amec's £5bn a year turnover.

Should the joint venture be successful in winning the Iraq contract then it said it would expect to employ a significant proportion of Iraqis while the revitalisation of the country's oil reserves would require extensive training of local people for long-term careers in the industry.

Sir Peter Mason, Amec's chief executive, said that together the two companies had 100 years experience of operating in the Middle East and a great deal of knowledge of Iraq.

The joint venture is understood to have been clinched after Sir Peter flew out to the US to see his opposite number at Fluor, Alan Boeckmann. The men have known one another for a long time and have worked closely on past projects.

Separately, Amec disclosed that Sir Peter's pay fell by 3 per cent last year to £719,000 after a fall in profits to £105m. The reduction in pay was largely due to a big cut in his bonus for the year to £100,000. The company's accounts also show that a pay-off of £538,000 was made to Peter Jansen, who ran the Canadian company Agra which Amec took over in 2001.