Sun, Dec 21, 2003 - Page 11 News List

Halliburton denies accusations that it overcharged for gas

NY TIMES NEWS SERVICE , NEW YORK

The Halliburton Co, which has come under scrutiny from Pent-agon auditors for the high price of fuel it imported from Kuwait to Iraq, said this week that it has saved the government money by using multiple suppliers of fuel for Iraq.

Pentagon auditors issued a draft report last week saying that Halliburton's Kellogg Brown & Root subsidiary overcharged the US government by as much as US$61 million for fuel supplies in Iraq.

The Houston-based oil services company has a contract with the Army Corps of Engineers to restore Iraq's oil infrastructure. Part of that contract involves importing gasoline and other fuels to Iraq.

Halliburton officials noted that the government required it to import some relatively expensive Kuwaiti fuel into Iraq, but that it saved taxpayers US$164 million by importing most of the fuel from Turkey.

Halliburton posted a response to the Pentagon audit on its corporate Web site, saying that the Army Corps of Engineers required KBR to use a Kuwaiti supplier and had approved the deal KBR struck with that supplier, the Altanmia Commercial Marketing Co.

Halliburton said that three other potential Kuwaiti suppliers it had considered failed to meet government specifications. In addition, the company said that it originally suggested that the government use Turkish suppliers.

A Pentagon spokeswoman said on Friday that the agency had received and was evaluating Halliburton's response to its auditors' queries. She declined to comment further.

Halliburton said about one-third of the fuel KBR imports to Iraq comes from Kuwait while the remainder comes from Turkey. The company said the average cost for fuel from Turkey and Kuwait is US$1.60 per gallon, which it said was inside Pentagon auditors' guidelines.

But Pentagon auditors' documents say that the government pays KBR an average of US$2.64 per gallon for Kuwaiti fuel, twice as much as other importers pay.

A spokeswoman for Halliburton, Wendy Hall, said Turkish fuel costs about US$1.18 a gallon, and since it represents the majority of the fuel KBR imports, it brings the average fuel cost down to US$1.60 per gallon.

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