Once the smoke clears and the fighting ends between Iran and Iraq, US engineering and construction firms may stand to benefit as the two warring nations pick up what's left of their refining and petrochemical complexes.
In Iraq, the US construction firm of C-E Lummus, a subsidiary of Combustion Engineering, has been active in building the $1.1 billion Basrah petrochemical complex, which will produce the raw material for plastics. A spokesman for the company says it expects to go back into Iraq and finish the job as soon as the fighting ends.
And in Iran the Foster Wheeler Corporation, headquartered in Livingston, N.J. , was responsible for part of the construction of the 587,000 barrel-per-day Abadan refinery complex that has been under attack by Iraq. Ray Bignell, a spokesman for Foster Wheeler UK, its British subsidiary that has done work on the refinery, says the company would be interested in going back to Iran to help put the refinery back together. however, he notes that since the Iranian revolution foster Wheeler has had no business dealings with Iran.
Fluor Corporation, based in Irvine, Calif., also had some responsibilities in the construction of the Abadan refinery and was in the process of building a refinery in Isfahan when the Iranian revolution broke it. A spokesman at Fluor says the company hopes to return to Iran "once the country stabilizes" and finish the job.
Although other companies in other countries, including Japan, Germany, and France, also have the know-how to reconstruct the damaged plants, Wall Street analysts say US companies probably have the greatest chance of participating in any rebuilding.
Mark Altman, an analyst for Merrill Lynch, Pierce Fenner & Smith Inc., notes that "the concentration of technical know-how is in this country. . . ."
Indeed, most of the large "superbuilders" are located in the US. Fluor, Parsons, Bechtel, Foster Wheeler, C-E Lumus (Combustion Engineering), Brown & Root, Pullman Kellogg, Stone & Webster, C. F. Braun, and Badger are all headquartered in the US.
Although the Iranians deny that there has been any damage to the Abadan refinery, individuals familiar with the refineries disagree. One refinery expert, who didn't want to be identified, says, "From what I've seen, it's a pretty extensive repair job. Everything will have to be examined minutely for cracks in pressure vessels and pipes. It might even be cheaper to throw away a portion of it and start all over again." He further notes that if any of the bombs have hit near the sophisticated control equipment, it might have been rendered worthless.
Mr. Bignell says that from reports he has seen, it appears that extensive damage has beed done to the Abadan refinery. To construct a new refinery, he says, would cost more than $1 billion. (The last 100,000 barrel- a-day expansion of the refinery four years ago cost $785 million, he notes.) Mr. Bignell says that if the whole refinery had to be scrapped, it might not be rebuilt at its present site since "its present location is not the best site for a modern refinery complex." For example, he notes that Shatt al Arab, the disputed waterway, is too shallow for large tankers, and much of Abadan's production is piped to a deeper water facility.
Would the Iranians want to deal with a US company to rebuild their facilities? Mr. Bignell replies, "It would be hard not to since the US companies are the leaders in terms of technology." And, he adds, "In instances where there have been a lot of government dislike for the US, it hasn't spilled over to business dealings."
In the case of the Basrah project, a spokesman for the C-E Lummus says that so far only maintenance and housing facilities have been hit and there has been no damage to the main part of the project. Unfortunately, Lummus had 29 workers killed when those facilities were hit by Iranian jets.In a recent meeting with security analysts, Lummus said that since the company had no investment there, it would have no write-offs. The project is a joint venture with Thyssen Rheinstahl Technick GmbH, the German steel and engineering company.
Mr. Altman of Merrill Lynch thinks that no matter what happens in the Middle East, the construction companies will benefit. "I would think that the problems in the Middle East," he says, "would illustrate for us the dangers of relying on oil from the Middle East and the importance of building up a synthetic fuels industry."
On that score, the engineering and construction firms are expecting to profit handsomely since some $20 billion will be spent on synfuel projects.