Nafta Polska to work with Kellogg, Brown and Root
By Karol Chlipalski
Fuel concern Nafta Polska is about to sign a contract to create a joint venture with U.S. firm Kellog, Brown and Root, a subsidiary of Halliburton, to help Polish companies land contracts for the post-war reconstruction of Iraq, says Krzysztof Mering, a Nafta Polska spokesman.
Nafta Polska, a holding that manages the state's stakes in fuel sector firms and advises the government on privatization, is representing a consortium of companies from the fuel and chemical sector that would like to be involved in the reconstruction of Iraq. The consortium includes Polish gas monopolist PGNiG, builder Prochem, state-owned chemical firm Police and fuel group Lotos, the second largest energy company in the country after PKN Orlen.
"The consortium has an open character, and we expect other companies to join it," said Mering.
Kellog, Brown and Root is one of a handful of firms that have won initial U.S. government contracts in Iraq. The company had been previously involved in negotiations with Nafta Polska concerning the installation of IGCC, the Integrated Gasification Combined Cycle, at the Lotos refinery in Gdańsk, a project worth $500 million (zł. 1.9 billion) that is supposed to be co-financed by energy giant Shell. The installation should improve the refinery's efficiency.
The consortium led by Nafta Polska is the second one in Poland to emerge recently with the aim of winning contracts in Iraq. The biggest fuel company in central Europe by refining capacity, PKN Orlen has signed an agreement with Polimex Cekop, Budimex, Alstom, Energomontaż Południe and Energobudowa to seek Iraq contracts.
"It is not clear whether the two consortia will compete with each other," says Mering.
"We want to form several consortia around Nafta, which would have the ability to break through and win contracts," Economy Minister Jerzy Hausner told reporters. The Polish government wants Nafta to lead the country's business efforts in Iraq.
Krzysztof Mering told the Business Journal that Nafta Polska is ready to co-operate with the consortium set up by PKN Orlen, if the situation requires such a move.
The emergence of a second Polish venture looking to win contracts in Iraq bodes badly for the continuing $600-million (zł. 2.2-billion) sale of a majority in Lotos to a consortium including PKN, as this would set PKN Orlen and Lotos Group against each other. Market watchers expect PKN Orlen to be involved in the Lotos sale.
According to analysts, the interest in Iraq contracts on the part of Polish fuel groups is due to the hope that Lotos and Orlen will gain access to Iraqi oilfields, which would strengthen their competitive position against other central European fuel groups, in the wake of a consolidation process anticipated by analysts and perceived by them as necessary on this market. The lack of access to oilfields is considered to be the weakest point of both Lotos and Orlen, and negatively affects the companies' performance. The main competitors of Polish fuel companies in central Europe, Austria-based OMV and Hungarian MOL, have access to oilfields in Libya and Russia.
