Iran Pays Fluor $43 Million to Settle Dispute : Payment Opens Door for Irvine Firm to Rebuild Oil Refineries

Fluor Corp. said Friday that it has received about $43 million in a settlement with the National Iranian Oil Co. for unpaid bills on a refinery construction job interrupted in 1979 by the revolution in Iran.

Potentially more important than the cash that Fluor received, industry analysts say, is that the settlement opens the way for Fluor to re-establish business in Iran, once a major Fluor customer and now eager to rebuild and renovate the gas and oil processing facilities ravaged in its war with Iraq.

Federal policy bars U.S. companies from doing business in or with Iran, but James Rollans, vice president of communications for the Irvine-based engineering and construction corporation, said that if that policy changes, the settlement would open the door for Fluor.

Rollans said: “Over the last two years there have been a number of telephone calls from the National Iranian Oil Co. asking us to consider coming back and helping them with the reconstruction of some of the refineries that were damaged from the war and to upgrade older refineries.”

But Rollans said the company refused even to consider a new project in Iran until its prior claims were settled. “Now the door is open to see what they have specifically in mind and if it makes business sense for us to bid on a project,” he said.

Negotiations Intensified

Rollans said that when the Iranian revolution broke out Fluor had worked in Iran for 18 years and was the largest oil and gas processing plant builder in the country. He said Fluor had nearly completed a $750-million gas refinery project in the central Iranian city of Esfahan, about 150 miles south of Tehran, and was waiting for the last installment payment when the government-owned National Iranian Oil Co. stopped paying its bills in 1979.

In 1982, Rollans said, Fluor filed a claim with the Iran U.S. Claims Tribunal, a special panel established at the Hague in the Netherlands to sort out claims and counterclaims between Iran and its foreign contractors. He said negotiations over Fluor’s claim had intensified in the past two years.

As a condition of the settlement, Rollans said, Fluor agreed not to discuss the size of its original claim, which he said included “more than the direct costs involved,” such as interest, damages and unpaid insurance losses.

“The only thing I can say is that we understand this settlement is roughly in line with the percentage of overall claims that U.S companies are receiving. They (Iran) have been fairly consistent in the awards,” Rollans said.

After taxes and other costs have been deducted, the settlement is expected to give Fluor a gain in its third fiscal quarter of about $8 million, or 10 cents a share.

Mark Altman, engineering and construction analyst for Paine Webber Inc. in New York, said: “The $43 million is not material, overall” to Fluor’s financial health because of the very large and expanding scope of the company’s business and because the company long ago had written off the claims against Iran as a total loss.

Altman said the most positive outcome of the settlement is the opportunity for Fluor to re-establish a business relationship with Iran.