Fluor Daniel Is Awarded Huge Saudi Oil Pact : Energy: The deal is said to be part of a drive by the country to boost its production as worldwide output slows.

Fluor Daniel Inc., the construction and engineering division of Irvine-based Fluor Corp., said Wednesday that it has landed a Saudi Arabian oil facilities contract that some industry analysts say could be worth as much as $6 billion over the next decade.

Fluor Chief Executive Les McCraw said the pact, which he called “prospectively the most significant project we’ve had in over a decade,” is part of a multibillion-dollar drive by Saudi Arabia to boost its oil production to replace slackening worldwide output.

McCraw would not comment on the value of the program management contract, saying the total is not known because the work will be released in several phases over the next seven to nine years by Saudi Aramco, the Saudi Arabian government-owned oil company.

The contract is not expected to create any significant new employment at Fluor, he said.

Fluor, a major international construction and engineering firm for the past three decades, was hit hard in the oil crash of 1981 and has been rebuilding and refocusing since. As part of the restructuring, Fluor reduced its dependence on oil-related projects--which accounted for as much as 85% of its business in the late 1970s--and began aggressively seeking industrial and government work as well.

Currently, McCraw said, Fluor Daniel’s hydrocarbon unit accounts for only about 30% of the company’s total revenue. That will increase with the new Saudi Aramco contract, he said, “but it will have a lesser effect in the current fiscal year and become a more significant part of our backlog in subsequent years.”

Fluor’s backlog of work--a major measurement of an engineering and construction firm’s business--currently is about $9 billion, down from an all-time high of $16.3 billion in 1981.

McCraw said that while the percentage of oil-related business will grow, Fluor won’t repeat its earlier errors. The company’s dependence on the oil industry led to a $633.3-million loss in fiscal 1985.

Employment plunged to 14,000 in 1987 from a high of 44,000 in 1981. It has rebounded to a current level of 20,000 in the wake of a 1986 restructuring that led to creation of Fluor Daniel.

Fluor, which maintained a major business relationship with Saudi Arabia in the 1970s and at one time was involved in more than $10 billion in contracts there, was one of several U.S. companies asked to bid on the contract, said Herbert E. Hart, an analyst with the San Francisco investment banking firm of S. G. Warburg.

Other finalists were Bechtel Corp. of San Francisco, Parsons Engineering of Pasadena, Dresser Industries of Dallas and Foster Wheeler Corp. and Lummis Crest Inc., both based in New Jersey, said Hart.

Fluor apparently had a leg up on the other competitors for the program management pact because of its longstanding presence in Saudi Arabia.

“We stayed as a company and maintained our presence there even after the big oil work ended” in the early 1980s, said McCraw. Fluor’s Saudi operations helped build the state university and did commercial engineering and construction jobs all through the 1980s. “We were there, so it was only natural for them to ask us for a proposal. . . . They asked others also.”

But Fluor “has always had a good relationship with Aramco and has a great reputation in Saudi Arabia and in the engineering and construction management business,” Hart said. “There will be a lot of subcontracts that will be let to non-U.S. companies as part of all this, and it is interesting that the Saudis only wanted U.S. companies for the three prime contracts.”