Marines requisitioned fuel gasoline tankers in early April to fuel their advance toward Baghdad. Since then, deliveries of gasoline and other petroleum products have proven more difficult for the Corps of Engineers and designated contractor Halliburton Kellogg Brown & Root. (Photo credit Andrew Wright for ENR)

The Pentagon announced late Dec. 30 that its Defense Energy Support Center will begin importing fuel to Iraq to distribute to the civilian population. That action, once a transition takes place, will replace a controversial contract that the U.S. Army Corps of Engineers has with Halliburton Inc.

Richard J. Connelly, director of the DESC, said “the center will strive to put competitively awarded contracts in place as quickly as possible for this mission.” Existing contracts will remain in place until “adequate DESC contract solutions are implemented,” he added.

DESC serves as the energy procurement agent for the Department of Defense, supplying fuel throughout the world.

The energy center will work with the Iraqi Ministry of Oil and its marketing unit, the State Oil Marketing Organization to assist the ministry in meeting the need for gasoline, diesel, kerosene and liquefied petroleum gas.

Kellogg Brown and Root, the Halliburton Inc. company that has been importing fuel for the Iraqi consumer market since last spring, has been paid nearly $485 million for the imports since the end of major combat, says Richard Dowling, public affairs officer for Task Force RIO (Restore Iraqi Oil), the Corps of Engineers-led team that is attempting to bring the industry back up to capacity. But processing payments takes up to a month and a half, and KBR's current invoices and unbilled invoices total nearly $296 million. The 1.5-month backlog points to a huge increase in recent imports. "We have seen notable success in arranging convoys for importing, better security and getting the whole consumer infrastructure geared up to bring in fuel," says Dowling. The onset of the winter heating season has made increasing the imports, "critical," he adds.

Halliburton has been under increasing fire for work done under its $2.2-billion contract with the Corps. Earlier this month a defense agency audit found that that Halliburton may have overcharged the government more than $60 million. The company denies wrongdoing. DOD sources claim the switch in energy importers is not tied to the contracting controversy.