UK engineering and technology groups have secured footholds in a fast-changing Arab world that is potentially lucrative and uncertain in equal measure.
The UK has finally notched up a major commercial deal in post-Saddam Iraq, while UK giants such as Shell and BAE Systems look likely to benefit from Libya’s sudden re-entry to the international mainstream.
Amec, the London engineering services group, has won a share of a $1.1bn (£0.6bn) contract to rebuild Iraq’s water infrastructure. The deal will be worth up to $540m to Amec, making it the largestnon-US contractor in Iraq. The UK company has also secured $250m worth of business to restore and operate power supply facilities.
The latest deal was a breakthrough for the UK, which had until then been beaten for big contracts by US interests such as Halliburton, the oil and gas giant with close links to the Bush administration. Amec is waiting to hear if its bid for a further $900m worth of Iraqi contracts has been successful.
The price Amec engineers will have to pay for the contracts is to work under conditions of huge instability and physical danger. They may become the targets of those opposed to the US-led occupation.On the commercial front, the company said it was taking a ‘cautious view’ and that its projections ‘must be regarded as provisional at this stage.’
Safety-wise, Amec confirmed that it would hire its own security squads to bolster the protection offered by US and British troops.Libya, formerly a pariah state firmly shut to UK companies, promises to be a safer environment since the dramatic thaw in relations between the west and its leader Colonel Gaddafi, cemented by a meeting with Tony Blair.
Energy giant Shell was first out of the blocks when it signed an agreement with Libya covering onshore exploration and the development of liquid natural gas facilities.
Atkins, the Surrey engineering group, said it was in talks with the Libyan authorities over projects to develop Tripoli. BAE Systems is also believed to be in advanced negotiations with the Libyans over the supply of technology to its commercial aviation industry.
Despite Libya’s apparent re-entry to the international fold, businesses will be mindful of its leader’s famous unpredictability when assessing their long-term prospects in the country.