Fluor's designs on Iraqi deals limited as rival gets bulk.

For months now, Fluor Corp.'s prospects for winning a big chunk of work rebuilding Iraq's oil industry have gone from good to bad and back again.

Now, after months of planning and lobbying, the engineering and construction company finds itself vying for a scaled-down contract that's small by its standards.

The Army Corps of Engineers last week took bids for what's left of work getting Iraq's oil sector up to prewar levels. Aliso Viejo-based Fluor was one of several companies that submitted bids.

But what once looked like a $1 billion deal could be worth just $200 million after the Corps drastically cut the work available for Fluor and other bidders.

Fluor is now chasing a contract that's worth about as much as its deal overseeing the Orange County Performing Arts Center expansion.

"It causes you to rethink the proposal and effort you're putting into that proposal--we've spent hundreds of thousands of dollars on this so far," said Fluor spokesman Jerry Holloway.

The government's new plan will end up giving Houston-based Halliburton Co.'s Kellogg Brown & Root International Inc. most of the Iraqi oil work, even if it does not submit a bid. That's because Halliburton has been working on Iraq's oil fields and other facilities since the spring under a contract awarded without bidding in March.

"Everybody was surprised about the work plan," Holloway said. "Kellogg Brown & Root probably wasn't surprised since they helped draft the plan."

Upon seeing the more limited plan earlier this month, San Francisco-based rival Bechtel Corp. said it was dropping out of the bidding. Company officials cited the project's timetable and said they would pursue future work directly with the Iraqi oil ministry.

The Corps is set to award a pair of oil contracts on Oct. 15. But of the $1.1 billion the Corps expects to spend on oil work, more than $700 million is to be done by Halliburton.

Another $200 million in work is set to wrap up by year's end. Halliburton could end up doing all of that second phase work, leaving only $200 million for the project's third and final phase.

Holloway said he expects whoever gets selected in October may have a shot at least some of the second phase work as well as all of the third phase work. Still, the lion's share of the work will not go to the winning bidders, unless Halliburton itself ends up submitting a bid for the remaining work and wins.