June 24, 2008 / 10:41 AM / 11 years ago

EADS near $1 billion Saudi-Iraq border deal: executives

DUBAI (Reuters) - A consortium led by European aerospace group EADS EAD.PA is favorite to win a $1 billion contract to build a border fence shielding Saudi Arabia from Iraq, executives at the Saudi business partner said.

Saudi Arabia, the world’s largest oil exporter, wants to build a razor-wire fence along the 900-km (560 mile) frontier with its northern neighbor, with thermal imaging and radar equipment.

An official at Al-Rashed Trading & Contracting, who declined to be identified, told Reuters the Saudi group had received a letter of intent for the work and was “working and completing some requirements for the client”. The two companies comprise the consortium.

Moubarak al Majid, general manager for construction at Al-Rashed said the company was still negotiating. “No contract is signed,” he told Reuters from Riyadh. “Call back in two weeks.”

Officials at Saudi Arabia’s Ministry of Interior could not immediately be reached for comment. Jacques Bourgeois, general delegate for EADS in Saudi Arabia was not available when contacted.

Two contractors bidding for the project told Reuters in September the project would cost about 4 billion riyals ($1.07 billion) and was part of a wider defense plan to secure the country’s 6,500 km (4,000 miles) borders.

International defense companies, including Thales TCPF.PA, U.S-based Raytheon Co (RTN.N) and DRS Technologies DRS.N also bid for the project, according to a list of bidders obtained by Reuters and confirmed by industry sources at the time.

Interior Minister Prince Nayef has said the border fence is essential because of escalating violence in Iraq, sectarian fighting and an insurgency against the U.S.-backed government in Baghdad.

Saudi Arabia is planning to bolster border security by adding hundreds of radar facilities, coastal detection centers, telecommunications networks and reconnaissance aircraft around the country.

That plan, known as the MIKSA contract, is worth billions of riyals. France’s Thales had been negotiating for 12 years over the MIKSA contract until the Saudi government decided to launch an international tender in April, 2007.

“The next phase will be for the border of the whole of Saudi Arabia and will be a much bigger contract,” the Rashed official said.

The EADS deal follows a French business trip in January led by President Nicolas Sarkozy in which France signed four framework agreements with Saudi Arabia to lead to billions of euros of contracts.

Officials traveling on the delegation estimated the trip could lead to 10 billion euros ($14.78 billion) worth of transport contracts, mainly for high-speed TGV trains, 1.5 billion euros worth of aviation contracts and 6 billion euros of orders for water and electricity projects.

In addition, arms and defense sales could generate 12 billion euros, they said.

Editing by Thomas Atkins, Paul Bolding

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