Syria continues to sell oil to U.S. companies and encourage U.S. investment in its energy sector, despite Washington’s unilateral sanctions, Oil Minister Ibrahim Haddad told Reuters.
A deal with a PetroCanada -lead consortium, including U.S. Occidental Petroleum (nyse: OXY – news – people), on developing the $600-$700 million Palmyra gas could be closed within months, he said.
“We are continuing all contracts that we have made, we respect our signature,” Haddad said. “We have not taken any negative action.”
A month ago U.S. President George W. Bush imposed sanctions that ban exports except for food and medicine, freeze assets of Syrians and Syrian entities suspected of links to terror or weapons of mass destruction and ban Syrian flights to and from the United States.
The sanctions exclude energy investment in the country, although the White House has said they could be tightened in the future.
Syria sells about 10,000-20,000 barrels per day of crude to U.S. ConocoPhillips (nyse: COP – news – people) and Exxon Mobil (nyse: XOM – news – people) via annual contracts, which will come up for renewal at the end of this year, oil traders say.
The Palmyra gas project consortium talks, which also include Britain’s Petrofac, had been progressing, Haddad said.
“We have been negotiating with them for one month already,” he said. “The investment companies declared they will continue their contracts.”
Occidental has a 25 percent stake in the project and has said it will continue with its investment plans provided they remain legal.
The biggest U.S. investment in Syria is ConocoPhillips’ Deir Ez Zor gas project, in which it has has a 50 percent share of a service contract with France’s Total .
Haddad said this contract was due to expire at the end of 2005 and ConocoPhillips has said it will end operations in Syria.
U.S. independent Devon signed a production sharing agreement for acreage last year and has recently begun drilling, he said.
U.S. Veritas is also doing offshore seismic work.
Sanctions will make it more difficult to replace U.S.-made spare parts in the industry, and might marginally raise the cost of some service projects that exclude U.S. bids, Haddad said.