Oxy Is Willing to Leave Syria

Occidental Petroleum Corp. will not hang on to its stake in a Syrian gas project if it determines its participation violates new U.S. sanctions imposed on the country, a company spokesman said Tuesday.

Los Angeles-based Occidental has a 25% interest in a multimillion-dollar proposal led by Petro-Canada to develop 15 natural gas discoveries in Syria. The partners are in talks with the Syrian government aimed at finalizing a deal.

“We were aware that sanctions of some kind would be imposed. We were certainly not sure what the nature of the sanctions would be,” Occidental spokesman Larry Meriage said.

“Our position has always been quite clear -- we follow the law, and if sanctions are imposed that would preclude us from moving forward with our participation in this project, then we would act accordingly.”

In a widely expected move, President Bush imposed economic sanctions on Syria on Tuesday, alleging that it supported terrorism and failed to prevent anti-U.S. militants from entering Iraq.

The sanctions ban U.S. exports other than food and medicine to the Middle Eastern country, freeze the assets of some Syrian nationals and entities, and restrict banking relations.

There was no immediate word on whether the measures would restrict investments by U.S. oil companies.

“There are all sorts of rumors and stories floating around out there, and we can only react whenever something official happens,” Meriage said.

When Calgary-based Petro-Canada announced the gas development project in early April, the company said it would be willing to assume Occidental’s stake if sanctions prevented the U.S. firm from proceeding.

That remains the case, said Michelle Harries, a spokeswoman for Petro-Canada, which has other exploration and production operations in Syria.

However, both company representatives said they knew of no formal discussions between the two firms about a potential exit plan for Occidental. The other partner in the consortium is Britain’s Petrofac Ltd.

Development plans call for gas production to be sold into Syria’s power-generating markets by 2007. The gas discoveries are in two clusters -- one east of the city of Homs and the other southeast of Aleppo.

“This will be a good project, but not in any way is this a company maker. It’s a pretty small project in the Oxy universe,” Meriage said.