U.S. Sanctions Against Syria Leave Oil Firms in Quandary

American oil firms operating here are still in a quandary about how to comply with the sanctions against Syria that President Reagan imposed two weeks ago in retaliation for its alleged support of terrorism.

“No one knows what’s going to happen, whether we will stay or leave,” said one official, who requested anonymity.

The White House on Nov. 14 announced a series of punitive measures to be taken against Syria, following the conviction in Britain of a Palestinian who carried a Jordanian passport for attempting to blow up an Israeli airliner. Alleging direct Syrian government involvement in the incident, Britain broke diplomatic relations with Syria and banned flights by Syrian airlines.

The United States withdrew ambassador William L. Eagleton Jr. and announced that the staff at the American Embassy here would be further reduced. It also barred the Syrian airline from landing in the United States or selling tickets there, blocked the export of aircraft spare parts to Syria and ended Export-Import Bank programs.

Little Impact

The practical effect of the sanctions appeared minimal because the airline has no American flights and parts for its two Boeing 747 jetliners can easily be obtained elsewhere. Other assistance ended when Syria was placed on a list of states supporting terrorism in 1979.

“As sanctions go, these don’t have very much bite,” one European diplomat commented.

Along with the package of sanctions, the White House announced that “we have informed U.S. oil companies that we consider their continued involvement in oil operations inappropriate under these circumstances.” The statement stopped considerably short of ordering the firms to cease doing business in Syria, as the Administration did in the case of Libya, which also has been accused of supporting terrorism.

One oil executive said the Administration had privately followed up the announcement with a request to oil companies to cease operations here by Jan. 1, but even that was confused by a tangle of questions about ownership of the firms.

Of the oil firms working in Syria, only Marathon Oil of Syria is wholly owned by an American company. Marathon is under contract to explore for oil.

Nationality Question

Another major firm engaged in exploration is Pecten Syria, a subsidiary of Pecten International. Registered in the United States, Pecten is owned by the U.S. Shell Oil Co., which in turn is owned by Royal Dutch Shell of the Netherlands. This anomaly has prompted some officials to assert that Pecten is in reality a Dutch company.

Following the discovery by Pecten of substantial oil reserves in the area near Dayr al Zur in 1984, a production company was established with the Syrian government. Known as Al Furat, the Arabic word for the Euphrates River, the company is 50% owned by the Syrian Petroleum Corp., and the other half is shared by Pecten, Deminex of West Germany and Royal Dutch Shell.

The operations of the oil firms are relatively small. Al Furat is producing only 46,000 barrels of oil a day, which is expected to rise to 100,000 barrels by 1988. Al Furat employs 29 permanent expatriates and 48 workers who rotate in and out of the country on 21-day work tours. Pecten employs 12 Americans.

“Both Marathon and Shell are conservative U.S. companies and like to be regarded as good citizens,” said one executive. “I’m sure that if the Reagan Administration insists, we will then have to leave.”

Working on Compromise

But other executives said a compromise was being negotiated with the State Department by Shell, in which the company would transfer ownership of Pecten to Royal Dutch Shell, perhaps as a Panama-registered company, allowing it to continue operations here. Most of the American employees here would be replaced by oil workers from the Netherlands and other countries.

Oil company officials said they have not heard at all from the Syrian government about the latest sanctions.

But the government has organized a massive propaganda campaign directed against the U.S. and British strictures, describing them as a plot aimed at aiding Israel. The press has been full of denunciations of British Middle East policy dating back to the Balfour Declaration of 1917, which officially accepted the idea of a Jewish homeland in Palestine.

“Today, world public opinion is well aware that what has been planned by America and executed by Britain against Syria under the false pretext of combatting terrorism consisted of mere lies and false allegations,” the English-language Syria Times newspaper said. “Therefore the U.S. Administration lost credibility all over the world as a result of its hypocrisy and hatred for the people of the world.”

Concern Over German Case

Oil executives said they were concerned that the Administration might stiffen its resolve to force the oil firms out of Syria following the terrorism conviction in West Berlin of two other Palestinians with Jordanian passports, one of them a brother of the Palestinian convicted in Britain. West Germany convicted the pair of bombing the headquarters of the German-Arab Friendship Society in West Berlin, using a bomb provided by the Syrian Embassy in East Berlin.

The Bonn government on Thursday imposed diplomatic sanctions against Damascus, including the expulsion of several Syrian diplomats from West Germany and a freeze on official aid to the Damascus regime.

Otherwise, governments in Europe so far have imposed only limited sanctions on Syria, including what is expected to be a ban on new financial assistance. But a backlog of other aid programs could mean that the new strictures won’t have any practical effect until the 1990s.

No European Consensus

One oil company official here said that he was surprised last week to find that officials of the French oil firm Total had begun discussions in Syria aimed at replacing departing American firms, suggesting a lack of a European consensus on economic sanctions.

Even Britain took no economic action against Syria, apart from barring the Syrian airline from landing in London. Commercial sources said that a British firm won a major contract here last week, well after the rupture in relations.

“It appears that the only thing that will suffer in all these sanctions is that (the) Syrian airline will lose even more money this year than last year,” one Western diplomat said.