Gulfsands said it cannot expect to receive any revenue from its Syrian assets for the foreseeable future

Gulfsands Petroleum (LON:GPX) has declared force majeure on its operations in Syria due to the recent imposition of sanctions by the European Union.

As a result, Gulfsands said it cannot expect to receive any revenue from its Syrian assets for the foreseeable future.

The sanctions do not preclude it from being in Syria and the group said it will continue to maintain its presence in the country for the time being.

It employs approximately 100 Syrian nationals and residents in Damascus and in the field and these will be retained and paid in full.

The company, which owns a 50 per cent working interest and is operator of Block 26 in north east Syria, said the preliminary indications is that the Syrian government is prepared to accept the force majeure notice.

In this eventuality, the existing production agreement (PSC) will not be terminated and the group’s rights under the PSC will be preserved.

Gulfsands added: “It is to be presumed that Syria will eventually emerge from the present upheaval and it is the directors’ resolve to seek to ensure that, when that day arrives, the group is positioned to retain its assets and to re-commence production activities.”

Force majeure, when invoked, means there will be no liability if a contract is not honoured due to unforeseen event outside of the control of the parties involved.

The Syrian government intends to continue production from Block 26 using its own resources, but the terms of the PSC will mean Gulfsands is compensated for any oil produced.

Gulfsands has no debt and cash balances of over US$120 million at 30 November. Syria comprises substantially all of its revenue-generating activities.