DAMASCUS (AFP) -- Marathon Oil of the United States has signed a 125 million dollar contract to develop two oil fields in northern Syria, the state Tishrin newspaper reported Tuesday.

The contract covers the Al-Shaer and Al-Sharifah fields in the Homs region, 160 kilometres (100 miles) north of Baghdad.

The deal grants the firm the rights to the fields for 25 years, with a possible five-year extension.

The company hopes to produce some two million cubic meters of gas per day and 5,000 barrels of oil per day, the newspaper said. Syria currently produces 400,000 bpd.

The United States imposed an array of sanctions on Syria in 2004.

President George W. Bush late Monday renewed a ban on U.S. exports to Syria of certain items, including military equipment, and continued freezing the accounts of Syrians supporting alleged terrorist organizations.