812.6363/1883
The Ambassador in Mexico (Sheffield) to the Secretary of State
Mexico, June 16,
1926.
[Received June 25.]
No. 2401Sir: I have the honor to refer to my telegram
No. 272 of June 15, 5 p.m., reporting the issuance of an order by the
Department of Industry, Commerce and Labor, on June 8, 1926, signed by
Minister Morones, prescribing special conditions governing the issuance
of provisional permits for drilling oil wells on lands, the acquired
rights of which have not been fully proven by the applicant companies. A
copy and translation of the order in question, which were furnished me
by the representative of an American oil company, are transmitted
herewith. It appears that the order has been circularized among all oil
companies in Mexico and has not as yet been made public.
A meeting of the representatives in Mexico of the Oil Producers’
Association took place today and it was agreed that a protest should be
made against the order, the enforcement of which would, in their
judgment, put an end to oil drilling by foreigners in Mexico. Before
taking action, however, it is their intention to obtain the adhesion
[Page 678]
to this position by
individuals and companies not members of the association, in order that
the action may represent unanimously all oil producers in Mexico.
I submit as of considerable significance the remark which was made to a
member of the Embassy by the representative of one of the American
companies to the effect that this order was further evidence of the
intention of the Mexican authorities to confiscate foreign oil
properties, which the Mexican Government considers would be fully
justified by the terms of the order.
I have [etc.]
[Enclosure—Translation64]
Order Issued June 8, 1926, by the Mexican
Department of Industry, Commerce, and Labor
Special conditions governing provisional permits to drill petroleum
wells on lands the acquired rights to which have not been fully
proved by the petitioning companies.
- 1.
- The permits shall be essentially provisional, and shall be
subject to the beneficiaries proving legally their rights within
the period indicated for this purpose in each case, which can
never extend beyond December 31 of the current year.
- 2.
- In order that these permits may be issued, the petitioning
company or person must first execute a bond for an unlimited
amount, to the satisfaction of this Department, to guarantee the value of the petroleum which may be
extracted from the wells drilled under these permits,
if the beneficiary should not succeed in fully proving the
legality of his rights within the period indicated for this
purpose.
- 3.
- If, as a result of the provisions of the foregoing articles,
the permits should be canceled, the beneficiary thereof shall be
obliged to refund the value of the petroleum which may have been
extracted under the permit, and if he does not do so, the
Department shall realize upon the bond furnished, making use of the compulsory economic
authority, to which the bondsmen must expressly
submit.
- 4.
- These permits are authorized for the sole purpose of not
interrupting petroleum exploitation, and they shall be continued
in their provisional character until the rights of the
beneficiaries are legally proved; and it shall be stated in the
permits that their issuance confers no rights whatsoever upon
the beneficiaries, and that by the mere use
thereof the beneficiaries signify their absolute conformity
to all the conditions enumerated in this order.
