835.6363/438: Telegram

The Consul General at Buenos Aires (Burdett) to the Secretary of State

Reference Title 17, Article 377, Argentine Mineral Code reading as follows:

“The National Executive may limit or prohibit the import or export of fluid hydrocarbons when in cases of emergency the public interests shall so dictate,” on July 20 a pertinent decree was issued on the alleged grounds that a national emergency now exists. It is said that imports of oil have been increasing at such a rate that the normal development of domestic industry (YPF) is imperilled. The decree reads in part as follows: “Quarterly Yacimientos Petrolíferos Fiscales (Argentine State Oilfields) will propose to the Executive the quantity and kind of petroleum products to be imported … importation. … will be effected by the YPF which will distribute it in the proportions to be determined … taking into account the productive capacity or the contact capacity … of the private companies which register. …

[Page 187]
Crude petroleum will be distributed among the private distilling companies … who are in agreement with the YPF. …
Sub-products … will be distributed and sold by YPF which may make agreements with other … entirety always reserving to itself decision as to price, sale or destination … every public department and especially the national hired [highway?] directorate and the Director of Mines and Geology shall make available all data and statistics which YPF might require.” In substance this decree seemingly means that the YPF is to be given such a hold over private oil companies that the YPF will be able to show a profit irrespective of concomitant damages to private oil companies. The measure is so drastic that private oil companies are considering legal action as well as request for diplomatic protest. Report being forwarded by air mail tonight.