The Chargé in Argentina ( Cox ) to the Secretary of State

No. 1297

Sir: I have the honor to refer to my telegram No. 155 of August 5, 3 p.m., 1936, advising the Department that the private oil companies operating in Argentina have applied for enrollment on the register mentioned in Article 4 of the Argentine Executive Decree No. 86,639 of July 20, 1936, regulating the importation, sale, distribution and exportation of petroleum and its liquid by-products, and to previous correspondence on this subject.

All of the companies thus far enrolled were called to a special meeting by the Minister of Agriculture held yesterday at which time representatives of each of the organizations were handed two copies of the proposed rules under which they will hereafter operate. A translation of these rules, obtained from one of the private companies, is being forwarded to the Department with the Consulate General’s despatch No. 169 of August 7.26

I am informed that the private companies have been given ten days in which to study these rules at the end of which period they will be permitted to propose any additions or modifications to them. The Ministry of Agriculture will then decide whether such changes are to be accepted or rejected and having reached a decision, will proclaim such regulations in their final form.

The private oil companies are now studying the regulations but are as yet unable to state their opinions concerning them in more than a general way. In discussing them with a member of the Embassy staff a representative of one of the private companies described them as severe but said that “they could have been a lot worse.”

Briefly, the proposed regulations contain the following points. An estimate of the Argentine consumption of gasoline and other petroleum products will be made annually. The difference between this amount and the annual production of the YPF will be pro-rated among the private oil companies. The quota for each of these latter concerns will be fixed every quarter in accordance with its production and distribution capacity. Any company which sells more than its quota will be liable to a fine. Inspectors will be appointed to see that no infraction is made of the rules. A tribunal consisting of five persons, [Page 190] two of whom will represent the YPF, two, the private companies, and the fifth to be elected by vote of the other four, will be charged with the supervision of the operation of these regulations. This tribunal will have the final decision in any matter under dispute and will have the power to fix the size of the fine to be levied against any infracting company.

Of primary importance is the fact that, for the present, the percentage of the Buenos Aires market to be allocated to the YPF is that which it already holds, roughly 38 per cent., and not 50 per cent, or more, as it attempted to secure by the proposed agreement of April, 1936.

Respectfully yours,

Raymond E. Cox
  1. Neither printed.