835.6363/476: Telegram

The Ambassador in Argentina (Weddell) to the Secretary of State

244. My 225, October 17, 2 p.m. Standard informs me very confidentially as follows:

Since marketing arrangement satisfactory to Government and to oil companies seems impossible, purchase of Standard interests in Argentina by YPF is being seriously discussed between Government and Standard. Government feels that in the event of such a purchase it would then be in a position to reach an agreement satisfactory to Shell. Harden has full powers to negotiate any arrangement he sees fit. He sees no reason why a good bargain could not be reached and has valued Standard investments in Argentina at 141,000,000 pesos.

Standard also informs me as follows:

Buenos Aires municipal bylaw has been signed by Mayor as of October 20, and now goes into effect one month from that date. Carrying out of bylaw is obviously impossible at present. Although the YPF is making every effort to take over sale and distribution of gasoline for city of Buenos Aires by November 20, against that date this service will very likely be carried on as usual by participating companies supervised by YPF as a matter of form. Standard is bringing lawsuit against the Government protesting unconstitutionality of bylaw.