824.6363/120
The Chargé in Bolivia ( Muccio ) to the Secretary of State
[Received January 27.]
Sir: I have the honor to enclose a copy and a translation of the decree of December 21, 1936,27 creating the “Bolivian Government Petroleum Deposits” (Yacimientos Petrolíferos Fiscales Bolivianos or Y. P. F. B.), a government organization for the exploitation and development of the Bolivian petroleum fields.
This office has been informed that this organization has been established not only to safeguard the interests of the State in the matter of petroleum production, but is contemplating actively entering the production field. To this end concessions are to be granted for large territories which were formerly surveyed by the Standard Oil Company but which have been relinquished by that company evidently as unproductive. The new organization is apparently of the belief that although these concessions have been returned to the State, they may be productive and worth developing, and that the Standard Oil Company let their concessions lapse simply as a blind.
While it is apparent from Article 6 of the enclosed decree that the organization and statutes of the new company are not yet completed, it is understood that as a result of Foreign Minister Finot’s visit to Buenos Aires and the resultant convention with the Argentine [Page 276] (See Legation’s despatch No. 112, dated January 11, 193728), the Argentine Government through the “Yacimientos Petrolíferos Argentinos” has evinced a more active interest in the Bolivian oil fields and is alleged to have gone so far as to promise that if the Argentine obtains advantages in this matter and the Bolivian Government expropriates the fields held by the Standard Oil Company and allows their purchase by the “Yacimientos Petrolíferos Argentinos”, the Argentine will guarantee that Paraguay will not again go to war with Bolivia.
With the economic rivalry of Brazil, Chile and the Argentine, and to a lesser extent Peru, Bolivia is in a position of some advantage and can play off one force against the others. The Brazilian Government has shown considerable interest in obtaining a steady and large supply of Bolivian petroleum sufficient to supply the larger portion of the needs of the country, while the Argentine Government, which is negotiating for the purchase of the Standard Oil properties in that country, is naturally interested in acquiring the Bolivian fields in order that it may have a production monopoly in the southern portion of this continent.
It is understood that the Argentine Government has already discussed this subject with the Bolivian Government and that a confidential agent of President Toro will shortly go to Buenos Aires to discuss with the “Yacimientos Petrolíferos Argentinos” the matter of raising capital. Economic penetration of the Argentine through British capital in the railways and oil fields of Bolivia would be an important step in counter-balancing the American influence in Bolivia.
The actual question regarding the production capacity of the Bolivian fields is of course important not only to the Argentine but to almost the same extent to Brazil. While the Brazilian Minister was fairly recently taken on a tour of the oil fields by the Minister of National Defense and the Chief of the General Staff, it is doubtful whether he has any very definite idea regarding production figures or potential production. The Bolivian Government has found it necessary to find some other means of raising capital in the form of foreign exchange since tin production has declined and in spite of government encouragement, has not increased to any great degree. Their alleged riches in petroleum are now receiving considerable attention because of this factor and the bait is being extended to any country which does not remember or prefers not to remember the difficulties of the Standard Oil Company during the recent war.
Respectfully yours,