812.6363/3029: Telegram

The Ambassador in Mexico (Daniels) to the Secretary of State

287. Department’s 218, November 5, 3 p.m. Following information obtained from oil company sources. Decree Diario Oficial November 4th transferred to National Petroleum Administration 350,000 [Page 674] acres of petroleum land in state of Tabasco on which Richmond Petroleum Company (Standard of California) either held exploration contracts or oil leases. On 250,000 acres of foregoing General Zuazua obtained exploration and drilling contracts from Mexican Government in 1930 which contracts were later ratified by Presidents Ortiz Rubio and Abelardo Rodriguez and by President Cardenas on August 15th, 1936. Zuazua transferred rights under contract to Richmond Petroleum Company after Cardenas’ ratification and then company applied to Government for transfer approval. Approval was not given and present decree cancelled contract and returned rights to Petroleum Administration. Richmond Company claims it has fulfilled all provisions of contract and has thereunder until December to commence drilling operations. Company also claims it spent 500,000 pesos this year in geological surveys in preparation for drilling. Land title on remaining 100,000 acres was obtained by Mexican Diversified Land Company (American) in 1909 and applied for confirmatory concession about 1926. In 1930 President Portes Gil signed order for concession but President Ortiz Rubio cancelled order. Company asked for amparo before Supreme Court against cancellation of order for concession and company won decision in August 1936. Supreme Court held that order for concession signed by President constituted legal act of authority and issuance of concession was only a notification. Company did not receive signed confirmatory concession. Interest of Richmond Petroleum Company in this case due to the fact that it secured oil rights lease on property from Mexican Diversified Land Company in 1928. Above information furnished to Lockett by Standard Oil Company. The American companies have made it clear to us that they are asking no assistance from the Embassy and that they have not yet decided what legal steps they may take. Air mail report follows.

Daniels