811.20 (D) Regulations/8710: Telegram
The Secretary of State to the Ambassador in Argentina (Armour)
1699. Embassy’s 1873 of September 28, 1977 of October 13, 2009 of October 15, 2136 of October 31, and 2205 of November 7.75
- 1.
- Department wishes to make clear that primary objective in present negotiations is to secure effective collaboration of Argentina in the joint effort among republics to insure maximum supply of oil to all republics with limited facilities now available. To this end Department has suggested to other republics particularly those neighboring Argentina that they join in effort to secure such collaboration. Vegh Garzon76 presumably is acting in interests of his own country and because of familiarity with general situation obtained by recent long visit here Department believes he is in position to make representations in behalf of Uruguay which will be helpful to entire situation. For your information pool committee in New York has commended him highly to Department for cooperative attitude shown. For your further information Department is sending circular telegram77 to neighboring republics informing them of present negotiations with Argentina both to secure their assistance and to correct certain misunderstandings which are being reported currently to Department.
- 2.
- Concerning Embassy’s proposed reply to government committee
outlined in Embassy’s 1873 Department agrees but with understanding
as to detail that the following points be considered of importance
in the order shown:
- (a)
- If Argentina will use or make available for use as described in (c) below, the tanker tonnage under its control, except that necessary in its own coastwise trade, this government will do all possible to make available to Argentina sufficient material to enable local production [Page 424] plus imports from Bolivia to be maintained at the average level of such supplies during the past 12 months.
- (b)
- If under the foregoing arrangements the products from local production and refining are not in balance with Argentina’s requirements for the various products, tankers will be allocated to bring in the product which is deficient and take away that in excess in such a manner as will maintain Argentina’s over-all supply on a tonnage basis in the proportion of the tonnage produced in Argentina plus imports from Bolivia during the past 12 months to the total tonnage consumed by Argentina during the same period.
- (c)
- In order to utilize efficiently the tankers made available by this arrangement Argentina will create a committee which in collaboration with national committees which have been created in the other republics for a similar purpose will schedule the Argentina controlled tankers in such a way as will result in their most efficient use in supplying the republics with oil and without upsetting the principle of equality of treatment upon which this supply program has been based.
- (d)
- Material made available by this Government for the purpose of maintaining production as described in paragraph (a) above will be allocated one half to YPF and one half to American companies now operating in Argentina; and Argentina will facilitate the acquisition, under Argentina’s laws, of drilling rights by the American companies which will enable those companies to use the material efficiently in developing new production.
- (e)
- If this Government finds it possible to do so it will make available additional material on the basis described under paragraph (d) above for the purpose of increasing crude oil production in Argentina to substantially more than the average during the past 12 months with the understanding that during the period of the tanker shortage caused by the war at least two-thirds of the increased production be made available for export to the other republics in accordance with the same principles of most economical use of tankers and equality of treatment as now govern the supply from other sources to those republics.
With regard to Argentina’s apparent reluctance to include discussion of mixed companies in present negotiations the Department wishes to make its views clear. This Government has no intention of negotiating particular contracts between any American interests and Argentina. Before releasing any material for Argentina however it will wish adequate assurance from the Government of Argentina that this material will be used to the best possible advantage in increasing oil production and that some arrangement will be reached through which the American companies can participate in those operations on an equal basis with YPF. The Department understands that under existing laws this can be achieved through the formation of mixed companies which are entitled to drilling rights in government reserved lands. This Government wishes assurance that American companies [Page 425] will not be impeded in their efforts to conclude reasonable agreements under those laws.
You understand of course that you are not to commit this Government in any specific way without approval of the Department. Because of the extremely tight material situation here it will be necessary for the Department to have a fairly close estimate of the material involved in the negotiation in order to get assurance of its availability from War Production Board before any commitment is made to the Government of Argentina. It is also important that the quantity of material be held to the absolute minimum.
Reports have reached the Department that some arrangement is under discussion in Argentina according to which two Argentine tankers would be chartered indirectly by certain American oil companies and used to supply Argentina in addition to the indigenous production. It seems hardly necessary to point out that any such arrangement would be completely out of order and that any efforts on the part of an American oil company representative to promote such a plan would be regarded most unfavorably by the Department.