834.6363/209

The Ambassador in Paraguay (Frost) to the Secretary of State

No. 1913

Sir: I have the honor to inform the Department that Mr. H. A. Metzger, a representative of the Standard Oil Company of New Jersey, has recently visited Paraguay and has made formal application of the Government for permission to send into this country a geologic exploration party. Mr. Metzger’s request has been based upon the fact that the exclusive exploration rights given by the Paraguayan Government to the Union Oil Company have now expired. In this connection, I wish to refer the Department to the Embassy’s various telegrams regarding the activities of the representatives of the Union Oil Company of California in Paraguay and to my two despatches Nos. 1523 of November 12, 1943, and 1624 of December 9, 1943.39

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It would appear very likely that Mr. Metzger who visited Paraguay several times during 1943, in the interests of his company, learned in Buenos Aires that the exclusive exploration rights granted the Union Oil Company have now expired without this Government and the subject American company having come to any definite exploitation agreement. Prior to his departure from Buenos Aires, Mr. Metzger prepared a memorandum, a translation of which is attached to this despatch as enclosure No. 1.41 It is understood that this memorandum was forwarded by the Paraguayan Consul General in Buenos Aires to President Morínigo in anticipation of Mr. Metzger’s arrival in Asunción on March 9th. It was possible for Mr. Metzger to visit the President on March 15th, at which time the memorandum was discussed and reportedly the President indicated to Mr. Metzger his interest and suggested that Metzger present a formal application to the Minister of Public Works. A formal letter of application was, accordingly, prepared and delivered personally by Mr. Metzger to the Minister of Public Works on March 17th. A translation of this letter of application is attached to this despatch as enclosure No. 2.41 The letter was signed by Mr. William Kaser, the manager of the Asunción branch of the West India Oil Company, purely as a matter of convenience and in anticipation of Mr. Metzger’s departure before a formal acknowledgment and reply could be expected. At the suggestion of the Minister of Public Works, Mr. Metzger also visited the Minister of Finance on March 18th, verbally reviewing his conversations with the President and with the Minister of Public Works.

In conversations with a representative of this Mission, Mr. Metzger explained that his company, the Standard Oil Company of New Jersey, has no desire whatsoever of infringing upon any prior claim or right which the Union Oil Company may have in this country. He has reportedly stated to President Morínigo and the Ministers of Public Works and Finance that his company believes it to be to the advantage of this country to not grant exclusive exploration rights to one organization but rather negotiate with and possibly conclude exploitation contracts for definite areas with different organizations. This position as held by Mr. Metzger as a representative of the Standard Oil Company of New Jersey would seem to be in strict keeping with the policy established by the Department.

Mr. Metzger has stated that his conversations with the Minister of Public Works were highly satisfactory and it is expected that a reply to the application for exploration permission will be forwarded to the Asunción office of the West India Oil Company late this week, probably on Thursday, March 23rd. Mr. Metzger will by that time [Page 1475] have returned to Buenos Aires but if the reply is satisfactory he expects to send at least one geologist from the Buenos Aires headquarters of his company to Paraguay and presumably he will suggest that several other qualified geologists be sent immediately from the United States.

I have gained the impression that at least for the time being the negotiations between the Paraguayan Government and the Union Oil Company have reached a stalemate. Mr. Chester Cassel is still in Asunción representing the Union Oil Company, but there is some possibility that he may return to the United States in the near future, particularly in view of the fact that while the Paraguayan Government accepted, in principle, Mr. Rubel’s invitation that three Paraguayans visit Los Angeles, this invitation is now said to have been refused by two of the intended guests, the Minister of Public Works and Dr. Carlos Pedretti, the President of the Bank of the Republic. It would appear likely, therefore, that the Standard Oil Company of New Jersey may be permitted to send an exploration party into Paraguay under the conditions described in the letter of application dated March 17th (enclosure No. 2). Of particular interest has been the statement of Mr. Metzger that if the Paraguayan Government feels that it has a prior commitment with the Union Oil Company in so far as the Chaco territory is concerned, this will not prejudice the proposal for the new exploration party. Mr. Metzger indicated that from his casual knowledge of the country superficial signs are more encouraging in the areas east of the Paraguay river and he stated that his company would be willing to confine its work to the east of the river sections and would be perfectly willing to leave the entire Chaco to the Union Oil Company.

I shall not fail to let the Department know as developments occur, particularly in view of the fact that this application on the part of the Standard Oil Company of New Jersey would appear to bear promise of the realization of the policy which the Department has established as regards petroleum exploration work.

Respectfully yours,

Wesley Frost
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