The Secretary of State to the Ambassador in Brazil ( Berle )
871. Reurtel 971, March 30, 1945. The attitude of the Department regarding the question of admission of foreign oil companies or foreign private capital to oil exploration and exploitation rights in Brazil has not changed.
The Department, because of the war time and long-range importance of oil, favors the development of foreign oil resources and encourages the participation of American companies in that development.
The Department further realizes that since Brazil is a large unexplored territory where certain physical obstacles and lack of transportation present serious difficulties to profitable oil development, and where substantial financial risks are consequently involved, American companies should be assisted in negotiating with the Brazilian authorities on a basis which will be entirely fair and equitable to both the company and the Brazilian government, and which will also follow sound development practice used under similar conditions elsewhere involving royalty and other arrangements commensurate with the company’s risk.
The Department takes the clear position that, if any country grants to foreigners rights concerning the exploration and development of petroleum resources, the nationals of any other country should be [Page 680] accorded equal opportunity with the nationals of the United States to obtain such rights.
This position has been constantly maintained in the discussions with the British covering the Anglo-American Oil Agreement.36
The Department believes that a joint Brazilian American Oil Exploration Company, mentioned in your number 971 of March 30, might conceivably run counter to the general policy outlined above, and would appreciate having the Embassy elaborate further as to what type of joint exploration company was contemplated.