Memorandum of Conversation, by the Commercial Attaché in Venezuela (Knox)

Participants: Minister Pérez Alfonso
Dr. M. A. Falcón-Briceño, Venezuelan Chargé
Mr. Rayner, AP
Mr. C. F. Knox
Mr. Smith, A–Br

After the usual pleasantries, in which Mr. Rayner welcomed the Minister warmly, Mr. Knox referred to the press article in the Journal of Commerce in which the Minister had mentioned a possible barter of Venezuelan petroleum for Argentine lard. Mr. Knox stated that he was pleased to inform the Minister that an allocation of 2000 tons of copra had been made to Venezuela, thus obviating the necessity for any such barter arrangement. Mr. Smith outlined the unfortunate effects that barter arrangements have against liberal international trade policies and expressed the hope that Venezuela would not engage in such practices. The Minister replied that he did not approve of barter practices and that he hoped they could be avoided; he realized their danger, particularly as regards future price situations.

[Page 1353]

Mr. Rayner took advantage of this opening to discuss the proposed sale of royalty oils on a public bid basis, expressing the thought that, while such a procedure might give the Government a transitory price advantage on certain spot shipments, the long-range benefit was extremely doubtful in that the volume of oil to be so disposed of (approximately two tankers per day) was so great that it would inevitably affect other aspects of the supply with relation to the sales contracts under which the operating companies in Venezuela were disposing of the non-royalty oil in foreign markets.

The Minister said he was aware of this possibility and that, in a very friendly vein, he had discussed the matter at length with the operating companies and had received from them a proposal which gave the Government the advantage of a higher price, which the Government would take into consideration in further studying whether or not it would be advantageous to sell the royalty oil on the basis of public bid. Mr. Knox stated that, in view of the operating companies’ offer, it might very well be that the Government would see no long-term advantage in selling the royalty oil to independents by public bid.

Mr. Rayner assured the Minister that he had a great interest in Venezuela, not only from the standpoint of the petroleum industry, but with relation to the general economy and welfare of Venezuela. He pointed out that, if foreign capital had a friendly and congenial atmosphere in which to operate, minor differences of opinion that might arise from operations could always be settled in an amicable way. He said that the oil companies were becoming increasingly conscious of their responsibility to integrate their activities in a manner that would benefit the general welfare, as well as their own interests.

The Minister re-emphasized that the Government had very happy relations with the petroleum industry and he looked forward to a continuance of such relations.

Mr. Rayner offered to assist the Minister in meeting additional American officials, and in particular Mr. Davies.76

  1. Ralph K. Davies, Deputy Petroleum Administrator.