Memorandum of Conversation, by Mr. James Espy of the Division of North and West Coast Affairs

Participants: Señor Ricardo Martínez Vargas, Bolivian Ambassador
Señor Rene Ballivian
Mr. Braden, A–Br
Mr. Espy, NWC

The Bolivian Ambassador called on Mr. Braden to introduce Mr. Rene Ballivian, the new President of the YPFB (Bolivian Petroleum Monopoly).

Mr. Ballivian after paying his respects to Mr. Braden stated that he wished to elicit the support of Mr. Braden and the Department for a request which the YPFB was making to the Export-Import Bank for approximately 3½ million dollars from the 5½ million dollar line of credit which the Bank established for the development of petroleum resources in Bolivia. This amount is to be used to help to finance well drilling at Camiri, the construction of a pipe line from the Camiri field to Cochabamba and the building of a refinery at Cochabamba.

Mr. Ballivian explained that the pipe line-refinery project has already been started; that the Central Bank of Bolivia has put up 5 million dollars for its financing and that an estimated additional $3,500,000. is required to complete the work. $1,000,000. is being spent for the drilling of 50 wells in the Camiri oil fields. The contract to undertake this work has been given to the South American Oil Development Company, an American concern. It is estimated that the pipe line will cost between 6½ to 7 million dollars and that between one million and 1½ million will be required to construct a small refinery at Cochabamba.

Mr. Ballivian pointed out that according to the loan agreement with the Export-Import Bank, the Bank must approve the projects for which the loan is used and that this project, which is a modification of [Page 396] one worked out and initiated under the previous government of Bolivia, is different from that recommended by the Bohan Mission report and will have to receive a new approval by the Export-Import Bank before funds can be drawn on the line of credit with that Bank for its financing.

Mr. Ballivian said that this project was one of the two stones on which the new government of Bolivia proposed to base its policy for the exploitation of Bolivian petroleum resources. He confirmed what has already been reported to the Department by the Embassy that the new Bolivian Government proposes to invite private foreign capital to develop the petroleum industry in Bolivia. He said that the Bolivian Government has decided to follow the line of encouraging private industry and that only when private industry failed to meet the needs of the country should the Government engage in commercial and industrial undertakings.

During his talk Mr. Ballivian made mention of Mr. Ro[w]land Egger, the representative of the Bolivian Development Corporation in Washington. He said that Mr. Egger had been very friendly to the previous Government of Bolivia but he was afraid that Mr. Egger was not so sympathetic and cooperative with the new regime. He hoped that this was not the case but he proposed to see Mr. Egger and endeavor to straighten out any misunderstandings that may rest in Mr. Egger’s mind.

James Espy