Memorandum of Conversation

Participants: Ambassador A. A. Berle
AP Mr. C. B. Rayner
A–BR Mr. James Wright72
ARA Mr. Ellis O. Briggs73
BA Mr. P. O. Chalmers
CP74 Col. H. R. Turkel
Mr. William F. Gray
PED75 Mr. Rex Townsend
Mr. D. A. Robertson
Mr. C. M. Pigott

Meeting held in Mr. C. B. Rayner’s office—December 20, 3:30 p.m.

Ambassador Berle was invited to describe the situation surrounding the present intention of the National Petroleum Council of Brazil to grant refinery permits for at least two 10,000 bbl. refineries. He outlined in most helpful detail the historical background of Brazil’s desire for an approach to self-sufficiency in petroleum and the steps taken via decrees to limit participation in such development to Brazilian nationals and Brazilian capital. He further expressed his conviction that the foreign oil market organizations now operating in Brazil definitely opposed the intended establishment of refineries and went on to describe the more recent development of the entry of the Gulf Oil Company into the marketing picture and its tie-up with the Ypiranga group.

It was Ambassador Berle’s contention that any effort by the United States Government at this time to bring about postponement of the granting of refinery permits would have serious political repercussions and would bring down upon the head of this Government the accusation [Page 539]of meddling in Brazil’s private affairs as well as of supporting the alleged monopolistic aspirations of existing foreign oil interests in Brazil.

Mr. Rayner explained that his concern and that of PED was for the future of present or prospective American oil interests in Brazil from an industry standpoint and that it was his feeling that the establishment of a Brazilian national refining industry wherein present marketing organizations were placed in a dependent position without the opportunity of participation of management might readily result in a gradual elimination of these organizations from their normal place in the Brazilian economy. It was, therefore, his hope and that of PED that liberalization of present laws might be affected in order to permit foreign capital and management participation in refinery operations and perhaps eventually in the exploration and development of potential Brazilian petroleum resources.

Ambassador Berle explained that this desire had been expressed just prior to his departure from Rio through a note submitted to the Brazilian Foreign Office which, in effect, indicated the hope of the United States Government that the creation of a national refining industry would not result in the establishment of vested interests or in a discriminatory situation prejudicial to prospective foreign interests and that Brazil would lend effect to its apparent intent to liberalize present laws so as to permit participation of foreign capital.

Following further discussions of the varying points of view surrounding this general subject, Mr. Rayner stated that while he felt that a liberalization of laws could more readily be affected if such liberalization preceded rather than followed the granting of refinery permits he would bow to the Ambassador’s view that such a course might be more prejudicial to the ultimate goal than were the granting of refinery permits be allowed to pass without comment and steps taken thereafter to urge the desired liberalization.

  1. Assistant to Assistant Secretary of State Braden.
  2. Director, Office of American Republic Affairs.
  3. Division of Commercial Policy.
  4. Petroleum Division.