821.6363/9–1346: Telegram

The Acting Secretary of State to the Ambassador in Colombia (Wiley)


500. Petroleum Adviser, Petroleum Division, and other interested Dept officials have reviewed with special interest your comprehensive airgram of Sep 9.68

Dept generally in agreement with Dr. Eduardo Zuleta Angel’s exposition of delays in implementation of Colombian oil legislation during past 15 years and of impediments to development of petroleum industry outlined on pages 1 and 2 of your A–319.

Dept is further of opinion that present Colombian legislation (Laws 37 of 1931 and 160 of 1936) could with some specific modifications be made satisfactory and acceptable to both industry and the country.

Dept believes modifications to existing legislation such as those suggested in Dr. Zuleta’s memorandum necessary to satisfactory conduct of oil industry in Colombia, and that these might be supplemented by other provisions previously encountered in projects of law submitted to Colombian Congress since 1942 which were considered satisfactory by the companies, for example, (a) provisions that concessions may include navigable lands and rivers or territorial waters as well as dry land; (b) extension of possible duration of public carrier pipeline contracts serving Llanos to 50 years; and (c) suspension of obligations imposed on concessionaire for duration of lawsuits promoted by third parties. Dept recognizes other provisions may also be added to above.

With respect to increase of royalties and taxes, outlined on page 3 of A–319, Dept is of opinion that extreme care should be used to adjust such changes in royalties and taxes to specific requirements of Colombia’s economy, so that no risk will be run of placing Colombia in noncompetitive world position.

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Dept is generally in agreement with Dr. Zuleta’s view that Colombia should not be used by companies to set up reserves without appropriate development schedule beneficial to country.

Dept has verified fact that Curtice and Hoover have not applied for oil concessions on their own in Costa Rica.

  1. Presumably A-319, August 30, which was received in the Department September 9, supra.