The Secretary of State to the Embassy in Bolivia
96. Stambaugh33 from Martin.34 Board of Bank formally approved additional credit to BDC for YPFB program on Feb. 19. Following statement for simultaneous release Washington and La Paz has been [Page 345] agreed upon with Mariaca and will be released here on Feb 25 upon word from you.
“Wm. McC. Martin Jr. Chairman Board Directors Export-Import Bank today announced approval by Bank of increase $3 million in an existing credit to Bolivian Development Corporation for financing petroleum development program to be conducted by Yacimientos Petroliferos Fiscales Bolivianos (the Bolivian government petroleum entity generally known as YPFB). New credit resulted from negotiations with Eximbank by Guillermo Gutierrez President Bolivian Development Corporation and Guillermo Mariaca General Manager YPFB.
Mr. Martin recalled that Eximbank authorized a credit $15,500,000 to BDC in Mar 1942. Of this amount $5,500,000 was allocated to petroleum development program and remainder to highway construction. Under terms this allocation Bank has to date advanced to Development Corporation $1 million for drilling operations in the Camiri oil fields and Corporation has in turn advanced this amount to YPFB to finance those operations. There have been no actual advances for construction costs and purchases in connection with pipeline and refinery since advances for these purposes were conditioned on reasonable assurance of a minimum stabilized production in Camiri oil fields, satisfactory plans and specifications and cost estimates, and satisfactory construction contracts with approved US engineering firms.
Bolivian and private funds equivalent to $5,650,000 have also been allocated to petroleum development program thus making together with increase $3 million in Eximbank credit a total of $14,150,000 for program as a whole. Funds to be supplied by Bank amounting now to $8,500,000 will be used to finance drilling program in Camiri fields, a part of cost of constructing pipeline from Camiri to Cochabamba, and construction of refinery at Cochabamba. Any additional funds required for completion of approved program are to be supplied from sources other than Bank and arrangements for provision of such funds have been made.
Petroleum development program in Bolivia which Bank is assisting in financing will result in production petroleum products required by Bolivian economy and is expected to produce substantial surplus revenues beginning in 1949. In order carry forward Cochabamba-Santa Cruz roadbuilding program to which Bank has already allocated $10,000,000 under the 1942 credit in favor of BDC it has been agreed that Bank funds advanced to YPFB through Bolivian Development Program will be repaid to Corporation from anticipated surplus revenues at rate to be determined by Bank but in any event not less than $3 million in each of years 1949 and 1950 and that these repayments will be dedicated by Corporation pursuant to its understanding with Bank to completion of highway program.
In announcing new credit to Bolivia for oil development Mr. Martin noted that YPFB has announced a policy subject to ratification by Bolivian Congress of opening oil resources in Chaco region to development by private capital.”