832.6363/3–747: Airgram

The Ambassador in Brazil (Pawley) to the Secretary of State

confidential

A–222. At luncheon Embassy Residence on Tuesday, March 4, Dr. Daniel de Carvalho, Minister of Agriculture told me confidentially that a petroleum projeto had been completed and was now being studied by Brazilian Government authorities. This projeto contained the following general provisions:

The Brazilian Government would furnish land rights, and the companies would supply capital and technical knowledge. The first six percent return would apply as interest on the companies’ investments and the second six percent would go to the Government. The balance would be divided equally between the Government and the companies.

I did not place importance on this report thinking it to be an idea presented by some outsider. However yesterday the Foreign Minister44 while discussing many other problems informed me of this petroleum project and outlined a similar plan. I told the Foreign Minister that this project would very likely not be acceptable to foreign capital and that it would appear more logical for Brazil to study petroleum projects in existence in other countries, such as Colombia and Venezuela, and to offer something slightly better than is offered elsewhere in an effort to induce foreign companies to invest in exploration and development of the petroleum industry in this country. There still appears to be an effort on the part of influential officials to suggest schemes which will not be acceptable to foreign capital. Brazil seems to continue to follow a dog-in-the-manger attitude with reference to their petroleum law.

I am informed, however, that a new petroleum committee consisting of the following: Dr. Avelino de Oliveira, Vice President of the National Petroleum Council; Glycon de Paiva, mining engineer with the Department of Agriculture; Odilon Braga, an attorney and formerly [Page 462]Minister of Agriculture; Ruy de Lima e Silva, Professor of Geology at the Polytechnical Institute; Colonel Artur Levy, member, of the National Petroleum Council representing the Army; has in the last few days asked MacNaughton of DeGollyer and MacNaughton to be adviser to the petroleum committee whom the President45 has instructed to write a petroleum law to be submitted to him at an early date.

Pawley
  1. Raul Fernandes.
  2. Gen. Enrico Gaspar Dutra.