812.6363/1–2147
The Ambassador in Mexico ( Thurston ) to the Secretary of State
No. 2553
Sir: Supplementing secret despatches nos. 2384 and 2534, dated January 10 and January 15, 1947,86 respectively, on the subject cited, I have the honor to inform the Department that I was received by President Miguel Alemán in his private residence last evening. As in the case of my preliminary discussion of petroleum matters with the Minister for Foreign Affairs, I informed the President of the substance of the first few pages of the “Memorandum on United States Government’s Policy regarding Mexican Petroleum” that accompanied the Department’s secret instruction no. 209 of August 27, 1946.87 I added that in view of the energetic manner in which the new Government had undertaken to deal with the problems confronting it, and in particular of developments affecting Pemex itself, I felt that perhaps the time had come for me to ascertain the views of the Government with respect to the Mexican petroleum industry and the part that [Page 789] might be played in the development thereof by American and foreign enterprises and capital.
President Alemán replied that he had for some time past been a close student of the Mexican petroleum problem and the world petroleum problem, and that he was well aware that the United States has seriously depleted its petroleum stocks and is in urgent need of readily accessible supplies abroad. He said that it was the firm policy of his Government to cooperate with the United States and that in any emergency that might arise Mexico’s petroleum would be at the disposal of the United States. He remarked that perhaps some government-to-government arrangement might be brought about, and suggested that possibly a loan might be extended to Mexico for the development of new oil reserves.
I stated to the President with respect to the foregoing observations that while it is true that the United States had drawn very heavily upon its petroleum reserves in prosecuting World War I and World War II, there were two schools of thought with respect to our present oil position—one of which maintains that we have depleted our reserves and must hereafter rely upon foreign stocks, and the other of which maintains that our known and potential reserves, together with improvements in exploration, extraction, and refining processes, assure us of adequate supplies for a very extended period of time. I said that I had not intended, in bringing up the topic of Mexico’s petroleum policy, to suggest any government-to-government arrangement, and that as far as any loan for the commercial development of Mexican petroleum resources is concerned, I thought it had been made clear in the past that there was no likelihood of any loan of that nature being granted. I then stated that what I desired to ascertain was the attitude of the Mexican Government with respect to the participation in the development of the Mexican oil industry by American and other foreign enterprises and capital. I remarked that it was felt by some observers that Pemex could not alone carry the burden of the development of the Mexican petroleum industry which in the past had been distributed among a group of oil companies of unusual individual and collective economic strength, and who possessed all the skills and facilities requisite for that task, and that moreover while Mexico should be deriving abundant foreign exchange from the export of its petroleum products it actually was expending heavy amounts in order to purchase such products to supply the northern and western areas of the Republic. I remarked that added to these conditions was the fact that while operating at a constant annual budgetary deficit, Mexico’s balance of trade presumably would be adverse for some time as a result of the postwar trend of diminishing exports and increasing [Page 790] imports. Under all these circumstances I suggested there might be some advantage in the collaboration of American and foreign enterprises and capital in the development of Mexico’s petroleum industry.
The President made no comment whatever with respect to the observations regarding Mexico’s economic position described in the preceding paragraph but confined his next remarks to a statement of the plans which Pemex will undertake to carry into execution during 1947. He stated that it is intended to drill one hundred wells during the present year which will be distributed throughout Lower California, Chihuahua, northern Tamaulipas, lower Veracruz, Tabasco, and Oaxaca. He spoke with confidence when describing these plans and seemed to believe that the prospects for bringing in large new pools are very good. He stated that suitable American oil drilling contractors and independent oil companies will be selected by the Pemex agency in Houston to undertake drilling and exploitation work under contractual arrangements.
I inquired whether these plans precluded general participation in the development of the Mexican petroleum industry by American and foreign companies. The President replied that this was the fact and that the Mexican petroleum law (which could not be changed because of the political consequences that would follow any tampering with it) made it impossible for any other than strictly Mexican companies to operate in Mexico excepting under such contractual terms as were contemplated with respect to the companies that are to be approached by the Houston agency of Pemex.
This morning Señor Valentín Garfias, the local representative of the Cities Service Company, called to inform me that he had seen Señor Antonio J. Bermúdez, the Director General of Pemex, last night and that Señor Bermúdez had stated to him categorically that it is not the intention of the Mexican Government to permit foreign capital to participate in the Mexican petroleum industry. I asked Señor Garfias if he could suggest any explanation that would account for such a complete reversal of the views of Señor Bermúdez—who as recently as January 9 had submitted to Señor Garfias a draft of a press release in which it was stated that foreign capital was essential to the development of the Mexican petroleum industry. Señor Garfias stated that he was unable to account for the abrupt change but that he suspected that it might be related to the presence in this city during the past few days of Mr. DeGolyer, the well-known American geologist and oil industrialist. Señor Garfias is of the opinion that Mr. DeGolyer, who has frequently served as adviser to Pemex, may have convinced the Mexican Government that the reorganization of Pemex now under way will enable it to operate and expand the Mexican petroleum industry [Page 791] through contractual arrangements with independent oil companies.
During our conversation President Alemán was alert and friendly—but I sensed that he was somewhat on the defensive and that he was not interested in exploring the possibility of participation in the development of the Mexican oil industry by American and other foreign companies and capital as a general arrangement. His chief concern appeared to be to make it clear to me that in any emergency affecting the United States or this hemisphere, Mexico’s oil resources would be instantly at our disposal. As to the current and peace-time development of the Mexican oil industry, it appeared to be his opinion that this is a domestic matter, and that the appropriate agencies of the Mexican Government will seek out such American capital or instrumentalities as they may deem necessary to the prosecution of their plans, and that such capital and such instrumentalities will work for the Mexican Government under mutually acceptable terms.
In the light of this general attitude, I did not consider it to be advisable to press for a further discussion or to bring up such points as that mentioned in the memorandum already cited to the effect that the Mexican Government “by its present nationalization of its oil industry … is not carrying out the spirit … of the Economic Charter of the Americas signed at Chapultepec on March 7, 1945”.88
I have not informed the local representatives of American oil companies of my conversation with President Alemán, and would appreciate an indication of the Department’s views as to the advisability of doing so at this time. I am of the opinion that it might be better to await further developments, and not to interpret the attitude assumed yesterday by President Alemán as constituting a definitive rebuff.
Respectfully yours,
- Despatch 2534 not printed.↩
- Foreign Relations, 1946, vol. xi, p. 1008.↩
- For the “Economic Charter of the Americas”, Resolution LI of the Final Act of the Chapultepec Conference, see Department of State, Report of the Delegation of the United States of America to the Inter-American Conference on Problems of War and Peace, Mexico City, Mexico, February 21–March 8, 1945, p. 120.↩