On February 5, 1948, the Chargé in Brazil received a free translation of the revised draft petroleum law. The principal terms of this draft, as transmitted by Key on that date to the Department of State in his [Page 355] telegram 115, February 5, not printed, were as follows: 1) Foreign capital companies, when established in accordance with Brazilian law, would receive concessions for exploration, developing, transporting and refining petroleum. They would produce only for exportation. 2) The domestic market would be limited to companies financially controlled by Brazilians and organized in Brazil. 3) The foreign companies described in Item 1 would not be permitted to export until the national companies were prepared to supply the domestic market. 4) Foreign installations would be nationalized without indemnity on expiration of concessions, which would be granted for a period not exceeding 40 years. 5) A formula would be devised to determine indemnity payments when the Government, on authority of a Congressional law, chose to buy back a concession prior to its termination.
The Chargé added that certain amendments, if approved by Congress, would be attached to the bill and would tend to render the law more liberal (832.6363/2–548).