504. Information Memorandum From William G. Bowdler of the National Security Council Staff to President Johnson1
SUBJECT
- President Belaunde Announces International Petroleum Company Settlement
On Sunday, July 28, in his annual message to the Peruvian Congress, President Belaunde announced settlement of the long-standing dispute with the International Petroleum Company (ESSO-N.J.) over the La Brea-Parinas (LB–P) oil fields.
The settlement is based on a formula proposed to Belaunde by IPC. Agreement so far is only in principle. The detailed agreement remains to be negotiated.
The essential elements of the deal are:
- —IPC hands over to the government all subsurface rights in the LB–P oil fields and all surface installations.
- —The government gives IPC a quit-claim on past taxes on LB–P operations, agrees to sell at a mutually acceptable price all crude, natural gasoline and gas from LB–P fields to IPC for processing at its Talara refinery, and grants IPC the right to explore and produce petroleum in an area outside LB–P.
- —IPC will expand its Talara refinery.
- —The government will grant storage, distribution and marketing concessions to IPC in Peru.
The deal is a statesman-like way out of a difficult problem. I hope it does not founder in the negotiation of the specifics. Until these are completed, and the agreement signed, it would be premature to consider the dispute closed.2
- Source: Johnson Library, National Security File, Country File, Peru, Vol. III, 10/67–11/68. Confidential. A notation on the memorandum indicates the President saw it.↩
- On August 13 Rostow informed the President that the IPC problem had been finally settled, thereby removing “this dangerous matter from U.S.-Peruvian relations once and for all.” (Telegram CAP 81956 to the LBJ Ranch; ibid.)↩