676. Memorandum From Arnold Nachmanoff of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1 2

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  • Pending Venezuelan Petroleum and Gas Legislation

Attached at Tab A is a memo to you from State on two measures pending before the Venezuelan Congress which could have an adverse impact on US oil companies operating in Venezuela. Neither measure is confiscatory in intent, but both may have that effect at least in the view of the oil companies. These measures are:

  • —A bill reserving the development of the natural gas industry to the state. (Gas is not now commercially exploited in large quantities and most of that which is produced by the oil companies as a by-product is burned.)
  • —A measure governing the condition of oil company properties and equipment when the concessions revert to the state beginning in 1983. The act could impose heavy financial and administrative requirements on the companies between now and 1983.

Passage of these measures in their present form is virtually certain and, though President Caldera has promised to interpret them in the most liberal way possible, his ability to do so is limited by the language of the laws themselves and political realities in Venezuela. At the present time this issue is mainly an economic one, though it could become a political issue in the future depending on how it is handled by both President Caldera and the oil companies. I am sending a copy of State’s memorandum to Pete Peterson and will coordinate with his staff on this question. We will keep you informed of further developments as they occur.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 796, Country Files, Latin America, Venezuela, Vol. 1, 1969–1971. Confidential. Sent for information. Kissinger initialed the first page of the memorandum. A note in the top right-hand corner reads: “Hold HAK [Kissinger].” Attached but not published at Tab A is a June 28 memorandum from Rogers entitled “Pending Venezuelan Petroleum and Gas Legislation.”
  2. The Venezuelan Congress was on the verge of passing petroleum and gas legislation that would potentially hurt the interests of U.S. companies operating there.