Oil Dickers

The agreements that may some day set thousands of oilwell pumps to work on the important job of increasing Latin American oil production welled up into news in two countries last week. Argentina was on the verge of signing a pattern-setting exploration and development contract with Standard Oil Co. of California when its politicians abruptly balked, forced a cautious re-examination of the whole deal. Guatemala laid down a come-and-get-it oil code that set hardboiled but workable terms by which it is willing to let foreign oil companies find and pump its oil.

Cry of "Entreguismo." In Argentina, which must sell beef in order to buy foreign oil, the saying goes that "every time you start a car you kill a cow." President Juan Peron wants foreigners to come in and produce enough oil to supply his country's needs and to staunch the wound that bleeds the economy of some $200 million a year. Peron last April signed the contract with California Standard, subject to legislative approval. Its main provisions were those that in general prevail throughout the world: 1) a 50-50 split of profits between government and company, 2) commitments aimed at requiring the company to make discoveries fast, and 3) assurances that local oil needs will be met first at fair prices.

But when the contract went to the Argentine Congress it struck a political snag. Objections by the opposition Radicals came as no surprise. But some ultranationalistic Peronistas now joined in with the cry of "entreguismo" (literally "deliveryism"), meaning that Peron is giving away precious resources. The anti-contract arguments were mostly nonsense. Nevertheless, the Chamber of Deputies Industry Committee insisted last week that the contract would have to be modified in Argentina's favor.

Workable But Not Liberal. Guatemala's new code, by contrast, gave every promise that the pumps will be clanking soon. It, too, adopted the 50-50 formula and other major provisions in the world pattern. Three big oil companies--California Standard, Standard Oil Co. (N.J.), and Conorada Petroleum Corp. (a combine formed by the Continental, Ohio and Amerada oil companies)--seemed ready to sign.

But in Guatemala, the companies had some qualms. "The law is workable, but not liberal," said California Standard's special representative, Frank Plaza. Oilmen think that if oil is found in that country it will be in the sparsely settled jungle region in northern Peten. near the Mexican oilfields. Equipment will have to be flown or dragged in. Under the circumstances, Guatemalan requirements that each company drill at least one well every six months on each concession may be burdensome. Said Lionel Weidey, Jersey negotiator, "Guatemala's first barrel of export oil will cost $50 million."

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