2. There has been a similar change for the worse in our 1953 position. E.P.C. (48) 72 showed a credit balance of $1,028 million. Adjusted for South American sales this becomes $1,165 million. Current estimates show a credit of $649 million. The change is due to the following causes:
Improvement in 1953 non-dollar position-
Reduced net expenditure on oil equipment Miscellaneous receipts
Deterioration in 1953 non-dollar position--
Reduced value of oil sales (due largely to the fall in prices, but partly to the fact that no receipts of foreign currency are now claimed for British companies' production at present unallocated to any particular market. A year ago it was assumed that $150 million worth unallocated production would be sold in this way)
...
Increased expenditure on tanker hire
28
$ million
28
56
391
...
44
Increased operating expenses (due largely to increased royalty
payments in the Middle East)
137
572
Net Deterioration
516
3. As regards expenditure on equipment, this is now estimated lower than it was a year ago. In the estimates of expenditure on equipment made then allowance was made for continued expansion at an increasing rate after the completion of the schemes then included in the programme. The change in the world oil position and indications of reduced business activity have caused the oil companies to postpone some plans which they had in mind. This does not imply that no further expansion is expected when present schemes are complete, but, on present indications, the rate of new capital investment will slacken. It is now estimated that the peak of expenditure will occur in 1951 and it is also estimated that the bulk of the dollar expenditure on the Middle East pipeline schemes will be offset by contributions from the American shareholders. In the case of non-dollar equipment the previous estimates are now thought to have been too high. A year ago Belgian currency was nothing like as hard as it is to-day and the purchase of considerable quantities of Belgian steel was allowed for.
APPENDIX IV
DOLLAR INVOICING OF BRITISH OIL COMPANIES' CUSTOMERS IN NON-DOLLAR, NON-STERLING AREAS
This proposal has prima facie the attraction of being a means of recovering from our customers some or all of the dollar costs which we incur for their benefit in obtaining the oil that we sell to them.
Technically, we could invoice for dollars all oil supplied above a certain basic amount for each country, this would be difficult to justify convincingly now that our oil-producing companies no longer make large marginal purchases of the major refined products from dollar sources. Alternatively, we could invoice in dollars all shipments not originating from Sterling Area sources, such as Trinidad and Sarawak. The sterling element in the cost of our so-called "sterling oil" from, e.g., Curaçao (N.W.I.) may be small, but in so far as we fail to give our customers the benefit of it we should, to say the least, invite retaliation and give an impetus to dollar invoicing by any country which considers herself as an important alternative source of supply to the United States of America. It may also lead to a demand for dollar royalties from Middle East countries, and it is not possible at this stage to estimate what effect such a payment of royalties. wholly or partly in dollars would have on the net amount of dollars which we are having to make available to these countries. Lastly, we could adopt proportionate dollar invoicing for crude oil and products shipped from sources outside the Sterling Area. The proportion chosen is to a certain extent arbitrary and so the less justifiable. That which could best be defended is that of the net dollar cost of oil to purselves plus the payments of gold or dollarpto Curacaofanch Iran (which are largely attributable to the operations of the oil industry) in relation
:
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to theagaluf British-controlled companies' prbation5 Thgives a figure of 40 per cent. in 1949-50 and 20 per cent. in 1953. Although we might succeed in justifying such a policy as a mere modification of our existing dollar for dollar " principle in the merchanting trade, even this method might lead to strong protests from our customers if at the expiry of present agreements or even earlier they were faced with a request for at least some dollars for oil which our companies had hitherto supplied for sterling. Theoretically, however, the amounts of dollars involved, taking 1949-50 for purposes of illustration, are :—
:-
From hard currency non-dollar countries From the countries where British oil companies own
concessions or wayleaves or hire tankers
From O.E.E.C. countries not included above From others
***
...
$ million
63
57
104
42
266
In the case of hard currency countries such as Belgium and Switzerland, there would be no advantage in switching to dollar invoicing, since sterling invoicing equally reduces our balance of payments deficit, which is settled in gold. In the case of certain other countries which do not cost us gold, such as the Argentine, dollar invoicing would increase pressure for settlement in dollars or for a dollar ration. If these countries are exempted from dollar invoicing, there might well be protests from others on grounds of discrimination. There is no doubt that we would meet with the strongest opposition from E.C.A. if we adopted dollar invoicing for oil. They have recently been pressing for the elimination of the dollar sign from inter-European trade, and they have urged United States of America-owned companies in France and Italy to sell for local currency instead of dollars. We on our side have been pressed to abandon dollar invoicing of sugar and nickel. Moreover, if we included the dollar cost of refinery equipment in our percentage calculation (as is done above) we should reduce still further the already doubtful possibility of obtaining E.R.P. financing for many of our purchases of such equipment.
The broad conclusion, therefore, remains, that quite apart from the obvious undesirability of extending the dollar sign further into the trade of the non- dollar world, while we still reserve the right to resort to dollar invoicing of oil if our dollar difficulties force that course upon us (in particular, if the Division of Aid is not settled to our reasonable satisfaction) we should only adopt that course as a last cxtremity as it would involve major political repercussions in our relations both with the United States of America and with the non-dollar world, including particularly the other O.E.E.C. countries. It is for this reason very doubtful whether in the end an attempt to dollar invoice oil would result in any net gain to the United Kingdom overall dollar balance of payments.
APPENDIX V
SHELL CARIBBEAN PETROLEUM COMPANY'S DOLLAR LOAN
Last year, with the agreement of the Treasury, the above company, an American company and a wholly-owned subsidiary of the Shell-Royal Dutch Group of companies, borrowed $250 million in New York. Under the terms of the loan this money must be invested in capital projects in the Western Hemisphere. One way and another it was expected that these dollars would be expended over a three- to four-year period, and they will relieve the United Kingdom Treasury of a considerable part of the dollar demands that Shell are likely to put forward on capital account.
It is currently estimated that Shell Caribbean will spend in new projects a further $8 million during 1949-50-the big expenditure will not come until later. Credit has been taken for this in making out the Balance of Payments. Purchase of Western Hemisphere assets is allowed as well as investment in new projects, and one transaction of this kind has already been completed-viz., the purchase from another member of the Group of a 60 per cent. share in Shell of Canada for about $20 million. A similar transaction is under consideration,
21
viz., the purchase of a half-share in Shell of Colombia (the price is still under
Page 416 hare
Page 416 negotiation, but it is expected to be of the order of $40 million). Any dollars paid over in respect of such transactions will become available for use by other members of the Group (under Treasury and Ministry of Fuel supervision) and will thus ease our position. It is probable that the full $60 million could be used in this way during 1949–50 and credit has been taken for this.
It is, however, possible that further transactions of this kind could be arranged, though this would require discussion with Shell and would involve the necessity of finding investments which would attract the Board of Shell Caribbean. It would, furthermore, increase the extent to which Shell would come to the Treasury in future years if the loan were thus prematurely expended.
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APPENDIX VI A
THE POSSIBILITY OF REDUCTION IN OIL CONSUMPTION IN THE UNITED KINGDOM
1. Total inland consumption of petroleum products in the United Kingdom (excluding ships' bunkers and petroleum industry's own use) in 1949-50 is now estimated at 13,915,000 tons. The main components of this figure are as follows (figures for 1948 and estimates for 1953 are included for
are included for purposes of comparison):
Aviation spirit
Aviation turbine fuel
...
Burning oil
Vaporising oil
Gas/Diesel oil (exc. DERV)
Fuel oil
Motor spirit
DERV fuel
...
...
(Figures in 000 tons)
1948
1949-50
1953
290
373
540
71
124
350
556
590
520
810
...
885
875
1,394
1,591
1,960
2,664
2,920
3,510
4,264
4,912
6,241
817
927
1,149
2.
...
The following remarks on the end uses of these products are confined to the immediate 1949-50 position since the long-term trends are still under investigation.
Aviation Spirit
·
3. Out of the estimated consumption of 373,000 tons in 1949-50, over 200,000 tons is attributable to the fighting services. The balance is accounted for by the three air corporations, charter aircraft, foreign airlines flying to and from the United Kingdom and by engine manufacturers for bench and flight testing of new machines or machines being overhauled. In addition there is a small consumption by private fliers and flying clubs, which are strictly rationed. Any attempt to limit foreign airline services might well lead to retaliation against British airlines abroad, while economies by the British corporations could only be achieved by reducing services, thus weakening their competitive position vis-à-vis foreign operations. Enforcement of cuts on the engine manufacturers would interfere with development work or reduce standards of testing of engines before they go into service. The private flier and flying-club use is already very small and strictly rationed, and the complete abolition of the ration would be a severe discouragement of an activity which is considered by the Ministry of Civil Aviation to have considerable value.
Burning Oil (including Air Turbine Fuel)
4. All the consumption of air turbine fuel (estimated at 124,000 tons) is accounted for by the services and the engine manufacturers. Consumption of normal burning oil is estimated at 590,000 tons, of which approximately two- thirds is consumed for domestic heating, lighting or cooking. The balance is principally consumed in industry, agriculture and the railways (for signal lamps). Deliveries to dealers and to industrial consumers are restricted to maxima faid down on control cards, which each consumer must hold. How far cuts could be applied to Pamestic consumers, without intolerable hardshiẞagen b6 bef assessed, but it will be appreciated that for the most part those using burning oil for
www
22
lighting,Phating or fooking do so because they eitheagoo bother sources of fuel or are too poor to use them.
Vaporising Oil
5. Of the estimated consumption of vaporising oil (885,000 tons) over 840,000 tons is accounted for by agricultural tractors and stationary engines. The small balance is used in fishing vessels and miscellaneous tractors. Any immediate cut in consumption could only be achieved by limiting the use of machines in agriculture, which would affect production proportionately. The vaporising oil tractor is, by comparison with the diesel tractor, uneconomical in fuel consumption. There is likely to be a long-term trend towards the use of diesel tractors, but at present the extra initial cost of these tractors makes them. uneconomical for the average farmer. Even with the adoption of special financial measures to encourage a turnover to diesel engines, it is not thought that any substantial result could be achieved on less than two or three years as extensive retooling of factories (possibly involving dollar expenditure) would be necessary.
Gas/Diesel Oil (excluding Road Transport)
6. Inland consumption of gas/diesel oil is estimated at 1,591,000 tons. The largest single item is the gas oil used by gas works, where it is used in carburetted water gas units mainly in order to cope with demand at peak periods. Such plant could be replaced by coal-using plant, but this would be expensive and take a long time to carry out owing to the existing commitments of coke oven and gas works plant manufacturers. It would also involve a very large extra demand for gas coal. Industrial power units of various kinds are the other big item in consumption of this product, including auxiliary generating sets installed to help overcome the present shortage of generating capacity: a prohibition of the use of these sets would save about 115,000 tons of gas oil, but would increase the estimated gap in winter electricity supplies by about 25 per cent. The balance of consumption is accounted for by coastal and inland vessels, agriculture, bakeries, pottery and glass kilns, industrial furnaces and central heating, for the most part individually small.
Fuel Oil
7.
Inland consumption of fuel oil is estimated at 2,920,000 tons (excluding oil used in refineries). The greater part of this consumption is for industrial furnaces and steam raising (2,200,000 tons) and principally is used by firms who converted from coal to oil burning as a result of the Government-sponsored campaign to save coal. The compulsory reconversion of these firms back to coal would clearly be open to very serious criticism and raise difficult issues of compensation. Moreover, in certain processes, particularly in steel and other metal industries, the use of fuel oil has considerable technical advantages over the use of coal. Reconversion would, moreover, require the provision of coal-burning equipment, which would take a considerable time to obtain. New applications to use fuel oil are only permitted when there is exceptional economic advantage to the country or where the use of an alternative fuel is impracticable. One other item in fuel oil consumption is central heating, which accounts for 200,000 tons a year, nearly half of which is consumed in schools, hospitals, factories and green- houses and only a small proportion in private houses. The supply of oil to new plant is only allowed now in most exceptional cases, but existing users are only limited by an arrangement of some years' standing made with the oil companies. to restrict supplies to the minimum required for efficient operation. More stringent restrictions could only be enforced by the institution of an elaborate system of rationing by the Ministry, involving increased use of man-power and Government expenditure. How far it would be possible to restrict consumption without excessive hardship is impossible to estimate without a detailed assessment of individual cases.
F
...
8. The above analysis indicates the fields of consumption which would be affected by cuts in oil supplies. The effect on industrial and agricultural activity would depend upon the extent of the cuts and also where they fell. At present, apart from burning oil, there is no rationing system controlling the allocation of these oilpo variousfusers, and it would therefore pe difficult to apply selective cuts intended to hit hardest the least essential undertakings or to ensure that available supplies were evenly distributed.
23
9. Thane 4ibs off he Ministry of Fuel and Power, Ragfidant efia the estimated consumption by these users would be undesirable and impractical.
Motor Spirit and Diesel Oil for Road Vehicles
10. In the case of private, commercial and passenger vehicles, a strict rationing system is enforced Arrangements for colouring commercial petrol have been introduced which have virtually eliminated the black market. The private motorist receives only a small ration sufficient for 90 miles motoring a month (doubled for three months in summer). Supplementary allowances are only granted for essential use.
Private Motoring
11. The Minister of Fuel and Power has suggested that the most that can reasonably be achieved in the field of private motoring would be a saving of 100,000 tons. It would be difficult to obtain the whole of this saving in 1949-50.
12. If it were nevertheless decided to abolish the standard petrol ration and summer bonus, this would give a saving of about 350,000 tons in a full year, or 200,000 tons in 1949-50. To achieve a comparable saving by cutting supple- mentary petrol allowances, would require an effective cut of 30 per cent. (and a much bigger initial cut to allow for appeals).
13. Past experience in the abolition of the basic ration and also in the application of percentage cuts to supplementary allowances suggests that any action to obtain savings on a large scale would lead to a flood of appeals from the public and thus to serious administrative difficulties necessitating increased use of man-power in the Civil Service, and that the saving would not be permanent. There would also be a serious danger of the re-establishment of the black market. Commercial Transport
14. The Ministry of Transport consider that a saving at the rate of 150,000 tons per annum on the current rate of consumption could be achieved in the case of commercial goods and passenger vehicles by (a) a general cut of 15 per cent. in the issues to goods vehicles, with restoration in part or in whole where need is shown giving a net saving of approximately 7 per cent. in consumption, and (b) reimposition of the 121 per cent. cut (at present 61 per cent.) in allowances for excursions and tours and private parties, with a distance limit for private parties of 70 miles (round trip), except with special permission of the Regional Transport Commissioners. The full rate of saving would not be realised until 3 months after the date of announcement of the cuts.
15. Further saving could be made by a return to austerity in the use of fuel. It would create material hardship, involve considerable changes in present methods of transportation and distribution, and could not be justified for commer- cial vehicles unless the standard ration for private cars were abolished with a drastic pruning of supplementary issues. For goods vehicles, there would be a net cut of 10 per cent. This would involve a consideration of individual traffics and facilities as well as a general cut. It would mean considerable reorganisation of wholesale distribution and some reduction in retail deliveries which would hit the still harrassed housewife. For passenger service vehicles there would have to be a pruning of ordinary bus and short-distance coach services, as well as a cut in long-distance express services. The cut on excursions and tours and private parties would be increased to 20 per cent. The further saving so realised might amount to some 70,000 tons a year.
16. Further cuts could be imposed, but these would mean virtually a return to war-time conditions in the use of oil fuel and, as then, could only be achieved with the co-operation of industry and the public, who would have to be convinced that the hardships involved were necessary and were being shared equitably by all users. The net cut on goods vehicles would be increased to 15 per cent. This would necessitate the reintroduction (under the aegis of the Departments con- cerned) of war-time schemes for the zoning and rationalisation of wholesale distribution and a heavy reduction in retail deliveries. For road passenger vehicles, there would have to be a material pruning at off-peak hours of ordinary bus and short-distance coach services, without disturbing essential, e.g., workers' services. Pongedistano (press services would be eliminaPegexcept ofre no other facilities exist. The cut on excursions and tours would be increased to 25 per cent. These cuts could be expected to yield a further saving of 120,000 tons,
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4
24
making Patotal saving onder all the cuts referred to above of about 340,000 tons. in a full year.
17. The Ministry of Transport considered that action on the lines set out above can only be undertaken successfully if-
(i) the public are convinced that the savings are necessary, that road transport is not being singled out, and that comparable cuts are being made in other dollar purchases (e.g., other consumption of oil fuel, films, tobacco, &c.); (ii) the necessary staff both in numbers and in quality can be made available.
to enable the cuts to be adjusted so as to avoid a hold-up of traffic; (iii) additional coal-including a proper proportion of large coal-is made available to the railways to enable them to carry the additional traffic, including additional passenger excursions to replace tours and excur- sions and private parties by road; and
(iv) the standard ration for private cars is abolished with a further pruning of supplementary allowances should a cut on commercial transport in. excess of 150,000 tons per annum be imposed.
18. The Ministry of Fuel and Power do not accept that conditions (iii) and (iv) are a necessary prerequisite of reductions in commercial consumption.
APPENDIX VI(b)
POSSIBILITY OF SAVINGS IN OIL CONSUMPTION BY THE REST OF THE STERLING AREA.
1. At the conclusion of the Conference of Commonwealth Finance Ministers the other Ministers went away with an undertaking to seek to limit their total dollar expenditure on imports to 75 per cent. of the expenditure during the calendar year 1948. In addition the Commonwealth Finance Ministers were addressed by the Minister of Fuel and Power on the need to save dollar oil, but were told at that time that our policy regarding possible discrimination against oil imports from dollar sources had not yet been settled.
.
2. The United Kingdom has had no detailed information yet from the Commonwealth about the cuts and indeed the other members of the Common- wealth are not bound to tell us in detail how they propose to achieve the cut. As regards oil we have had a communication only from the Government of Australia who say that their consumption programme for 1949-50 is below that for which the oil companies programmed. This almost certainly is not due to deliberate post-conference cuts.
3. The self-governing territories of the Commonwealth, not being bound by the Anglo-American Financial Agreement of 1945, might find it easier than the United Kingdom to discriminate against dollar oil, but if they all sought to make a 25 per cent. cut in imports British oil companies could not in total replace more than about a 10 per cent. reduction in dollar imports. Further replacement of dollar imports could therefore only be made in conjunction with cuts in con- sumption in the Commonwealth countries; it would be unrealistic to count at this stage on obtaining any very substantial saving by this means.
APPENDIX VII
THE DOLLAR DRAIN ARISING FROM CERTAIN ACTIVITIES OF UNITED STATES COMPANIES IN THE STERLING AREA
Apart from the dollar liability arising on imports from dollar sources some dollar liability arises from United States oil companies' own activities in the Sterling Area or from their subsidiaries' activities in the United Kingdom. Two cases that call for comment are:
1.
American-owned Bunkering Companies
age
9
American-owned bunkering companies registered in the United Kingdom conduct a soft currency trade which, to a considerable extent they have taken over because their customers abroad could no longer provide dollars for dealing direct with the American parent companies, as used to be the case.
25
It is for consideration whether these companies should be limited not to a figure of dollar oil purchases, based on past performance as has been the case in 1948 and 1949, but rather to a figure equal to their sales of oil to dollar shipping. In as far as this policy relates to bunkering stations owned by those companies in the United Kingdom itself, it is merely a part of the general discrimination issue: As regards the companies' bunkering stations outside the United Kingdom, such restrictions might even be imposed without the possibility of being effectively challenged under Article 9 of the Anglo-American Agreement of 1945, since this Article relates only to imports into the United Kingdom. The possible saving could be of the order of $13 million a year, but the American companies reaction is likely to be unfavourable particularly as the principal company con- cerned British Mexican Petroleum (Britmex) has been in business for 30 years.
2. Bahrein Petroleum Company
The position of the wholly American-owned Bahrein Petroleum Company is special. This company produces some oil at Bahrein but in addition purchases crude oil for dollars in order to keep fully occupied the Bahrein refinery, whose capacity is about three times the crude oil production in that Sheikdom. At present we find dollars ($44 million net in 1948-against which the sterling area got oil worth $60 million c.i.f.) for the company's crude oil purchases, expenses and profits on the understanding that they do not invoice oil to non-sterling territories in sterling. To treat this company wholly as a sterling company would immediately involve a request from these American interests to sell their oil outside the sterling area for sterling and to convert the profits from such third country
cry sales into dollars at our expense. The alternative would be to treat the company as a United States company and this is how it has been dealt with in Section III.
Representatives of the California Texas Group, to which the Bahrein Petroleum Company belongs, are about to have discussions with United Kingdom officials. Until these are completed no action is necessary.
APPENDIX VIII
UNITED STATES PRESENT ATTITUDE TOWARDS DOLLAR/STERLING PROBLEM
!
.
There are, at the moment, two interrelated oil questions which have been receiving much American attention recently and which are closely bound up with the question of discrimination. These are (1)
and United Kingdom overseas refinery expansion plans, and (ii) the displacement of dollar oil by sterling oil which is already taking place in non-sterling area countries, e.g., Argentina and Egypt.
Overexpansion
وو
2. The Americans feel that the refinery plans may aggravate the position of the American oil companies and E.C.A. has, for the moment, refused to finance European countries' refinery expansion plans-beyond an arbitrarily selected amount on the grounds that anything in excess of this would represent an overexpansion of world refinery capacity. The oil people in E.C.A. had even hinted that they would like to stop the use of free dollars for "" unagreed refinery projects, though this would raise a point of general policy which E.C.A. might not wish to advocate. In any case, as the result of difficulties in Paris' O.E.E.C. asked the British, Dutch and American Governments to make a review of their overall refinery position. The Americans were asked to join in since American companies are not only concerned in the building of refineries in Europe but also have plans for non-European areas as have the British companies.
3. The review has just been completed and though no report has yet been issued it is likely to show that in 1953 the plans for erecting refineries would show a theoretical surplus of 10 per cent. to 15 per cent. over what is likely to be the demand for oil on the basis of normal expansion. To decide where the overexpansion is taking plage is, however, a different mattep owing to the conflict The European countries assert that as it is cheaper in
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foreign currency to import crude oil than refined products expansion of their own Pafgery2 taph662 up to their total consumption requirements is not only justified but necessary to achieve viability. In view of this both the United States and United Kingdom oil interests plan to build refineries in Europe in order to protect their market positions. On the other hand, the big oil interests have certain concessional obligations to erect refineries in the countries where the oil is actually produced. The position is also complicated by the fact that some European countries favour the establishment of locally-owned refineries and as these are likely to want to operate on sterling crude-which is likely to be avail- able--this is again a matter of concern to the Americans and is leading them to blame us not only in connection with our refinery plans but also with our plans for the expansion of the production of crude oil. Any suggestion that this over-expansion" should be directly or indirectly financed by the United States is naturally somewat galling to them.
CC
,4. The position is also confused by the fact that, while we have as yet no precise figures, it is clear that some companies are pruning their plans in the light of the present outlook for oil demand. A year ago, when most of the refinery projects were drawn up, the world envisaged a shortage of oil that might go on for years and would certainly be very acute in the winter of 1948-49. The 1948-49 winter shortage never occurred, largely owing to an exceptionally mild winter in the United States, and since the spring, given the currency to pay for it, there has been no difficulty in buying oil. It is quite possible, therefore, that the figures of availability on which the view that overexpansion is likely is based may prove to be excessive. It is also very difficult to assess world demand three or four years ahead.
Displacement of Dollar Oil
5. The possible effect of the world shortage of dollars on their overseas sales has been on the American oil companies' minds for some time. It was not, however, until the Anglo-Egyptian Financial Agreement and the Anglo- Argentine Trade and Finance Agreement that the issue came to a head. The former, which was an exceptional case, has been settled more or less to American companies' satisfaction in that the United Kingdom subsidiaries of American companies are being allowed to put in oil to meet their Egyptian associates' requirements. Since, at the moment, we allow United Kingdom subsidiaries of American companies to buy oil from their parents for dollars, this arrangement not only protects the American companies' distributive position in Egypt, but also the outlet for the oil which they produce. This arrangement was only made because at the time of the agreement additional sterling oil products of the kind required by Egypt-did not appear to be available to supplement what British companies will in any case be putting into Egypt to meet their own commercial demand. With the expansion of British companies' production which has already taken place, this situation will not continue. British companies are likely to have, even in 1949-50, " unallocated supplies" of oil-see paragraph 7 of text. The Anglo-Egyptian arrangement, in fact, represented a concealed way of providing Egypt with more dollars. The Anglo-Argentine Trade and Finance Agree- ment was different. We undertook to make available at any rate for 1949-50--- against sterling payment quantities of fuel oil and crude oil which would cover Argentina's entire import requirements. And, as British companies are likely to have the additional quantities of fuel oil and crude oil needed, there would be no point in our making an arrangement such as was made in the case of Egypt. The American companies therefore lose the outlet for the oil that they could produce and would in ordinary circumstances sell to Argentina. We have, however, endeavoured to make arrangements whereby the American companies' Argentine subsidiaries would themselves buy the additional British companies' oil and therefore retain their position as importers, partly because we do not wish to create unnecessary difficulties for the American oil companies, and partly because we feel that if Y.P.F., the Argentine Government-controlled oil company, were to take over the importation of oil for the American distributors in Argentina they might then be inspired to try to do the same with Shell.
6. Somewhat curiously, the Standard Oil Company of New Jersey, which is the principal American company involved in ArgPragna4 2has fdebilled against availing themselves of the opportunity that we have offered them and have
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