543. Memorandum From the President’s Special Assistant (Rostow) to President
Johnson1
Washington, July 28, 1967.
Mr. President:
Venezuelan Ambassador Tejera-Paris called me yesterday to ask for an
appointment with you to deliver a letter from President Leoni. He said he was under
instructions to deliver it to you and make some oral remarks. I gave him
no encouragement but did not close the door. An advanced copy of the
English translation is at Tab A.2
What Leoni wants is revision of
our Mandatory Oil Import Program (MOIP)
to put Venezuela on a par with Canada and Mexico and permit higher
imports of Venezuelan oil. He looks upon increased demand on Venezuelan
production resulting from the Middle East crisis as further
justification for this request.
We are not in a position to do what Leoni wants on the MOIP. You told him this at the Summit when you outlined the
steps you were prepared to take:
- —talks with Canada to restrict their deliveries.
- —additional imports of asphalt.
- —assistance in desulphurization technology.
[Page 1131]
We are moving forward on all three of these commitments as described in
the report at Tab B. Tony Solomon tells us that Stu Udall has not moved faster toward
carrying out the pledge on asphalt because of opposition of his staff
and Congressman Mahon.3
Because you can’t oblige Leoni on
what he is after, it is inadvisable for you to receive Tejera-Paris.
Were you to see him, it would become known and expectations in Venezuela
aroused. The government might even encourage such hopes. The resulting
let-down of an unforthcoming reply would then be increased. Covey Oliver and Tony Solomon agree
with this assessment.
I recommend that I tell Tejera-Paris that I have consulted you on an
appointment and because of the pressure of business you asked that I
receive him on your behalf.
You want to receive him
I should receive him4
Speak to me
Tab B
Memorandum From the Director of the Office of
North Coast Affairs (Hill) to William G.
Bowdler of the National Security Council
Staff
Washington, July 27, 1967.
SUBJECT
- Venezuelan Petroleum Problems
In the course of the President’s April 11 conversation with President
Leoni at Punta del Este a
number of commitments to actions were made by the President within
the overall context of our desire to help Venezuela as much as
possible by using more oil from Venezuela. These undertakings, and
the current status of the related U.S. actions, are summarized
hereunder:
[Page 1132]
1. To initiate talks with Canada to see whether or not we can get
Canada to reduce its share in the growth rate of the United States
market (thereby giving Venezuela an opportunity to share in such
growth).
Action taken:
A series of meetings has been held with Canada, the most recent being
to present a U.S. revision of an informal Canadian proposal. This
latest U.S. revision was presented by Assistant Secretary Solomon to Canadian Ambassador
Ritchie on July 26. We feel that our position and degree of
flexibility is fully outlined to the Canadians. At the moment we are
not able to anticipate their willingness to agree to voluntary
limitations of exports at a suitable level. We must await their
response.
The Canadians have been insistent in their desire to expand petroleum
exports to the U.S., and the most that we can expect by limiting the
Canadians is only a small increase in offshore imports rather than
the decline which would otherwise occur. The Venezuelans, while
understanding our strong efforts to keep the Canadians from forcing
a cutback in imports from overseas, will not get significantly more
imports as a result of our negotiations with Canada.
2. The President indicated that he had just signed an important
proclamation relating to U.S. imports of asphalt, enabling the
Secretary of Interior to certify to the need of additional imports
thereof outside the MOIP. The
President indicated that the U.S. would like to increase its
purchase of asphalt and that the matter would be kept under
continuing review.
Action taken:
Following issuance of the proclamation, the Office of Emergency
Planning has progressed with a detailed study of the U.S. asphalt
requirements. Interior has under consideration implementation of the
asphalt authority, and is awaiting the recommendations of the OEP study.
3. An undertaking to “see what we could do to get the sulphur out of
Venezuelan oil”.
Action taken:
- a.
- The White House has established a Committee to coordinate
technical economic research on the impact of air pollution
problems under the chairmanship of HEW and CEA.
- b.
-
HEW to make available $2.7
million from FY 1968
contingency funds for research, including desulphurization.
Findings as developed will be made available to Venezuela.
President Leoni
recently called
[Page 1133]
the attention of Ambassador Linowitz to the latter understanding,
indicating that he was awaiting news.5
- c.
- Although not specifically discussed at Punta del Este,
residual fuel oil was redefined by a Presidential
Proclamation issued July 17 to include #4 fuel oil as a step
toward air pollution abatement.6 The redefinition had
been supported by the GOV.
This redefinition, which has been welcomed by the GOV, could allow Venezuela to
maintain substantially the same level of earnings it has
been receiving by supplying the great bulk of imported
residual and thus offset the potential loss caused by the
fact that the residual Venezuela has been supplying can no
longer be sold under anti-pollution regulations. It will
not, however, result in the use of more oil by the U.S.
Moreover, the GOV, in a
statement welcoming this U.S. action, has expressed serious
concern with regard to a discretionary provision of the
Proclamation which gives the Secretary of the Interior
authority to reimburse with import allocations U.S. refiners
who produce low sulphur residual. Venezuela fears this could
redound to the benefit of non-Venezuelan crudes. Interior
has told Venezuelan representatives that the implementation
of this authority would provide the mechanism for utilizing
traditional Western Hemisphere, low gravity, high sulphur
crude to produce the required low sulphur residual. Interior
is preparing regulations which will be open to public
comment prior to implementation.
4. Passing mention was also made by the President to an increase of
refining capacity in Puerto Rico, where Venezuelan oil is used.
Action taken:
Import applications for supplies to these refineries are still under
study by Interior.
5. The President was categoric in asserting to President Leoni that 1 to 3 above was just
about all he could do at this time. A more fundamental revision of
the MOIP to remove “discrimination”
in favor of overland imports by extending equal treatment to
Venezuela remains a major Venezuelan aspiration. President Leoni in a conversation with
Ambassador Linowitz on June
26 asserted that the Middle East crisis had shown the vital
importance of Venezuela’s oil resources to the United States and
hoped this would be taken into account in the continuing discussions
and negotiations between Venezuela and the U.S. regarding petroleum.
The Venezuelan Ambassador has inquired at the Department of State
about the possibility of revising the MOIP in
[Page 1134]
Venezuela’s favor (he was given discouragement) and the Venezuelan
press has also played up this theme. Venezuela has increased
production by 300,000 barrels a day (about 9%) and President
Leoni has stated that
increases beyond that amount must be covered by long-term contract.
Venezuela has no intention of increasing production on a crash basis
only to find itself in economic difficulties after the crisis ends,
as in 1956. President Leoni
has used the current crisis to point out that Venezuelan production
is just as strategically important to the U.S. as that of Canada and
Mexico. We can therefore expect greatly increased pressure from
Venezuela as and when the current crisis subsides, precisely at a
time when domestic producers will also be resisting cutbacks.7
