Big Wildcat

Oil and politics formed a high-octane mixture in Paraguay last week. The Union Oil Co. of California had begun what it called "the greatest wildcatting venture in history": the oil exploration of the entire Paraguayan Chaco, some 55,000,000 acres.

In 1943, Paraguay's President Higinio Morinigo had dined in Manhattan with a director of Union Oil. As Morinigo hoisted his food, he dropped a hint: oil gushed in the Bolivian Chaco, why not in the Paraguayan Chaco? The hint became a project. Soon three Union Oil geologists hacked their way through the Chaco brush. They reported that the region had a geological structure characteristic of oil fields.

The glad news apparently leaked. For when Union Oil began negotiations for a contract with the Paraguayan Government, it met stiff competition from British and U.S. companies, and from the Argentine Government. Finally, the company signed a complicated agreement. It would pay an annual rental, and would give Paraguay up to 15% of any oil it produced.

The contract surprised diplomats, who had long written off landlocked Paraguay as the slave of Argentine's peso-diplomacy. An oil-rich Paraguay, in partnership with a non-political U.S. company, might thumb her nose at her big and bossy neighbor down the Parana River.

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