Killing the Sacred Cow

President Arturo Frondizi sat in a gilded chair in the Casa Rosada one evening las,t week and nervously slaughtered one of the oldest sacred cows in Argentine political life. He reported that he had abandoned Argentina's long-revered nationalistic policy of going it entirely alone in oil development. He had closed or was about to close nearly $1 billion worth of contracts with foreign oil companies.

Frondizi first outlined the present gloomy situation, in which Y.P.F., the government oil monopoly, produces only 35% of the country's annual needs. Although reserves are estimated at 2.3 billion bbl., Argentina is forced to import about $300 million worth of petroleum products a year--a sum roughly equal to the 1957 trade deficit. The President then listed the precedent-shattering development arrangements with foreign companies. The main deals:

P: A preliminary agreement with a combine including the U.S.'s Atlas Corp. (Floyd Odium), Atlas subsidiaries and affiliates, and pipeline contractors Williams Bros. (U.S.) and Ferrostahl A.G. (Germany). The combine will invest $240 million in drilling as many as 4,000 wells in the Comodoro Rivadavia field in Patagonia, $240 million for casing and maintenance of the wells, $5,000,000 in a factory to make meters and pumps.

P: A signed contract with Pan American International Oil Co. (Standard Oil of Indiana). Pan American will invest $60 million in a 1,540-sq. mi. section of Santa Cruz and Chubut Provinces. For the first five years Pan American will get $10 for each cubic meter of oil it produces for Y.P.F., then the price will gradually be adjusted to match prevailing world prices.

P: A letter of intent from Conorada Petroleum Corp. (Continental Oil Co., Ohio Oil Co., Amerada Petroleum Corp.) to invest $100 million in much the same way as Pan American.

P: A signed contract with Carl M. Loeb, Rhoades & Co. (New York bankers) for investment of at least $100 million in an area still to be chosen.

P: A letter of intent from a combine of Durum A.G. (Zurich) and Texas Oil Magnate John W. Mecom for the exploration, exploitation and transportation of oil both on dry land and underwater.

"Furthermore," added the President, "this very evening, two hours ago, the Soviet ambassador brought me an offer from his government to sell Argentina $100 million worth of equipment, taking raw materials as payment."

Outside, as Frondizi finished, Buenos Aires police were tensed for street riots. But the expected demonstrations never began. "Apparently," said one pleased Argentine banker, "the Argentine people show a lot more sense than many of their leaders."

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