The Pittsburgh Press (October 16, 1940)
OIL LEASE GIVEN JAPS IN MEXICO
…
Concession 425 Miles From Texas Border
…
Mexico City, Oct. 16 (UP) –
Mexico has granted to a Japanese-controlled company a huge exploratory oil land" concession on the Gulf of Mexico, 425 miles from the Texas border and 1,300 airline miles from the Atlantic entrance to the Panama Canal, and is considering the sale to Japan of 20,000 tons of scrap metals, now embargoed by the United States, it was disclosed today.
Diplomatic and foreign quarters were greatly interest in the disclosure, partly because the land is in the Gulf, from where any eventual oil would have to be sent through the Panama Canal to Japan, and partly because other foreign oil interests have explored the concession area and decided that, as regards oil, it was not promising.
Primary Interest Questioned
An American businessman commented:
I do not believe the primary interest of the concessionaires is oil.
It was made known that the Ministry of Economy had signed an agreement September 13 allowing the Veracruzana Petroleum Co. five year exploratory right to a 250,000-acre tract of state land in Veracruz between Japala, the state capital, and the Gulf Coast village of Misantla.
Japs Highest Bidders
Reliable informants reported that the great Japanese Hitsui Co. had outbid American buyers by at least $1.50 a ton for at least 20,000 tons of scrap metal owned by the government national petroleum administration.
It was pointed out that the United States had forbidden the sale of American scrap metal to Japan as a Western hemisphere defense measure and that it was unlikely such a sale by Mexico would be welcomed in the United States.
Informants replied that the deal was considered because the petroleum administration badly needed cash and might be forced to sell to Japan because of the price differential of about $36,000.
Area Once Explained
Foreign observers said that Japan’s embarkation on an uncertain oil-seeking venture was puzzling. The concession area is 60 miles south of the rich Pozarica fields, but its land was superficially explored by at least one foreign company 20 years ago and never exploited.
The Veracruzana Company was formed about five years ago. This is its first big concession, though it has drilled 15 wells in the vicinity of Tampico – also on the Gulf side. Only one well is producing, according to oil men, and it not enough oil to class it as a commercial venture. One of the Laguna Company’s biggest deals involved the sale of three million barrels of government oil to Japan.
May Extend Concession
Under its agreement the Veracruzana Company during the five years of its concession “must” completely survey and map the concession area. It has the option of extending the concession for 20 years, during which time it would have to drill two wells a year.
The government would get 5% royalty on any oil and the land owner another 5%. However, in this instance, the government is believed to own all the land outright, and so it would get 10%.