Papers Relating to the Foreign Relations of the United States, 1919, Volume I

821.6363/51

The Minister in Colombia (Philip) to the Acting Secretary of State

Bogotá, June 28, 1919.
[Received July 21.]

No. 95

Sir: With reference to the Department’s unnumbered instruction of the 14th ultimo,⁴⁴ relative to the contemplated exploring expedition of the Richmond Levering Company,⁴⁵ and to my cable message No. 90 of June 26:11 a.m.,⁴⁴ I have the honor to transmit herewith copy and translation of a Presidential Decree, dated the 20th instant, which is framed to regulate the exploration of petroleum bearing lands in Colombia and to provide for the compilation of official statistics bearing upon the development of such lands.

As reported to the Department in the above cable message, this Decree makes an important affirmation to the effect that the sub-soil mining rights to all petroleum bearing lands in Colombia are vested in the Government only. This statement would appear to settle a question as to the relative claims of the Government and of private concessionists which has been a subject of controversy for many years past.

Prior to the above Decree, the attitude of the Government in this matter has not been very clear. It has been thought to incline to the right of governmental ownership of all sub-soil mining rights (including petroleum) and, though opinion does not seem to have been certain as to the stand to be taken, to base its attitude upon the following precedents: (1) That by virtue of Spanish laws, and especially the laws of the Indies, the ownership of the sub-soil and consequently the mines therein belonged, during the Colonial period, to the Spanish Crown, whose rights subsequently passed to the Republic when independence was gained. (2) The Decree of Simon Bolivar (the “Liberator”), dated October 24, 1829, which stated in part: “Mines of every class belong to the Republic which grants title of ownership to citizens who solicit them under certain conditions defined in the laws and ordinances on mines.” (3) Law 106 of 1873 which states that: “Coal, iron and petroleum mines, etc. discovered or which may be discovered in unappropriated lands and in those which may have been adjudicated after October 23, 1874, are the fiscal property of the State.” (4) Law 30 of 1903, which was formulated in order to clarify the question of oil rights, and which contains the following clause: “The dispositions of the Fiscal Code referring to coal mines will apply also to those of petroleum or mineral oil of any grade or class, natural gas, and to any other products of the same or analogous nature.” (5) Report submitted to Minister of Public Works by the Council of State July 23, 1918, which sets forth the following conclusions:

1. That the reserve of all classes of mines in favor of the Republic dates from the year 1829, by reason of the Decree of October 24th, signed at Quito by the Liberator, Simon Bolivar.

2. That Article 1126,⁴⁷ in agreement with article[s] 1116 and 1117 of the Fiscal Code of 1874, decreed the same reserve of all mines not expressly classified by the law, and which might be found in unappropriated lands, or which by some other title might belong to the Nation.

3. That Law 30 of 1903 defined with respect to mines of petroleum, asphalt, natural gas and other hydrocarburate products what was indefinite in Article 1126 of the Fiscal Code then in force.

I beg here to mention that I am indebted for the above data and translations to the report of Captain J. P. W. Crawford, Military Attaché, No. 50 of March 27th last to the War Department.

The final decision of the Colombian Government as to this matter of its claim to sub-soil rights to all petroleum bearing lands is of great moment to a number of American interests (notably the Tropical Oil Company), and owing to the fact that the question has been submitted to the Colombian Congress during the last two sessions without a decision having been arrived at, it has been the cause of great uncertainty and anxiety to those interested.

I understand that the representatives of American oil interests which have acquired extensive tracts of oil lands from private owners, claim concessions based upon their absolute ownership of mining rights to such lands, the titles to which are dated prior to October 23, 1874 (see above (3) Law 106 of 1873). They also argue that the Bolivar Decree of 1829 made no mention of petroleum etc.

Presumably this question will be presented for final settlement to the next Congress, at which time it is probable that legislation will be enacted to fix the percentage of tax to be levied by the Government upon oil production by concessionaires etc.

I beg here to mention that Dr. Suarez has assured me that the Government only seeks to arrive at a just and fair basis of taxation.

It remains to be seen whether the Colombian Government with its extravagant idea of the value of the petroleum deposits in the country, will carry out this intention and thus avoid discouraging interests which would prove of great benefit in developing its resources.

I have [etc.]

Hoffman Philip

[Enclosure—Translation]

Executive Decree No. 1255 lis, June 20, 1919, Regulating the Exploration of Petroleum Lands

The President of the Republic

in use of the prerogative conferred upon him by clause No. 3 of Article 120 of the Constitution, and

Considering

1. That by decree of the Liberator, signed in Quito the 24th of October, 1829, it was declared that all kinds of mining properties existing in the territory of the Republic belong to the latter in fee simple, as has been so recognized by the Council of State in an opinion rendered July 24, 1918;

2. That Article 1126 of the National Fiscal Code of 1873 is to the same effect as the above mentioned Decree of 1829;

3. That the National Constitution of 1886, in incision [paragraph] No. 1 of Article 202, says also that the properties which formerly belonged to the Colombian Union now belong to the Republic;

4. That Law 38 of 1887, by which the Mining Code of the formerly sovereign State of Antioquia was adopted, ordained in Article 5 that, whenever the mining property belonged to the owner of the soil, up to September 7, 1886, in which year the Constitution took effect, each owner would have for a period of one year, counting from the date of said law, a preferential right to seek, examine and file claim to the mining properties of his hereditament and that at the end of the year the mining properties remaining in those hereditaments can be filed upon by any one, as is the case with all other properties of like nature, in conformity with the law, with the limitations therein established and those established in former laws;

5. That the Government has knowledge that exploration parties, as much national as foreign, are making plans for the exploration of petroleum deposits, commencing with that end in view some preliminary works of exploration, and even engaging in works of prospecting, sounding and perforation, which they still carry forward without having advised the Government, which is interested in knowing the result of those studies, the zone in which they are conducted, the nationality of the explorers and the result of the investigation;

6. That in conformity with the stipulations of Law 63 of 1914 relative to national statistics (Article 5), all the industrial undertakings or establishments of individuals or companies resident or domiciled in the Republic are obliged to render to the Government the data of general interest in regard to these industries which may be called for;

7. That by Decree No. 1320, of November 28, 1914, the Executive Power decided that statistics in regard to mining properties should be compiled, and determined the manner in which this should be done;

8. That the petroleum industry presents for the country the most alluring prospects, and that considering, moreover, its nature and the special circumstances under which it is customarily developed, it is important for the Government, as the representative of the rights and interests of the Nation, to be informed as to the progressive development of that industry, the petroleum zones that may be discovered and in which works of greater or less magnitude may have been commenced,

Decrees:

• Article 1. In order to carry on explorations of any kind and on any scale, in lands that may be or may not be the property of the Nation, in search or in a localization of sources or deposits of petroleum, a permit from the Government must first be obtained.
• Article 2. All undertakings of individuals or companies, which are occupied definitely or transitorily, and in any section, in making studies of petroleum properties, such as prospectings, soundings and perforations, on any scale, will be required to comply with the following obligations:

  a) To advise the Government, through the Ministry of Public Works, as to the works that are being initiated, and if they have already been initiated, to report on the result of the explorations, indicating the number of soundings or perforations made, the profundity of the wells and the results obtained.

  b) They will also be required to remit to the Ministry of Public Works, accompanied by their report and duly authenticated, labeled samples of the petroleum which they have extracted, and a topographical sketch of the zone or region explored.

  c) If the explorations were effected on private property, this circumstance should be so stated and, moreover, the original title to such lands should be indicated and stating whether they were at any time unappropriated and, if so, the date of their cession by the Government.

• Article 3. The permit for exploring petroleum properties, referred to in Article 1, will be granted by the Ministry of Public Works whenever deemed convenient by it; and the granting of this permit, or the fact that explorations have been made, will not be construed as involving a license, or expectation of a license, on the part of those who have carried on the work.
• Article 4. The explorers who, to the satisfaction of the Government, verify the exploration of the zone which may be conceded to them, complying with all the conditions imposed by said permit, will have, dating from the expiration of said permit, a period of six months for proposing to the Government a contract for making exploitations in accordance with the laws relating to this matter.
• Article 5. The permit to which Article 3 refers will be granted under the following conditions, besides any others which, in each case, may be judged necessary:

  1a. The period of the permit will be for one year, without renewal rights, commencing with the date of its issue.

  2a. The extension of the zones of exploration will be limited, in each case, according to the circumstances of the region in which they are located, such as their easy or difficult access and penetration, their proximity to the coasts or their situation in deserted territories, or in lands more or less explored from the point of view of petroleum resources. The extension will be from 10,000 to 30,000 hectares, which the Ministry will graduate in accordance with the importance of the region and express circumstances, reducing or amplifying said extension according to the greater or less facilities for exploration and the probabilities of good results, respectively.

  3a. Only the party to whom the permit has been granted can explore the zone comprehended by it. The permit cannot be transferred, in any manner, to another natural or juridical person.

  4a. The concessionaire will make a monthly report to the Government on the state and progress of the exploration.

  5a. He will also report immediately on the discovery of outcrop-pings or sources of petroleum.

  6a. When excavations, drillings or perforations are made on any scale and they do not furnish petroleum in commercial quantities, they will be duly plugged.

• Article 6. The explorer or explorers of petroleum properties will present to the Mayor of the town where the exploration is being carried on the permit granted by the Government.
• Article 7. Whenever explorers of mining properties present themselves the Mayor will require of them the turning over of the permit, without which the exploration will not be permitted.
• Article 8. The Prefects and Mayors will report to the Ministry of Public Works, through the respective department of the Government, as to the works of exploration and exploitation of petroleum lands which are being carried on within their jurisdiction and will also state as to the permits which have been presented to them.
• Article 9. The Governors, Prefects, Mayors and Notaries throughout all the Republic will also proceed to advise the Government, in the briefest time possible, as to the negotiations which, in the territories of their jurisdiction, have been effected for the exploration, exploitation, rent or sale of petroleum lands, whoever may be the owner of the soil.
• Article 10. The Government will be able, whenever it deems advisable, to verify the data which has been furnished it relative to the exploration and exploitation of petroleum properties by means of the Geological Commission, created under Law 83 of 1916, or by any other means it may consider convenient.
• Article 11. The obligation imposed by Decree 1320 of 1914 of compiling statistics in regard to gold, silver and platinum mines is extended to petroleum properties.
• Article 12. The new labors which may be involved under this Decree will fall to the lot of the National Department of Mines of the Ministry of Public Works, which will undergo a reorganization, if required by circumstances.

Let it be communicated and published.

Given in Bogotá, the 20th of June, 1919.

Marco Fidel Suarez

The Minister of Public Works,

Carmelo Arango

44. Not printed.
45. Of New York City.
44. Not printed.
47. Of the Fiscal Code of 1873.