Evening star., 1940-05-04
Sinclair Settlement
Fails 10 Halt Rift
Over Mexican Oil
Arbitration Proposal
Is Believed Rejected
In Reply to Hull
BY GARNETT d. HORNER.

ny uANNE L ~. I1OnNEns
The sharp diplomatic controversy
between the United States and
Mexico over Mexican appropriation
of American-owned oil lands will
continue despite reported private
settlement of Sinclair Oil Co. claims,
1t was believed here today.
An agreement between Sinclair
and the Mexican government, rep
resenting a break in the united
front" of oil companies whose lands
were taken over by Mexico more
than two years ago, was reported by
reliable sources in Mexico City, New
York and Washington.
Lacking official confirmation, the
agreement was reported to give SIM
clair in cash and trade bounties
over a period of years it's full in
vestment in Mexican oil properties.
estimated at approximately $l6,-
900 900.
Huge Claims Still Disputed.
Still IN dispute are the claims of
the Standard Oil Cos. of New JERSEY
and California, amounting to nearly
5000 600, 900, and British holdings
estimated at around $3.50 900 900.
The United States Government
has urged Mexico to agree to in
ternational arbitration of the Amer
lcan claims by tribunal with
power to enforce prompt and ade-
quate compensation for the expro-
prlated properties. 1t is expected
to continue demands on behalf of
the companies not affected by the
reported settlement.
reports OF the Sinclair agree
ment reached Washington while
the Mexican governments reply to
Secretary of State Hull's recent
note requesting arbitration was
being translated at the State De-
partment for publication tomorrow
morning. 1t is understood that
Mexico rejects the arbitration pro-
posal, contending that the oil dis
pute is entirely a domestic matter.
Meanwhile Jesus Silva Herzog.
general manager of the Mexican
Petroleum Distribution Agency, an
nounced here the conclusion of con-
tracts with three United States
companies for sale of Mexican oil
products, aggregating $4,000, 900.
over a period of four or five years.
He said one Of the contracts was
with the National Oil Corp. of New
York City, but declined to name
the other two.
Major oil companies previously
had refused to handle petroleum
products from Mexico, believing that
refusal OF a market for oil from the
appropriated lands might help in
duce the Mexican government to
make what the affected concerns
considered a fair settlement. They
have contended Mexican offers of
compensation were insufficient.
Mexico Wins Round.
The announced contracts for sale
OF Mexican oil and the reported set
tlement with Sinclair appareatly
mean that Mexico has won a round
in the long controversy, Latin Amer
ican diplomats here pointed out.
From New York it was reported
that Mexico had agreed to pay the
Consolidated Oil Co. uhe Sinclair
company at1ected) $1,000 900 in cash
over a period Of three years and
deliver 100000 barrels OF oil dur
ing the next six years at a price
low enough to insure the Sinclair
interests an extra profit Of 81 7,OOO, 900
Acting Secretary of State Summer
Welles said at his press conference
today that he had not been informed
OF the reported agreement, and
therefore could not comment on
what this Governments attitude
might be toward it. He said there
would be official concern over sale
of Mexican oil here If it came from
properties taken from American
owners without compensation.
1t also was reported in Mexico
City that the Mexican government
was negotiating for the sale OF
$4,000 worth of fuel oil to the
Petroleum Heat & Power Co. OF
New York, but this was denied in
New York by w. c. McTarnahan
president of the company, accord
ing to the Associated Press