HUNGARIAN OIL COMPANIES DISAGREE

Grey River Argus, 15 November 1948, Page 8

HUNGARIAN OIL COMPANIES DISAGREE

[From Peter Furst, Reuters Correspondent] BUDAPEST. (By Airmail). The arrest of two American directors of Maort, the Hungarian-Ameri-can oil company, a standard oil subsidiary, has .brought to a head the whole problem of Hungarian oil production and the relations between the American concern and a new So-viet-Hungarian company, Maszovol. The two American, Paul Ruedcmann and George Bannantine, were arrested bj’ Hungarian police on September IS on charges of having, with “political motives,” sabotaged Hungarian oil production by forcing production down “at the order of the Standard Oil Company of New Jersey,” owners of Maort. Ruedemann, son of a well-known German-American geologist and paleontologist, Dr. Rudolf Ruedemann, was also charged in an official communique with having been an “outspoken Nazi sympathiser” when he was here as Standard Oil official before the war. Ruedemann, himself a geologist by profession, is President of Maort, and Bannantine a member of its board of The two Americans are among a group of Maort officials and engineers indicted on the same charges, and their detention is threatening to evolve into another serious international dispute between the United States Government and an Eastern European country, particularly since the question of nationalisation of the oil company may be evolved. The Hungaran Government has already appointed a State manager to administer Maort affairs. Behind the arrests is an interesting set of official (U.S.) figures which, incidentally, confirm that Hungarian oil production has been on the decline since the Germans left and post-war rivalry began between the two companies now producing oil here—one 100 per cent. American and the other partially Hungarian and partially Soviet. While admitting that Maort has, in fact, slowed down oil production, the American officials here sharply disagree with the Hungarian charge that this slow-down was due to “political considerations.” The American Legation states flatly that the reason for the slow-down was, on the contrary, the conviction that oil production previously had been unnaturally high and that unless it was cut down sharply, the fields would soon be useless without extensive pumping operations. Of the two rival oil companies, Moart is by far the largest producer. No figures are available for the Maszovol concern, but it is believed that the latter is largely concerned at present with exploring new fields and setting up new wells in various parts of Hungary for future largescale production. Maori’s production figures, as supplied by an economic report of the U.S. Legation here are as follows:—l943, 838,000 tons; 1944, 809,969 tons; 1945, 655,567 tons; 1946, 675,919 tons; 1947, 570,584 tons. Although the 1947 figure is more than 100,000 tons below* that of 1946 and almost 300,000 tons lower than in 1943, Maort officials still felt production to be too high for* the good of the fields, states the Legation’s report. “Maort,” it says, has cinsistently tried to reduce production to a rate of 480,000 tons a year, because much of the oil which would otherwise have been forced to the surface by natural gas pressure could not be recovered, or only recovered by means of extensive pumping operations. The Hungarian Government, on the other hand, alleges that the reasons for the slow-down were “purely political” and an official communique even alleged that some of those arrested “admitted” that they had "politically motivated” orders from the Standard Oil Company to cut down Hungarys oil production. Some Hungarian sources also state that whether or not high production would actually endanger natural gas pressure and necessitate pumping operations is not important —the vital matter to-day is higher oil production, both for home consumption and for export. , . The Hungarians have also claimed in an official communique that Reudemann made “ not attempt to cut down Maort’s ‘unnaturally high’ oil production when Hungary declared war on the United States and he was forced to leave the country.” Instead allege the Hungarians, Ruedemann appointed pro-Nazi directors and left instructions with them to work smoothly with the Deutsche-Ameri-kanische Petroleum Gesellschaft of Hamburg. Under its contract with Maort, the Hungarian Government has held sole rights of distribution and has also received a royalty of 12 per cent, on all crude oil production. The arrests and charges now bring up the whole question of the future of this, foreign-owned concern in a country which has steadily been nationalising all home-owned industries but has so far not taken over foreign-held interests. Crude oil produced by Maort has been refined here by several refineries, two of w’hich are Western-owned and one of which is a joint Hungarian-Soviet concern. The two Western companies are British Shell and American Vacuum. The Hungarian-Soviet Refinery is known as Molaj and a fourth, Peti Nitrogen is Hungarian . Stateowned. Before nationalisation earlier this year, there were also four pri-vately-owned refineries which account for 17 per cent, of production.