NOTE. The Mining Code of Guatemala contains no reference to oil, but the following articles of the Code are given for the effect they may have upon the subsequent decree relating to petroleum and other hydrocarbons.

ARTICLE I. The mineral substances and fossils occurring in the surface of the ground, or hidden under the soil, are in respect to the regulations governing their exploitation, classified under three heads; namely mines, clearings and quarries.

ARTICLE II. Such places are to be considered mines where veins, beds or pockets are met with containing gold, silver, platina, quicksilver, lead, iron in veins or beds, tin, manganese, copper, zinc, bismuth, cobalt, arsenic, magnesia, antimony, molybdenum, or any other metallic substances, sulphur, coal, lignite, bitumen, alum, and sulphates with metallic base.

ARTICLE III. Clearings or loose soil containing minerals, comprise, alluvial soils containing iron, or pyrites capable of being converted into sulphates of iron; earth containing slum and peat.

ARTICLE IV. Quarries comprise slate, building stone, marble, granite, limestone, gypsum, pozzuolana, basalts, lavas, chalk, marl, sand, flints, argil, kaolin, potters earth, all kinds of earthy substances, pyritic earths that are esteemed useful as fertilizers, whether worked by open cuttings or by means of underground excavations.

ARTICLE V. Mines specified in Article 2 belong exclusively to the State. There are no taxes imposed on the output of minerals in Guatemala.1

DECREE RELATING TO PETROLEUM CONCESSIONS.

DECREE NO. 722.2

Considering that the Mineral Code does not comprehend in the classifications under its articles 2, 3, and 4, the deposits and fountains of petroleum and hydrocarbons in general, and that, in consequence, it is necessary that a law be decreed regarding the acquisition and exploitation of such deposits.

1 Consul. Rep. August 30, 1919; Survey file 595.

2 Consular Report, July 23, 1919. Decree itself made up from translation accompanying report and translation from New York.

DECREE.

Article 1: The nation reserves to itself the absolute ownership of all deposits and fountains of petroleum and hydrocarbons in general, that exist in the subsoils of the territories of the Republic.

Article 2: The acquisition of said deposits can be effected solely by means of a lease, that may not exceed ten years in duration, made with the Secretary of Public Works, and submitted for the approval of the President. These contracts can be entered into only with native born or naturalized citizens.

Article 3: The above mentioned contracts will not be transferrable, save by express authority of the Government, and then only when all the parties are citizens of Guatemala.

Article 4: Special regulations shall detail all the requisites and conditions under which said contracts may be drawn, and the present decree will be understood to be an integral part of the Mineral Code, and same will be ratified at the coming ordinary session of the National Legislative Body.

Given in the Palace of the President in Guatemala City, the tenth day of December, 1915; approved by the National Legislative Assembly, April 29, 1916, Decree 945.

HONDURAS.

PETROLEUM CONTRACT.

PETROLEUM CONTRACT.

NOTE: No petroleum laws have been received for Honduras. A Congressional enactment in the way of an approval of a concession, in the form of a contract for the purpose of operating for petroleum and other hydrocarbons was enacted on April 3, 1919, and is as follows:

THE NATIONAL CONGRESS DECREES:

ARTICLE 1.

To approve the agreement which reads as follows:

TEGUCIGALPA, April 3, 1919.

The President of the Republic AGREES: FIRST, To approve in all its parts the Contract which reads: "J. Roman Ramos Valdes, chief of the Department of the Interior, Public Works and Agriculture, in the name of the Government of the Republic of Honduras, which hereinafter will be called the Government, Party of the First Part: and * * * physician and resident of Catacamas, Department of Olancho, in his own name and as a representative of the Senores ** * * and others, Parties of the Second Part, who hereinafter will be called the CONCESSIONAIRES, have agreed to execute and hereby DO EXECUTE the following Contract: FIRST, The Government grants to the CONCESSIONAIRES the right to DRILL and DIG in the lands of any ownership whatsoever, in the Department of Tegucigalpa, Olancho, Chuluteca, Valle, El Paraiso and the territory of Mosquitia, of this Republic, for the purpose of seeking PETROLEUM, MINERAL CARBON, NAPHTHA and OTHER HYDROCARBONS which may exist in the interior of the earth, a right which they will exercise in conformity with the rules established by PART II of the MINING CODE. If the CONCESSIONAIRES should discover any of the substances specified in the preceding paragraph, they will have from that moment the exclusive right to EXTRACT, EXPLOIT, BENEFIT and EXPORT all those which may be found within a zone of ONE THOUSAND SIX HUNDRED hectares for EACH DISCOVERY, the zones to be measured in the form that the CONCESSIONAIRES may indicate, on condition that the well through which the discovery was made be contained in the zone to which it properly belongs; and they will enjoy all the rights and privileges which the laws concede to miners. It will NOT BE CONSIDERED A DISCOVERY if there merely be found on the surface of the land seepages or geological formations which may serve as an indication for believing that there exists petroleum in some part of the interior more or less near to the spot on which the seepages or formations are found. A DISCOVERY will be understood to have been made ONLY when they (CONCESSIONAIRES) SHALL have succeeded in making the petroleum, carbon or other hydrocarbons FLOW to the surface of the land, whether they surge out spontaneously thru the wells drilled by the CONCESSIONAIRES or whether they be extracted thru said wells (per

forations) by means of any mechanical device (or procedure). Once the CONCESSIONAIRES have made a discovery they must make it known to the Government, by means of writing to the SECRETARY of the INTERIOR in which (writing) they will give the special and characteristic (identifying) signs (of location) of the spot where the well, thru which they have found the petroleum, carbon or other hydrocarbon, is located; the extension (size) of the zone which they desire to take within the limits permitted by this contract and the courses (directions or routes) toward which it is to be laid out (surveyed). The CONCESSIONAIRES will be permitted to line out, provisionally, their zone. The Executive Power (President) (after having received the petition) after verifying, by means which he may believe best and without loss of time, the fact of the discovery, will name a surveyor, in order that he (the surveyor) may, at the expense of the CONCESSIONAIRES, make the survey of the zone within six months from the time of his appointment. As soon as the survey is approved, there will be delivered to the CONCESSIONAIRES a certified copy of all the acts (decrees) from the (time of) the application, in order that it may serve them as a Title of Right.

SECOND: The CONCESSIONAIRES may introduce, free of all duties and fiscal imposts now established or which may in the future be established, with the exception of the road tax, the machinery, tools, implements and goods of all classes necessary for the exploitation in question. Each time that they have to make a petition (request) the CONCESSIONAIRES will present previously to the Secretary of the Interior a general itemized list of the articles which they have to introduce, specifying in said list the number quantity and quality of the goods. The Secretary of the Interior will make examination and classification and will determine if said effects are appropriate to that object (work) in conformity with this contract, and in that case will fix the quantity which the CONCESSIONAIRES may import free of duty. This resolution (of the Secretary of the Interior) will be communicated to the Secretary of Hacienda in order that in his turn he may transmit the orders to the Custom Houses thru which the goods are to be introduced; it being understood that without the presentation of this list the Secretary of the Interior will not approve any introduction of goods. The goods which are brought in must be for the exclusive use of the enterprise (company) and if they be for or apply to other uses all or any of them, the Secretary of Hacienda will demand the restitution of the duties thereon, without prejudice (damage) of (or) deducting from the CONCESSIONAIRES the corresponding responsibilities, in conformity with the laws of the country.

THIRD: The CONCESSIONAIRES may use freely the national and common lands which may be in the departments mentioned, in all the area necessary for the easy (comfortable) exploitation of the enterprise, as fast as the development of the works demand, for the establishment of corrals, machines of extraction and profit; for workshops, living houses, transport roads for the local service of the different works which may be established and pasturage for the animals which may be necessary for the exploitation. In this case as well as in the case of the national and common lands to which Article 40 refers, the CONCESSIONAIRES will pay in advance the value of the betterments which may be on them, at a just valuation of experts named according to law. Also the CONCESSIONAIRES are empowered to make free use of the timbers which may be on said national and common lands and which may be necessary for the exploitation of the enterprise, excepting the precious woods and useful trees which may be found within the borders of each zone, for the use of these must be controlled by the Decree No. 62 of March 4, 1909 and by the regulations on it (their use) which in the future the Executive Power or the respective

municipalities, with the approbation of the former (Executive Power), may demand.

FOURTH: If the CONCESSIONAIRES should deem it suitable to place a pipe line for transporting the liquid products of their development (enterprise) from the points of extraction to any others, they will have the right to make free use for that purpose of a strip of national and common lands of two meters in width between said points, and of making use also of a strip of the same width over privately owned lands which may be in the (path of) transit, previous arrangement with the respective owners (being made) and on failure to do this, by means of legal expropriation since for this work the pipe line shall be considered as a work of necessity and public utility. The case having arisen of making use of the right which is granted them in the paragraph which precedes this article, the CONCESSIONAIRES will designate the national and common lands which they may need and the Executive Power will order them to be surveyed by one or more surveyors of his appointing and to be paid by the CONCESSIONAIRES. The Government will extend to these (latter) after the corresponding (proper) (legal) steps have been taken, a copy of the respective formalities in order that it may serve them as Title of their Right. If it should be necessary to establish the employees mentioned here upon lands of private ownership in accordance with the disposition of said first paragraph of this article, the CONCESSIONAIRES may stop all planting or new work on the strip under consideration and will have right to send their workers and inspectors upon it to clean and repair the pipe line and to care for its preservation. The pipe line which may have to cross navigable rivers will be placed in such a manner that it in no way will interfere with navigation.

FIFTH: The enterprise, as well as the sale and exportation of the substances which are exploited, will (may) not be burdened with taxes and fiscal tributes, and the employees and operatives of the same will be exempt from all military service, parades and doctrinal exercises, provided that they have served their time in Garrison duty, once at least in conformity with the organic law of the Military (branch of Government).

SIXTH: The CONCESSIONAIRES obligate themselves to have completed at least 2000 metres of well (drilling) within two years counting from the date on which the Congress (National) approves the present contract.

SEVENTH: The CONCESSIONAIRES cede to the Government TEN PERCENT of the gross product of crude petroleum or other hydrocarbons which they may extract, which will be delivered at the point where it may be produced. When the CONCESSIONAIRES shall have established pipelines for the transportation of said petroleum to the coast of the Republic, the Government will have the option to receive its part, free of expense of transportation, at the point where the pipe line may end, or its value in money as fast as the cash is realized. For this result the Government may dictate the means which it considers fitting to assure its just rights.

EIGHTH: The CONCESSIONAIRES will have the right of preference to denounce and acquire, according to the Mining Laws, the minerals which they may discover, upon opening the wells for the exploitation of petroleum, a preference which will endure SIXTY days counting from the day following that on which the discovery is made.

NINTH: The present contract will have a life of TWENTY FIVE Years counting from the date on which it be approved by the National Congress. TENTH: The CONCESSIONAIRES may transfer the rights and obligations which are born with this contract to any person or company, native or judicial, with the previous approval of the Government, and in no case to governments or corporations of (operating under) foreign public laws.