Big deals are always on the luncheon menu for Armand Hammer
New York — In the hushed, dark-paneled dining room of the Lotus Club in Manhattan, Armand Hammer had breakfast at the end of August with Mexico's finance minister, Jesus Silva Herzog. Dr. Hammer suggested a multibillion-dollar deal in which his Occidental Petroleum Company would buy Mexican oil, supplying debt-heavy Mexico with needed cash. He also talked about an idea for buying Mexican-made goods for a retail chain in which Occidental owns a large interest - a plan that he said would help provide jobs in a country where unemployment runs to an estimated 40 percent despite an improving economic picture.
Having launched those proposals, Hammer prepared to visit Richard Nixon for the first time since the latter left office - to hand-deliver an invitation from China's Premier Zhao Ziyang for another Nixon visit to Peking.
Between these events, Hammer lunched with this correspondent at his Lotus table and talked about: world leaders he has known; the future of world resources (plentiful); capitalism in the communist world (growing around the edges, but carefully controlled); summit conferences (needed); nuclear war (unlikely); a natural-gas pinch in the winter of 1985 (likely); and a rosy forecast for enough United States shale-oil production ''to protect us for 100 years.''
Because he has roved the globe for six decades making deals in grains, oil, Romanov art, coal, chemicals, fertilizer, beef, films, and other commodities, Hammer is deeply conscious of that fundamental earthling question: How are the planet's resources holding out?
His answer is a crisp estimate that the world's undeveloped mineral and food resources are ''tremendous.'' As for running out of fuel and food, he argues that ''we're a long way from it. We haven't even tapped the ocean yet'' in any major way.
He suggests, furthermore, that if the great powers can dampen their quarrels, the industrialized nations can cooperate with the third-world countries to develop those resources, increase trade, and provide more employment, food, and housing.
That may not be a profoundly new thought. But he says we are in danger of losing sight of it as we worry over glut-to-shortage cycles and ideological warfare.
And he feels that the capitalist incentive system is the way such resource and trade development, for the most part, will take place. He points out that capitalist competition and incentives are increasingly being tried in the two Soviet-bloc countries whose economies have made the most progress - Bulgaria and Hungary. And he is convinced that Chairman Deng Xiaoping and his designated successors in China are intent on expanding such competition and incentives in the world's most massive communist economy.
Not surprisingly, Hammer knows personally China's Deng, Bulgaria's Todor Zhivkov (''I went hunting with him last trip and bagged the only stag''), and Hungary's Janos Kadar. And he has made trade deals with all three of their nations.
(He delights in telling about his first meeting with Deng on the latter's trip to the US during the Carter administration. Zbigniew Brzezinski, Carter's national-security adviser, had assiduously kept Hammer away from Deng in Washington, fearing that Hammer's long connection with Soviet leaders would irritate the Russophobic Chinese. But in Houston, Hammer was squeezed into a reception for Texas oilmen. This guise failed when Deng, speaking through his interpreter, said he didn't need to be introduced. ''We know who Dr. Hammer is, '' Hammer reports Deng as saying. ''He is a friend who knew Lenin.'')
Hammer has sometimes been portrayed as the name-dropper's name-dropper. That's misleading. It's true that he has known an impressive repertoire of presidents, prime ministers, and communist party leaders. But that's simply his way of doing business - particularly in those countries where the boss instructs state trading companies on what deals to conclude.
His start at becoming a real-life Lanny Budd came with a meeting that is now legendary in the Soviet Union - his 1921 encounter with Lenin. (Lanny Budd was novelist Upton Sinclair's fictional hero who flew about the world as a confidant to heads of government. In Hammer's case, life appears to have improved on art in the number of world leaders known.)
Since then, he has met every Soviet leader except the current President, Yuri Andropov. Mr. Andropov sent greetings on Hammer's 85th birthday, a gesture the industrialist hopes means a meeting soon, despite the vagaries of US-Soviet relations after the Korean plane attack.
Whatever happens about his own Kremlin ''summit'' meeting, he urges that a Reagan-Andropov summit take place. He says he would like to see the two leaders deal with arms issues, but he argues that they should meet even if they are only able to deal on trade and cultural exchanges, leaving arms control for a later session.
Still, even before the Korean plane incident embittered feelings, he had doubts about an early meeting. According to Hammer, Bulgaria's Mr. Zhivkov believes the late Leonid Brezhnev very much wanted a summit. But, again according to Hammer, Zhivkov feels that Andropov is reluctant because he fears he wouldn't get much from it. So Andropov is not inclined to help Reagan if the latter should decide he wants to meet.
Despite this concern that superpower relations may languish without a top-level attempt to break the deep mistrust, Hammer is not among the pessimists on nuclear war. He says he believes we have deterred the use of nuclear weapons as successfully as we deterred the use of gas after World War I. He makes no comment on stockpiles of poison gas on both sides of the East-West divide.
Most profiles of Hammer note that he became an oilman almost accidentally after retiring to California from his earlier trading careers. He was asked by a friend to lend $50,000 to Occidental, which was tottering near bankruptcy, so it could complete a drilling project. The company's assets at the time were worth $ 34,000. The drillers struck oil. Then more. After that, his risk-taking and careful study paid off - in the second-largest natural-gas well in California, later in Libya, and then in the giant North Sea field.
Some investment company analysts have down-rated Occidental because of the debt level it incurred in buying Cities Service to bolster its domestic oil reserves and in diversifying into meatpacking and coal. But even these analysts note cautiously that Occidental has been sharply reducing its debt-to-equity ratio, and that Hammer has pulled rabbits out of the hat in the past and may do so again.
A shrewd oil executive from another company involved in Chinese offshore drilling plans estimates that the China Sea field may hold as much as 2 to 21/2 times as much crude as the North Sea field. Asked about this estimate, Hammer said he would not disagree.
But recovery of that oil is some time off. At the moment Hammer is enthusiastic about a petroleum development that most people believe is also years away and that only a successful contrarian might back: shale oil.
At lunch, Hammer became almost exuberant when he described the shale prospect. Occidental (teamed 50-50 with Tenneco) plans to produce 14,100 barrels per day of crude-oil equivalent, beginning in mid-1987. Their Cathedral Bluffs Shale Oil Company, operating in northwest Colorado, expects 150 million barrels of oil from the project over 30 years. It estimates that the entire 5,094-acre tract, leased from the government, could yield more than 1 billion barrels.
Hammer describes how Occidental has extracted 300,000 barrels of oil from its site in Logan Wash, Colo., from two underground caverns in the shale formations. Each ''room'' is 30 stories high and about an acre in size. Plans call for upping production to 90,000 barrels a day. At that point, Hammer says, a Bechtel Corporation study projects a price competitive in the open market.
Some oil industry analysts, mindful of the retreat of Atlantic Richfield, Exxon, and Ashland from this shale operation, argue that the time for shale extraction to be commercially profitable is still distant.
But Hammer is unfazed. He talks about the purity of the extracted oil: ''Twenty-five percent of the oil is of such high quality that we can use it directly in trucks as diesel fuel.'' In a test at Logan, Wash., gradually increasing amounts of the shale oil were added to the diesel fuel running a Ranger underground vehicle. At 100 percent shale, the vehicle's engine showed no ill effects.
The on-site process Occidental has developed raises the temperature underground to 900 degrees F., at which point the oil separates, sinks, and can be pumped to the surface. There is less environmental damage from this process than from bringing the shale to the surface.
''If we come to have a synfuels industry in this country in another 10 years, '' says Hammer, ''it would protect us for 100 years.''