ABSTRACT
Amongst Soviet claims to have led the world in the field of technical developments is one which attributes the world’s first oil well to the Soviet Union. This claim challenges the more generally accepted view that the modern oil industry began in the United States in 1859 (see p. 25), but adjudication in this dispute is not relevant to the task in hand. The fact that the Soviet claim can be made at all does, however, indicate the early date of oil resource exploitation in Russia. The expansion of this early initial exploitation of Russian oil into a Russian oil industry which was already of world significance by the late nineteenth century was a function of European trading interests. They sought and obtained concessions in Russia in order to provide Europe with an alternative to the United States as a source of oil supplies, and thus break the near monopoly which Rockefeller’s Standard Oil Company had achieved in Europe with American oil products. The shallowness of the oil deposits and other attractive geological conditions in the vicinity of Baku in the Caucasus, together with the completion in the 1880s of good transport facilities to the Black Sea coast, encouraged the growth of Russian oil production. At the same time the proximity of the oil to potential markets, particularly those in Europe, compared with the alternative supply points in the U.S.A., made these early Russian ventures financially interesting. A little later the rapidly emerging Royal Dutch Shell Group also used its Russian oil production to break the monopoly of Standard Oil east of Suez. Success in that part of the world, however, depended on the company’s ability to deliver the oil in bulk, rather than in tins or drums, whose shipment through the Suez Canal necessitated expensive safety precautions. Success in this respect was achieved in 1892, with the entry into service of an ocean-going tanker which was given safety clearance by the Canal authorities. As a result Russia’s oil development was given an important boost and in the period before the First World War it was second only to the U.S.A. in its total oil production. In fact, for a few years Russia was even ahead of the U.S.A. in its annual production of oil. Through to the outbreak of the First World War and to Russia’s involvement in it, physical conditions for oil production in the Baku region remained attractive, the markets of Western Europe continued to grow, and foreign capital continued to be drawn to this important producing area. Thus, the prospects were set fair for the rapid and continuing development of the country’s oil resources under the oil concession system which the Czarist régime was content to accept, in return for the payment of royalties by the oil companies concerned. This typical nineteenth- and early twentieth-century approach to the development of a country’s mineral resources by foreign companies, mainly from the United States and the United Kingdom, was, however, first upset by the involvement of Russia in the First World War and was then terminated abruptly by the Soviet Revolution in 1917.
