OIL INDUSTRY OF AZERBAIJAN
* XIX - XX century
In the development of Azerbaijani oil industry 5 stages can be distinguished:
I STAGE - mud oil production till 1871
II STAGE - industrial oil production with application of mechanical drilling methods beginning from 1871 till nationalization of oil industry in 1920
III STAGE - from nationalization of oil industry during Soviet period till discovering and putting into exploitation the large-scale Oily Rocks offshore field in 1950
IV STAGE - from putting Oily Rocks offshore field into exploitation in 1950 (considerable expansion of exploration, striking and putting into exploitation of new fields in Caspian Sea, intensive development of the offshore oil-and-gas production infrastructure) till signing of the first "Contract of the Century" with attraction of foreign investment in 1994.
V STAGE - begins from the signing of the first great "Contract of the Century" on "Azeri-Chirag-Guneshly (abyssal sea)" offshore fields in September 20, 1994 and attraction of the large-scale foreign investments to the oil industry of the sovereign Azerbaijan.
* Oil industry of Azerbaijan for more than 130 years of its development history.
There are evidences of the ancient historians that oil was exported from Azerbaijan to Iran as far back as III-IV centuries. Information on production of oil in Apsheron peninsula have been reflected in the manuscripts of the most Arabic and Iranian authors such as Ibn Miskaveykh (X c.), Abu Dulaf (X c.), Yakut al-Khamavi (XIII c.), Khamdullakh Gazvini (XIV c.) and others. Azerbaijan geographer Abdurrashid ibn-Salekh Bakuvi informs that daily production of oil was made up 200 kharvar (asinine bale) at early of XV century and part was exported by ships. There were a lot of burning oil gas discharges not far from the town.
Turkish scientist and traveler of the second part of the XVI century Katib Cheleby informs that "Boku fortress was surrounded by 500 wells, from which white and black acid refined oil was produced".
Europeans' primary information on Baku and Apsheron oil belongs to XIII century. Prominent Venetian Marko Polo, probably, has been the first European who pointed the fact of "black gold" production in Baku.
Dg. Dyuket writes about Baku oil as follows: "One can observe a strange occurrence near the town - striking quantity of acid refined oil rises here which is popular in the remote part of Persia; it serves for illumination of houses throughout the country. This acid refined oil is black and called "oil". It is transported throughout the country on mules and donkeys that can frequently be met in caravan of 400-500 at the same time. Near the above mentioned Boku city there is also another kind of oil, of white and very valuable, and it's assumed that it is the same with what we call petroleum".
The first more or less detailed description of Baku oil industry have been made by E. Kempferom, Secretary of Swedish Embassy to Iran in 1683.
In his notes he confirms existence of discharge places of natural gas to the surface. Kempfer describes "flaming steppe" as follows: it "...constitutes peculiar and wonderful sight, for some of the fissure were blazing with big, others with quite flame and was allowing everybody to come up; thirds emitted smoke or at any case minimum perceptible evaporation that was sending off heavy and stinking taste of oil. It was occupying the territory of 88 steps in length and 26 in width." After portraying the place of so called eternal lights and temple of fire-worshippers, author says: "At the distance of the thousand steps to north-west from the eternal lights there is another marvelous occurrence, namely - sources of white oil".
Every European who traveled to Caucasus and Baku in the XVIII - XIX centuries, considered his duty to visit temple of fire in Surakhani. Ganvay's description where he narrates about white oil, its medical characteristics, as well as practical usage of gas for lime burning and for household purposes (preparing meals and etc.), survived till our day.
In the first quarter of XVIII century Peter I got interested in Baku region, considering it as a base station for development of Russia's trade relations with the East. He was especially attracted with so called "white oil" which was long since extracted on Baku suburbs. Final "joining" of Baku khanate to Russian Empire occurred in 1813. Since this time right up to end of 60s of century before last when the first Baku derrick was installed, production of the entire Baku region equaled app to 20 thousand t. Till that time all Baku oil sources belonged to Baku khan Huseyin. Tsar government exempted oil-fields from taxes for 7-8 years, enabling population to trade and produce oil without return.
In 1806 government formed from khanate wells a profitable article and gave it to farming maintenance. Oil production and utilization methods at that time were very primitive, population extracted it from open and not very deep wells, mainly from natural wells. Production volume of the coming years can be judged about from data provided in 1842 by Caspian Chamber of State Property under second Department of State Property Ministry. It said that in total there were 136 wells in Absheron, which produced 3.76 thousand t oil annually, and this oil was exported t Persia more than to Russia.
In spite of increase of wells, annual oil production at the first half of XIX century remained unchanged -250 - 300 poods (4-5 thousand tons). In 1813 the number of wells was 116, in 1825 - 125, in 1850 - 120, in 1860 - 218. In 1821-1872 oil production was either farmed or was state managed.
Though due to abrogation of farming system oil industry developed greatly and in spite of certain technical progress in oil production, oil patches were exploited very primitively. After abrogation of farming system government only got annual taxes from oil industrialists for oil-field use and excised produced kerosene.
Only in 1871 Mirzoyev built first oil-rig, and next year - second one. Drilling was conducted primitively with balance arm, whim and manual pump. When in 1873 at a depth of 14 sazhen for the first time oil gushed forth and produced several million poods for a short period, drilling progressed very rapidly.
1877 shall be considered the moment when Baku oil industry became firm and solid. In 1879 there were 126 firms and enterprises producing oil on the territory equaling to 411 dessiatina, from which 259 dessiatina was state property and 152 - private. Sate lands were distributed under territories: Balakhani - 149 dessiatina, Surakhani - 10, Bibi-Heybet - 20 and Binagadi - 80 dessiatina. Private lands were only in Sabunchi vicinity.
For the first time in the world, for 10-11 years earlier than in Pennsylvania (USA) in 1844 oil well was drilled in Bibi-Heybet. Baku oil region, which at the beginning was the sole one, later on also remained leading oil supplier to Russia.
Banking and investments to oil industry of Azerbaijan
In oil industry of pre-revolutionary Russia monopolies and foreign capital were dominating. On the eve of the World War One three companies ("Toshen General Oil Company", "Shell" and "Partnership of Nobel Bros.") held 86% of all share capitals and controlled 60% of oil production. Oil boom cannot take place without large investments and penetration of bank capital to oil industry.
At the beginning of the century English capital ranked high in oil industry. In 1901 English companies controlled 11% running wells, which gave 17% of produced oil.
In 1903 12 English companies with capital equaling to 60 mln. rubles were functioning in Baku region. In 1912 Anglo-Dutch firm "Shell" obtained 80% shares of Caspian-Black Sea Society "Mazut", which had belonged to Rothschild Banking-house. These huge firms yielded only to "Partnership of Nobel Bros.". "Shell" created "Oil production and financial corporation" in Baku region. At the beginning of World War One capital of the latter equaled to 28 mln. rubles, and for production this company yielded only to American "Standard Oil".
"Merchant bank" founded in 1914 with participated of H. Tagiyev and M. Nagiyev, served mainly oil industry of Azerbaijan. Main clients of Russia "State Bank" were E.A. Nobel, G.M. Pianozov, M. Nagiyev, Sh. Asadullayev, I. Hajinski and G. Sh. Dadashev. We must state that Baku branch of "State Bank" attended local needs. It's indicated by bank's bill policy. For the period of 1901-1915 local bills equaling to 140 mls, and non-resident bill equaling to 19 mln rubles were discounted.
During those years, bank capital actively penetrated into oil industry.
Entrepreneurship and entrepreneurs
Owing to oil industry development in Absheron, the entire financial world rushed to Baku. Only in 90s of the century before the last, when Balakhani and Bibi-Heybet oil-gushers stroke the whole world, Baku fame launched. Baku was the city of oil and contrasts: dazzling wealth of bourgeois block with their luxurious palaces at the city center and villas over the sea and abject poverty of working suburbs, where people lived in shacks without light, in mud and cold. Huge wealth of Baku region immediately attracted foreign capital.
Oil and financial tycoons rushed to get firmly established in incipient oil business of Azerbaijan. "Partnership of Nobel Bros", Rothschild's "Caspian-Black Sea Society", G. Deterding's "Royal Dutch Shell" and some other firms settled firmly and for 50 years in Azerbaijan and were successfully involved in oil business.
In the second half of XIX century one of the small town-fortresses - Baku turned into large industrial center.
For 40 years city area increased for 5 times: from 250 ha in 1878 to 1300 ha in 1918, and population - for over 10 times: from 20 thousand to 262 thousand. Growth of Baku is similar to the growth of Huston; in both cases in literary and figurative sense of word oil was the main reason.
Rare dynamism is also typical for financial sphere of those years Baku. City incomes for the last quarter of XIX increased 28 times: from 51 thousand to 1.423 thousand rubles. The following fact from municipal history of Baku is interesting: at the end of XIX city had at its disposal special capital donated by private persons at the amount of 20.472 rubles, including reserve capital - at the amount of 100 rubles. This fact indicates abject poverty of the city in special capital, and hardly any other city of Russia could be compared with Baku.
Baku oil millionaires played main financial role in city building.
Haji Zeynalabdin Tagiyev. In the encyclopedia by F. Brokgauz and I. Efron (1897) under the part "Oil" famous chemist D.I. Mendelleyev wrote about Haji Zeynalabdin Tagiyev the followings: "Haji Tagiyev can be considered very important force in development of Baku oil business. Obtaining the area Bibi-Heybet near the sea in Baku, he launched there drilling, conducting drilling of many wells, almost all of which gushed forth, built large plant near oil output, started his Russian and foreign trade, and conducted all activities so carefully that could stand Baku crisis. With very insignificant finances (in 1863 I knew Tagiyev as a small contractor) but with reasonable attitude to all operations, Tagiyev's oil business served to rapid accumulation of means."
Following successful drilling, Tagiyev builds road to Bibi-Heybet, fascinating palaces at Baku center, estate in Iran, four-storied mansion in Moscow. At his own expenses he organized fire-station in Baku. Tagiyev was not only industrialist, but also manufacturer. He owned mill, weaving mill, 300-kilometers fisheries on the Caspian Sea, to the north from Baku, reaching Port-Petrovsk (at present Makhachkala), as well as at mouth of Kura. Tagiyev's fishermen caught herring and salmon in large quantity. From fish-factory near Kura mouth, high quality caviar was exported to Russia and Western Europe. Haji Zeynalabdin Tagiyev played and important part in construction of Baku water-pipe. As far as at the end of the last century he invited here famous German specialist Lindley and entrusted him conduction of research. Lindley discovered Shollar water near Guba suburbs, and developed project of 190-kilometer water-pipe. After long disputes the project was approved, and in 1917 first line construction was completed.
Aga Musa Nagiyev. Another well-known Azerbaijani industrialist - Aga Musa Nagiyev was even richer than Haji Tagiyev. Maybe due to it folk rumor ascribes to him some vices, such as stinginess, niggardliness. Nevertheless, his donations to improvements of Azerbaijan capital are widely known. Nagiyev built fascinating building of Muslim Charitable Society "Ismailiyye" in the center of Baku, completed construction of third floor of Baku real college, built hospital building (in the city suburb), donated generously to construction of Baku water-pipe. At the beginning of the century at the expense of Aga Musa Nagiyev several magnificent mansions were built at the city center, they remain to our time. Nagiyev sponsored Baku real college and paid for maintenance of 25 Muslim children.
All Nagiyev's wealth was based on exploitation of oil-fields on Bibi-Heybet. Owing to his efforts association on drainage of Bibi-Heybet bay, was founded. Nagiyev himself contributed to this activity. Construction activities on bay drainage were carried out intensively and up to 1917 70% of work was fulfilled. The work could be completed in 1921. Even 90 years later on the filled bay territory oil-field is functioning.
Nobel Brothers. Following industrial development of Baku oil-fields in 70s of the last century, over dozens of foreign companies were attracted to this rich oil region. First foreign firm in Baku was formed by Nobel Brothers. In 40s of XIX century head of firm Emmanuel Nobel bought mechanical factory in Petersburg and was involved in arm production. He invented underwater mines, which were used in Crimean war against the English. Later, on the motherland, one of his sons Alfred invented dynamite and became organizer and owner of many firms producing dynamite. Certain percentage from his capital Alfred bequeathed to money fond for establishment of honorary international Nobel Prize.
In the mid 70s of the last century "Partnership of Nobel Bros" obtained in Baku several oil patches and small kerosene plant. Due to abundant oil reserves of Absheron, their wealth increased and at the century end "Partnership of Nobel Bros" achieved maximum export ratio in Russia, and oil production in corporation's oil-fields equaled to 90% of world production.
Nobel Brothers owned oil-fields in Bibi-Heybet, Balakhani, Surakhani. Leasing lands in "Black" and "White city" they built oil distillation, sulfuric acid, brass, iron works, as well as sea berths. First oil pipeline from Balakhani to "Black city" oil distillation plants built by corporation Nobel bros. reduced price of oil delivery from oil-fields to the plants for 7 times. Nobels built first railway - narrow-gauge (which was called "cuckoo" among population), it also reduced oil delivery price. Nobels were among the first firms who transported oil by filling method. Corporation built its own tanker fleet, which accelerated and simplified oil delivery to Russia, Iran, Turkestan.
Corporation generously spent finances on upgrading of oil production, distillation and transportation facilities, on improvements of worker and employee settlements. To present day thousands of oilmen live in Nobel's worker settlements in Sabunchi.
Rothschild. Famous French banker Alfonse de Rothschild heading Paris bank, was also actively participating in profitable Baku oil. He wasn't involved directly in oil production, his small oil-fields in Baku and Grozni made insignificant profit. But his firm bought up shares of "Caspian-Black Sea Oil Industrial and Trade Society" and on its basis created "Caspian-Black Sea Society". Rothschild founded company "Mazut" for trade with England on the Volga and established many points for kerosene sale. He penetrated even to the Far East. And everywhere Baku oil was sold.
In 1901 Rothschild amalgamated with Nobel, and newly founded "Nobel-Mazut" only in 1901 transported 43% black oil, 57% - kerosene and 67% engineering oil obtained from Baku oil. During production recession in 1912 Rothschild sold oil and trade enterprises to Anglo-Dutch trust "Royal Dutch Shell". To our days remained fascinating building in Baku bult by Rothschild. Founder of the firm "M. Mukhtarov and Co" Murtuz Mukhtarov early in life carried oil and other loads from fields on cart. In 1870 he became worker and worked from bailer bailing oil from wells to master. Working in filed engineering shops Murtuz Mukhtarov improved semi-automatic machine-tool "Hammer" and soon became recognized repairman for wells. 20 years later in 1890 M. Mukhtarov opened private drilling office and successfully drilled deep for that time 1000 -meter wells. Range of his inventions, especially Mukhtarov's tool was considered the most perfect among existing ones on the turn of XX century.
Business and enterprising millionaire built for himself magnificent mansion, which is now Wedding Palace in Baku. Another interesting fact from his life: With his wife-daughter of general Tuganov they adopted young singer. Later on Fatima Mukhtarova became star of Baku opera stage.
Mukhtarov's country man millionaire Shamsi Asadullayev had similar fate. Shamsi who was from Amirjani settlement, worked as a laborer on the Absheron fields. Pool of oil river flooding Azerbaijan, fell on his share too. At first he established oil field, and later after growing richer builds his own oil filling fleet. Azerbaijani ship-owner yields only to firm of Nobel Bros for the tonnage of cargo transportation vessels. Asadullayev sold oil at a considerably low price, thus drawing over clients. There were other entrepreneurs with lower rank, but who also made contributions to industrial development of Azerbaijan. Haji Baba Alekperov, Agasibek Ashurbeyov, Ali Bala Zarbaliyev, Kerboloy Zarbaliyev, Huseyin Melikov, G. Bagirov, G. Aliyev, S. Zminov, Amir-Aslanov brothers and others were owners of oil-field areas in Sabunchi, Balakhani, Romani, Shubani, Bibi-Heybet. Quantity of running wells belonging to them ranged from 5 to 30, number of workers-from 20 to 200. Jointly these industrialists delivered considerable volume of produced fuel and oil products.
Sheki silkworm breeders could press famous Lion weavers in European countries. Azerbaijani merchants, finding method for long maintenance of incomparable grapes "Shaani", exported it from Absheron to Warsaw, Berlin, and even Paris.
Jevet Melikov built and equipped under his own project the most advanced oil distillation plants.
One of the first professionally qualified Azerbaijani engineers-Fatulla Rustambeyov contributed to oil business. Here are some of his proposals:
Transition from percussion drilling to rotary drilling using electrical drive;
Use of thread line casing pipe instead of valve strings during deep hole making;
Replacement of bailing oil production with well pumping; gas-lift introduction; replacement of wooden derricks with metal ones, etc.
German entrepreneurs were very active in Azerbaijan. "Trade House Benkendorf and Co", "Partnership O. Lents and Co", "Partnership Bepple and Co", T.E. Gagen, A.F. Berench owned oil-fields. Major oilman was Benkendorf owned oil patches in Balakhani, Sabunchi, Romani, Surakhani and other Absheron regions, in Neftchala.
In 1864 Siemens brothers launched construction of copper smeltery in Gedebey. In 1883 brothers Siemens constructed and put into operation second copper smeltery on Kalokent mine. Unlike Gedebey here electric power was used. Siemens were involved in copper mining at Khas-Mammad, quartz deposit ear village Aykend, obtained enterprises in Dashkesen. Siemens substituted well-sinking with well drilling, launched casing strings preventing caving of stems. Building kerosene works, they provided kerosene production with quality much higher than the one produced in Russia then.
As far back as in the middle of the century before the last German industrialist Vitte established large wax plant on the island Pirallahi (Saint) and arranged production of paraffin in huge volumes, produced candles, which were in firm demand well outside Baku and Transcaucasia.
In 1892 in Yelendorf brothers Forer built cognac plant, which was the first in Azerbaijan. Three years later Gumell bros built the second one.
As it was expected, oil boom caused development of the entire economic life in Azerbaijan. In 1900 in Baku appeared 10 huge wood storages, 106 oil companies, about 60 machine-shops.
In 1858 one of the major shipping companies on the Caspian Sea - joint-stock company "Kavkaz and Merkuriy" was established.
On the Caspian Sea appeared first in the world tanker - metal ship "Zoroastr", built in 1878 in Sweden on demand of oil tycoon Robert Nobel. In 1880 345 tankers, including 133 steam vessels and 212 sailing vessels were sailing on the Caspian Sea.
During these years, first large Azerbaijani ship-owners appeared: Useynovs, Zeynalov, Ashurov, Dadashevs, Manafov, etc. In 1903 vessel with internal-combustion engine - three-power motor ship (diesel-electric ship) "Vandal" constructed in Sormovski plant, was sailing on the Caspian Sea. It was equipped with non-reversible three-cylinder diesel actuated by DC generators.
Thanks to oil industry other industries also were developing. In 1913 portion of each branch in general industrial structure of Azerbaijan equaled to: oil industry - 79.6%, engineering and metal working - 3.4, power generation - 0.9, textile - 2.4, food - 6.8, others - 6.9%.
* USSR
Thus by the start of revolutionary events Azerbaijan was one of the richest oil-producing countries in the world. According to English journal "Near East" in 1918, "Baku is the major oil center in the world. If oil is queen, then Baku is its throne*". But revolutionary upheavals brought Azerbaijani oil industry to collapse. Existence of oil in any country forms "an apple of discord" among powerful states. Such full-scale process started in Baku. Events of November 1917 in Russia immediately were reflected in Azerbaijan. In 1917 extremist Bolshevik group assumed power in Baku Soviet.
It comprised 48 Bolsheviks, 85 socialist-revolutionaries (mainly left), 36 dashnaks, 18 musavatists and 13 Mensheviks. P. Japaridze was elected chairman of the Soviet. Kindness of Azerbaijani people turned into tragedy. Dashnaks who came to Baku from all parts of the world, abusing hospitality of Azeri people became the most active helpers at first for tsar regime, and later for Bolsheviks. While Azerbaijani millionaires were improving and developing Baku, dashnaks bought arms and ammunitions, formed soldier troops. Party was inspirer and organizer of it. It's clear that without world society assistance small and rich in oil Azerbaijan had no chances to remain independent. Bolsheviks proclaiming freedom, even self-determination to nations, greedily looked at Azeri wealth. As American "Washington Post" fairly noticed, "up to now oil brought to Azerbaijan only bloodshed". To seizure Azeri oil Bolsheviks tried to attract Azerbaijan to interRussian affairs. G. V. Chicherin, people's commissar of RSFSR foreign affairs from January till April, 1920 four times addressed ADR government with note to form single front against White Guard general A. Denikin, as well as on cooperation of Azerbaijan with RSFSR. F. Khoyski, head of Azerbaijan Foreign Affairs Ministry replying to Checherin's first note on behalf of the government stated: "Republic of Azerbaijan doesn't intervene into internal affairs of the Soviet Russia and stands neutrally on this matter." Other responds were of similar content. F. Khoyski was reading the text of the last one at the parliament in April 27, 1920, when information on approach of XI red Army to Baku, was imparted. These events preceded certain work conducted by Azerbaijani and Russian Bolsheviks. Famous Azeri proverb says, "One couldn't get warm from fire heat, but stifled with its smoke". This maxim completely corresponds to the situation with Azeri oil: "fraternal nations*" profited from its heat, and Azerbaijani people stifled with smoke of political and economic hardships.
In February 1920 Lenin wrote to I.T. Smilge anf G.K. Orgjonikidze: "We desperately need oil, think over manifest to population, that we will slaughter everyone, if they put to fire oil and oil-fields, and will pardon all, if Maykop and especially Grozni is handled safely."
Such work style was peculiar to that time. But such methods can't be applied for industrial and agricultural development, for rise of people's cultural and material living standard.
During World War One 5 mln ton of first-class oil accumulated in Azerbaijan. After April revolution fulfilling Lenin's resolution this oil was transported for 40 days - from 29 April till Mid June - by railway and sea to Russia. It's useless to mention of what importance was this oil for Soviet regime just getting on its feet. For performance of such predatory action chief of Azneft A. Serebrovski was awarded with order of Military Red Banner. It was first but not the last action contributing to formation of soviet regime on the huge territory. At the price of those years this oil cost 452.8 mln dollars. Such was entrance fee of Azerbaijan to "fraternal alliance", no other republic didn't make any equal fee. It was gift of the republic bleeding profusely from terror of Bolsheviks and dashnaks. That year Bolsheviks organized Special Sea Expedition on trans-shipment of oil products in Russia.
While Serebrovski was pumping oil from Baku, Bolsheviks carried away valuables from the country. During World War One and Civil war over 500 mln gold (app 2.5 billion dollars) left Russia. At the same time over 1920-1924 Azerbaijan produced oil to the amount of 1.87 billion dollars, which practically covered all Russia's losses.
In those years "New York Times" wrote: "Purpose of "workers" leaders of Bolshevik Russia is a desire to become second Harun-al-Rashid with the only difference that legendary caliph kept his riches in the basements of his own palace in Baghdad, while Bolsheviks on the contrary prefer to keep their riches in European and American banks".
Thus from 1913 till 1921 number of wells decreased from 3485 to 817. In those years oil production declined catastrophically, and 1920 it only a little exceeded the level of production in 1889. For its reconstruction the entire oil industry had to be rehabilitated. For increase of oil production at least to the level of 1913 new approach was required. Scientific achievements of that time had to be widely applied: search and exploration of oil horizons by implementation with geological-physical methods, to drill deep wells, to apply new technologies to petroleum refining, to improve new delivery methods of oil and oil products to consumer, etc. but the Soviet Union lacked it.
In 1920 app 1800 specialists (!) worked in Russian oil industry, including in Azerbaijan - 1232, in Grozni - 345, in Ural-Embensk region - 62, on Temir oil fields - 14, on Volga oil fields - 12, i.e. in Russia institute of oilmen experts was smashed, something remained in Baku and with certain conditions in Grozni. Under such conditions foreign specialists and companies' assistance was in great demand. In 20s American scientific developments and equipment impacted considerably Azerbaijan's oil production. In archive there is a document witnessing that app 80 years ago Azneft tenaciously strived to apply advanced technologies for deepening oil wells. It emphasizes that "without immediate transition to American drilling method it's impossible to save oil industry from inundation and to increase production. For transition to American drilling method, machines shall be obtained from USA."
Specialists from Baku visited oil-fields in Pennsylvania, Oklahoma, California, Texas, learned new methods of well deepening and exploitation, advantages of rotary (American) drilling. USA companies expressed readiness to allocate credits to Azneft for equipment, promised comprehensive technical assistance. "Barnsdal Oil Corporation" in the person of its president Robert Lou and vice-president Mezon Dey was the first which started cooperation with Baku. Bornsdal Corporation undertook to exploit old exhausted wells with 15% royalty from gross output. After expiry of short-term contract all American equipment was placed at the disposal of Baku free of charge.
In 1928-29 oil production in USSR equaled to 13.5 mln t including in Azerbaijan 8.7 mln t (64% from all production), all other oil regions produced 4.8 mln t (35.6%). In 1940 total production in Soviet Union equaled to 31.1 mln t oil, including in Azerbaijan - 23.5 mln.t (75.5 % of all production), all other oil regions - 7.6 mln t (24.5%).
These figures indicate that in spite of large expenses for material and human resources, new regions played secondary part in oil production. Changes in oil production in USSR and in Azerbaijan during pre-war five years plans are indicated . By the end of 1932-33 oil production in USSR had to be increased up to 27 mln t, ant by the end of second five years plan - to 90 mln t. We can see that these plans were not fulfilled, as with only directives it's impossible to improve oil industry. It concerns oil production in Azerbaijan too. In spite of apparent successes by the end of 30s oil production in Azerbaijan in comparison with 1913 (7.63 mln) didn't increase much (8.7 mln t). All failures and breakdowns in oil industry as usually were ascribed to Soviet enemies' activity.
* Oil - main war energy
Oil is the main war energy. Western public figures expressed opinion that XX century is oil century, oil is the source of existence and became driving force of peace and war... Without oil products army and naval fleet is inconceivable. Indeed fuel and lubricants are necessary for techniques functioning. In other words, without fuel technique is dead. Even the most perfect military machines on the battle fields of Second World War without fuel and lubricants became metal heap. Only the fact that USSR had oil more than required for military actions with Germany, enabled the system of front's oil supply to adapt under hard conditions of war beginning. First of all record oil production in Azerbaijan (24 mln. ton) contributed to it.
During Second World War, like the First one, as once Clemanso stated, allies "surfaced to victory on the crest of oil wave, but if soon precautionary measures are not taken, this wave can attract world to catastrophe". Nikita Khrushev recollects, "when USA entered into war, Stalin told me, "Now the war of engines will begin". He had told it before too. I don't know if these were his own words or someone had told them before. But it's clear that war on the present stage is really war of engines. Those who have more engines, who can keep these engines working, i.e. who has sufficient fuel, he will win the war".
We remind: four of five planes, tanks, cars were filled with petrol, produced in Baku refineries from oil obtained on Baku oil-fields. Baku oil was delivered even to besieged Leningrad. In 1942 fuel line with length 28 km and throughput capacity 400 t per day, was laid underneath Ladoga. Two and half years Leningrad and Leningrad front was supplied with this fuel. During war years 75 mln oil was obtained, 80% of All-Union petroleum, 90% ligroin, 96% lubricants was produced in Azerbaijan.
On the next stage of Azerbaijani oil industry development discovery of off-shore gas-condensate and oil fields enabled Azerbaijan to return to world elite of oil producing countries.
Port-war period. Offshore fields
After World War Two oil industry in Azerbaijan was characterized by offshore oil fields prospecting and development. By that time some experience in offshore prospecting and operations was obtained.
Idea of offshore oil fields exploitation appeared in Russia as far back as in last century. In 1846 academician G.V. Abikhov launched prospecting Caspian offshore oil deposits and shelf. In 1864 he published results of Caspian's Azeri part researches. After Abikhov many other Russian and Azeri scientists (S.A. Kovalevski, A.D. Arkhangelski, A.K. Aliyev, B.K. Babazade, F.I. Samedov, etc) studied geological texture of the Caspian Sea. On the basis of these researches in Russia and abroad specialists proposed a range of peculiar suggestions on off-shore drilling techniques. As far back as in 1896 engineer Zglenitski proposed original method for offshore drilling. But is proposal wasn't considered. For the first time offshore drilling was undertaken in California (USA) in 1827, but it resulted negatively. Further drilling was stopped and only in 1927 in USA this idea again was proposed.
In 1901 it was decided to fill up Bibi-Heybet bay of Baku region. By 1918 this bay was filled on the space of 193 ha. First drill hole was laid in 1922. The next year it gushed forth from the depth of 460 m. this well gave rise to offshore oil deposit development on the Caspian Sea. In 1926-27 offshore wells produced app 714 thousand t oil.
In 1925 near Ilyich bay on the sea on the specially formed island, offshore oil well was drilled, it was first in USSR. Formation of artificial island was hard and expensive work. Baku oilmen were proposed construction of offshore wells on timber piles. First such well was laid in the open sea on the depth of 6 m to the east from filled Bibi-Heybet bay. Such structures are less laborious and less expensive, but on the sea they are less efficient. In 1935 engineers N.S. Timofeyev and K.M. Mikhaylov developed new method of metal pipe piles installation, which were collared to the sea bottom. For the first time this method was used on island Artem. It had some advantages: metal piles could be installed in the hardest rocks, applied in the deepest sea bottoms; they were more solid, which reduced their quantity under the basis.
Specific oil production in 1940 on offshore oil fields of Azerbaijan was 2.4% from the entire production (i.e. 533 thousand t).
Till 1944 in USSR and some other countries bases for offshore bore-holes were installed on steel piles reaching the depth of 30-40 m. but this method was laborious, expensive and seasonal.
In 1945 oil engineers S.A. Orujev, Y. Safarov proposed method of tubular collapsible constructions for offshore bases. This construction enabled quick installation under oil-rig at any season. Production of huge blocks was conducted in the plants. This method appeared very rapid. In 1947 group of oilmen developed trestle method of offshore oil-rig construction. All field communication is laid and transport passes under trestles. Average height of trestle above sea level is 5-7 m, width of carriageway is 3.5 m.
In 1948 construction of trestles started on Azeri deposits. Trestle method of offshore oil-rig construction has more advantages than others, for example it's more economical. Trestle method of offshore oil deposits drilling is especially economical for drilling of several slanted wells from one base. In 1945 drill advancing on Azeri offshore fields equaled to 252 thousand m (17.5% from drilling). In 1950 advancing was 1308 thousand m (23.5%). In 1950 specific weight of oil production on Baku offshore deposits increased to 10.6 % from total production.
In 1950-60 main Caspian oil-and-gas bearing structures were determined. The following oil deposits entered into industrial development: "island Artem", "Darwin Bank", "Southern Square", "Grgani-sea", "island Jiloy", "OilyRocks", "Mud Mound", "Hazi Aslanov", "Sangachalli-sea", "Duvanni-sea", "Island Bulla", "Sandy-sea", "Southern", "Bahar", "Jdanov Bank".
Many of these oil-and-gas structures were prospected in 1949-50, but to achieve industrial oil flow was impossible. Only well-selected geological-teophysical methods of oil structure prospecting enabled immediate development and assess of newly-opened deposit.
One of the striking examples for offshore oil deposit development is "Oily Rocks" - "Neft Dashlari". It's located to the south-east of Absheron Archipelago. In "Oily Rocks" sea depth ranges from 10 to 25 m, though part of oil pool reaches 60 m. depth. Oil prospecting with geological survey, structure drilling, seismic prospecting and preliminary drilling started in 1949-1951. And immediate success.
First oil gushed forth from prospect well 1 in November 1949 with output 100 t per day. Intensive development began in 1950 and already in February of next year first tanker with oil was sent. At the beginning of 1952 commercial oil inflow was obtained from 6 prospect wells. By trestle construction sea depth of 40 m was reached. Deposit development from trestle was conducted with multiple drilling method, deviating holes. Such deviating holes enable to develop oil deposit patches located at large sea depth - up to 60 m. On one area there located up to 24-32 wells with bottom-hole vertical deviation to 2000 m and more. Total length of trestles over the period from 1951to 1980 increased up to 180 km. "Oily Rocks" is a peculiar town over sea abyss, which has its own communications, transport, dwellings etc. Oil produced here, is of high quality, which is typical for oil of Baku region. Primarily, deposit here was developed with dissolved gas drive, which couldn't provide optimal exploitation. In 1953 for seam pressure maintenance, flooding was applied. Almost all pay sections are now being exploited. Steady rise of oil production on the deposit continued till 1967. By this time 769 producing and 116 injection wells (pipe arrangement was 4-12 ha/skv.) were being developed. During this period, i.e. first stage of development, product watering reached only 22%.
In the mid 70s app 115 mln t oil was exploited, 87% of which was produced with fountain method. Additional oil production from watering made up 53 mln t or 46% of total volume.
Talented Azerbaijani geologist Fuad Samedov contributed greatly to development of "Oily Rocks". Several scientists and oilmen, including F. Samedov were awarded with Lenin Prize for "Oily Rocks" development.
Oil deposit "Gurgani-sea". Prospecting drilling started in 1932-34. In 1946 well 7 produced oil with output 50 t per day, in 1949 11 wells gushed forth with output 150 t per day. Seismic exploration, conducted on vicinity "Southern" in 1947-50 indicated existence of perspective structure. In 1951 prospecting drilling launched, but only in 1962 well 2 gushed gas with output 500 thousand cubic m/day and condensate - 50 t/day.
On the deposit "Sangachal-sea" deep prospecting drilling was performed in 1959, but it gushed oil only in 1965. On the vicinity "Duvanni-sea" prospecting drilling was conducted in 1950, but it gushed oil only in May of 1963 with output 250 t/day. Prospecting drilling on "island Bulla" was conducted in 1959, but it gushed oil only in 1973.
Oil and gas search on structures "Shikhov-sea", "Tarasu", "Hamamdog-sea", "Ignatiy Rocks", "Andreyev Bank", "Grigorenko Rocks", "Kaverochkina" launched in 1950, but they gushed forth oil later. For example, oil deposit "Tarasu" was discovered in 1974, gushed oil 200 t/day and gas 100-150 cubic m/day. Sea depth in the vicinity of these structures ranged from 30 to 350 m. For oil-and-gas condensate fields' exploration with prospective drilling the following floating drilling units were used: "Absheron", "Baki", "Khazar", "Azerbaijan".
Till 1976 on the deposits of Southern Caspian since the beginning of operations 218 mln t oil (condensate) and over 600 billion cubic m gas was produced.
Discovery and exploitation of offshore oil-and-gas condensates didn't mean that onshore oil search was stopped. In 1950-60 with the help of super deep well drilling several onshore oil deposits were discovered.
In 1955 huge gas condensate pool was discovered in Absheron. In the same year "Kurovdag" deposit was discovered in Prikurinski lowland. In 1956 "Mishovdag" oil and "Kalmass" gas deposits were discovered. Commercial oil was discovered at the depth of 4862 m prospecting well on the south-east extremity of Absheron peninsula, at the vicinity "Zyra". Oil discovery at such depth indicates new perspectives of oil industry development in Baku region.
Materials from the book "Huge Oil of Azerbaijan" by Ch. A. Sultanov were used in the article.