Russia was not new to oil, far from it. The ancients had called it the blood of the earth. It seeped from the ground, floated on streams, its pungent aromas were carried by the wind and on occasions it spontaneously combusted. It was for this reason Russians called it neft, from the Greek word nafata, which in turn was derived from the Persian naft, meaning to seep or to ooze.
Mineral oil has been known to man since remote antiquity, it was used as early as the fifth or sixth millennium BC. The oldest known sources were situated near the Dead Sea, the Euphrates River and the Kerch Peninsula (Crimea) on the shores of the Black Sea.
According to the Bible, Noah used pitch to make his ark watertight and as mortar to build the Tower of Babel, whilst the ancient Egyptians used it for mummification and medicinal purposes.
The first reference to oil in what is now Russia was in the Bosporan Kingdom, situated on the northern shores of Black Sea, now Russian Crimea and Krasnodar Krai - at that time Greek colonies, where petroleum had long been used for lighting and other domestic purposes.
Towards the end of the first millennium AD, Russian princes seized the region, which had in the meantime become the Khazar Khanate, giving them an opening to the Black Sea region.
Later, in the sixteenth century, oil was used in Muscovy where it was imported from Astrakhan and the Absheron Peninsula (Baku, Azerbaijan) by Russian merchants who shipped it up the Volga to the cities of Nizhny Novgorod, Moscow and Yaroslavl.
In the seventeenth century, the czarist government formed the Siberian Office to manage its new territories to the east, where oil was discovered floating on the Yenisey River and along Lake Baikal.
Near Irkutsk, where it was said the stench from petroleum vapour was overpowering, oil could be found by simply digging in the ground, however, another three centuries were to pass before this resource was exploited commercially.
Under Peter the Great, the first practical use of petroleum was made and he took a personal interest in its scientific and commercial development.
The signing of the Treaty of Gulistan between Russia and Persia in 1813, signalled the end of the Russo-Persian War and saw the return of the Baku Khanate to the Russian Empire. At that time, there were more than one hundred wells on the Absheron Peninsula with an annual production of some twenty thousand barrels. These wells were simple pits from which oil drawn by hand. By 1834, the distillation of light oil was introduced for lighting oil that burned cleanly and brighter than candles.
Intensive drilling started on the Absheron Peninsula in 1873. It was the start of the great oil fever. Overnight, a forest of derricks sprung up and the throb of steam engines were said to have filled the air. It required four months to cap the first gusher, struck the same year, which pointed to the Baku oil field’s vast reserves. Soon refineries were springing up everywhere and the sky was filled with smoke from the crude processes, shedding a fine rain of soot that covered buildings and installations with a thick black film.
The Russian oil industry was born and production quadrupled from 1873 to 1877 with Baku Oil, a joint-stock company, being formed to sell and produce a complete range of petroleum products. About this time time, Nobel Brothers Petroleum Production Partnership set about marketing Russian oil on international markets, where it was in competition with America’s Standard Oil.
In 1899, the Nobel Brothers Partnership produced nearly twenty percent of all Russian oil, almost ten percent of the world’s oil production. At the end of the nineteenth century the Czarist Empire’s oil production had exceeded that of the US for the first time with over fifty percent of world production.
Standard Oil launched a network of international subsidiary companies. In 1888 it formed the Anglo-American Oil Company in Great Britain, and in 1890 the Deutsch-Amerikanische Petroleum Gesellschaft in Germany, in which the Rockefellers owned forty percent of the shares.
Other American controlled companies followed suit setting up subsidiaries across Europe, biting into the Russian market. The Russian reaction was to redirect its exports towards the Far East, where, in spite of established American presence, its producers soon increased their market share to nearly fifty percent.
At that moment in time the first modern automobiles started to make their appearance on the roads of the US and Europe, as navies and shipping companies were converting their fleets to fuel oil. It was the start of new era and a race to capture markets and develop new resources that was to continue during the whole of the century ahead.