We should note that Russia’s growing prestige today in the world arena is due primarily to well-considered policy, domestic political and social stability, and good opportunities for growth of the country’s economic potential.
However, like most of the world, the consequences of the present global financial crisis have subjected the Russian economy to a very serious strength test. Yet, beginning in March 2009, clear signs of economic and financial stabilization have become apparent.
In late July 2009, the Russian government approved the basic outlines of national budget policy for 2010–2012. In this plan, the successful realization of the “Strategy for Development of the Russian Federation Through 2020” will guarantee that our country will overcome the consequences of the world crisis and soon adopt a path of sustainable development. Essentially, unlike a purely technocratic approach concentrating solely on questions of scientific and technical development and economic efficiency, the innovative strategy through 2020 aspires to a fundamentally new type of development. It is decisively based on a transition from a raw-material economy to an innovation-based economy, with comprehensive stimulation of innovation. Russia’s strategy for developing innovation also relies on one of our main competitive advantages—the realization of human potential, the most effective use of our people’s knowledge and skills, to continuously improve technology, economic performance, and our society’s life as a whole. This is a crucial breakthrough strategy that Russian society must implement with updated “human capital.”
It is a well-known truth that in order to move forward it is necessary to look to the past. The book you hold in your hands—Oil of Russia: Past, Present and Future—does just that. It presents a comprehensive history of the origins and development of the Russian oil industry, a history that is being made available in English for the first time. It is my belief that the numerous examples and experiences of Russia’s oil pioneers contained in this text will no doubt prove instructive for today’s readers and industry leaders.
And if, as I genuinely hope, the reader of this book manages to gain an understanding of the role that historical forces have played in the Russian oil and gas industry and in turn the enormous responsibility this industry bears to the world community, the author will consider his modest mission to have been accomplished.
Vagit Alekperov
President
LUKOIL Oil Company
December, 2010
Chapter ONE
The Russian Empire’s “Black Gold”
Oil on the Tablets of Ancient History
The ancients called oil “the blood of the earth.” It seeped up from cracks in the ground, floated on streams, spread pungent aromas and sometimes spontaneously combusted, attracting the brave and the curious with its power and fascinating character. The modern Russian word for petroleum—neft—is derived from the word nafata, which came into Greek from an Old Persian word meaning “to seep, to ooze.” As civilized technology evolved, oil continued to reward its investigators with rich fruits from its inexhaustible potential.
Oil has been known to humanity since remote antiquity. Archeologists have found that it was extracted and used as early as the sixth or fifth millennium before the Common Era. The oldest known fields are in the area of the Dead Sea, on the banks of the Euphrates River, on the Kerch Peninsula in the Black Sea, and in China’s Szechuan Province, some of the earliest sites of civilization.
Oil or its various naturally occurring forms are mentioned in many ancient writings. According to biblical tradition, Noah smeared his ark inside and out with tar for impermeability to save his family from the Great Flood. The Bible also relates that during the construction of the Tower of Babel, pitch was used as a cementing materiaclass="underline" “They said to each other: ‘Come, let’s make bricks and bake them thoroughly.’ They used brick instead of stone, and tar [chemar] for mortar.”1 Chemar, a Hebrew word commonly translated as tar or bitumen, is the highly viscous bituminous material remaining from the weathering of petroleum. Similar material was also used in the construction of the Great Wall of China and the Hanging Gardens of Babylon. Tar was also used for waterproofing the ancient dams on the Euphrates River.
Many historians support the view that the area of the Dead Sea was once the site of 13 ancient cities, dominated by the city of Sodom, all of which were destroyed by the pressure of ground water mixed with petroleum and by explosions of gas contained therein.
There is evidence that the ancient Egyptians obtained oil from the Dead Sea and used it for mummification, as well as for various medicinal purposes. In particular, tar ointments were used to treat scabies and boils, and long “baths” in petroleum pools were used to ease joint pain.
According to the Greek historian Xenophon (ca. 430–355/354 BCE), the ruins of ancient Babylon show that heated asphalt was used in building the temples of the Hanging Gardens. The grandiose mosaic roadways and magnificent inscribed plates in the garden palaces of Babylon were cemented with asphalt. Residents of Babylon smeared wooden walls and doors with rock tar to protect against adverse climatic conditions. Archeologists also have found an asphalt floor in the ruins of ancient Kassan (near modern Baghdad, Iraq). Petroleum for these purposes would have been supplied from sources near a tributary of the Euphrates, 120 miles from Babylon.
The Arthasastra of the Indian thinker Chanakya (Kautilya), who lived in the fourth and third centuries BCE, provides reports of experiments with “flammable oil.” And an enormous basin, the bottom and sides of which were covered with a layer of bituminous material, was found in the ruins of the ancient Indian city of Mohenjo-Daro.
The ancient Greek medic and scholar Hippocrates (fifth to fourth centuries BCE) gave a series of medicinal recipes employing petroleum for the treatment of skin diseases. The works of Herodotus, the so-called father of history (490/480–ca. 425 BCE), mentioned oil sources on Zante, an island in the Ionian Sea, while another scholar of antiquity, Plutarch (ca. 45–ca. 127 CE), gave a description of a continuously burning source near the Median capital of Ecbatana (modern Hamadan, Iran). Plutarch noted that the origin of the oil was unknown, but speculates that “the liquid substance that feeds the flame... proceeds from a soil that is unctuous and productive of fire.”
Mentions of petroleum continue in the works of Roman historians from the periods of the Republic and early Empire. Pliny the Elder (Gaius Plinius Secundus, 23/24–79 CE) wrote in his Natural Histories that petroleum had qualities similar to those of sulfur, and that the mythical enchantress Medea allegedly smeared her rival’s crown with it so that, during a sacrificial offering, the crown caught fire and her rival was burned alive. In another work, he praised petroleum’s wondrous curative properties: “And this substance heals cataracts, stops bleeding, relieves toothache, and even promotes eyelash growth.”
The Roman physician Pedanius Dioscorides (first century CE) mentions lamps burning a “Sicilian oil” that came from sources near Agrigento. In the ancient encyclopedia attributed to Bishop Julius Africanus (ca. 224 CE), we can find a recipe for self-igniting flame, which also includes liquid natural asphalt.
Texts from the early days of alchemy, the so-called Alexandrian epoch of the fourth and fifth centuries CE, promoted improvements of the oil distillation process and a certain modernization of laboratory equipment and apparatus.