The geologic exploration carried out over the following two years did not produce any major results, but the Kama Valley oil business was aided by a lucky break. On June 16, 1934, while drilling an artesian well at the construction site of the Krasnokamsk Pulp and Paper Plant, drilling specialist Ivan Pichugin encountered water with a strong hydrogen sulfide odor and a thick oily layer at a depth of 525 feet. M. Eliashberg, the former head of the paper plant, recalled: “A well was being drilled near the building to provide the acid workshop with cold artesian water. I was extremely concerned that water had yet to surface despite the considerable depth of the well. Finally, when the well was at a depth of 180 meters [591 feet], drilling specialist Ivan Mikhaylovich Pichugin joyfully shouted ‘water!’ Water had indeed surfaced, but it smelled strongly of hydrogen sulfide. We could not even think of using it for production. The drill specialist and I dejectedly poured the water into a bottle and a film formed on the surface at that moment.... It became clear: this was oil! This occurred on June 16, 1934.”45
The People’s Commissariat for Heavy Industry noted in a report: “By early 1935, the Sverdlovsk region and the western slope of the Urals had been enriched with another oil field, at Krasnokamsk. By late February 1935, after six months of exploration, a field was discovered with 8.5 square miles of oil-bearing deposits and indisputable total oil reserves of 66–88 million tons. Field research over the next three to four months should determine the best method for organizing the industrial production of Krasnokamsk oil.”46
Several more new discoveries later took place on Perm lands, along with many remarkable events that are now considered milestones in the storied annals of the Russian oil industry.
In the Squeeze of the Early Five-Year Plans
In December 1927, at the 15th Congress of the AUCP(b), Soviet political leadership decided to transition the country to “five-year plans” of economic development. The First Five-Year Plan (1928–1932) called on group “A” enterprises (i.e., heavy industry) to accelerate development, and the strategic goal of the country became industrialization. In the USSR the reforms of the NEP were successively rolled back, and the Soviet leadership transitioned to total control over the economy, continuing to accelerate the formation of an administrative command system dominated by directive and noneconomic methods.
In his work, “Particularities of the Development of the Oil Industry in the USSR during the Years of the First Five-Year Plans (1928–1940),” in the anthology Soviet Union’s Oil [Neft strany Sovetov], Professor Aleksandr Igolkin, Doctor of Historical Sciences, emphasized that the deep contradiction present in the Soviet Union, associated with the complex foreign and domestic processes of the 1930s in which dictatorial and bureaucratic aspects of the command-administrative system predominated, could not help but leave its mark on the development of the Soviet oil industry.
Fiscal 1929–30 saw some advancement in the USSR’s oil industry as compared to 1928–29, but the rate of development could not keep pace with the demands of the time. For example, in 1929–30, domestic consumption of light petroleum products reached the level planned for the last year of the Five-Year Plan. This called for a radical reexamination of the Five-Year Plan for the oil industry.
In a resolution of the AUCP(b) Central Committee dated November 15, 1930, Soviet leaders outlined the future development of the oil industry: “Based on the size of the national economy’s demand for petroleum products and the prospects for development of exports, the CC proposes: 1. The VSNKh shall raise the production of oil in 1933 to 49–50 million tons, with no less than 44–45 million tons coming from old and new fields of the Transcaucasus and North Caucasus.... The VSNKh must devote special attention to exploration and prospecting for oil in the eastern part of the USSR (the Urals, Emba, Sakhalin, the Volga region, etc.).”
At the end of 1930, Gleb Krzhizhanovsky (1872–1959), the head of the State Planning Committee [Gosplan], who was developing a “constructive” Party approach and emphasizing the special significance of the Soviet oil industry on the world market, announced at a meeting of his agency: “The VSNKh is not carrying the banner of power generation the way it should. A change of direction, a decisive break with the past, is needed in 1931. Such a position must be defended from this perspective: we need to be extremely thrifty both with money and with our proposals, etc., with the exception of this front.... In this one area, special conditions need to be created for a break with the past.... The socialist shark is supposed to swallow the entire world, but without fuel or energy nothing will be accomplished.”47
According to Party instructions, the Neftesindikat organization was reformed, and in January 1930 all oil production organizations in the country were included in the All-Union Association Soyuzneft.
The Baku-Batumi trunk oil pipeline went into operation in late April 1930, carrying Caspian oil. Less than two years later, the country successfully realized, using its domestic potential, a large-scale pipeline project providing large-scale deliveries of Soviet oil onto the world market. However, as Azneft Director Mikhail Barinov had stated earlier in his letter addressed to Glavgortop, the new pipeline had one other important purpose: “The intended purpose of moving oil from Baku to Batumi is to bring Baku oil close to the export port of Batumi, where this oil will be refined into petroleum products, whose quantity and quality will be determined mainly by the requirements of the foreign market.” As of the end of 1931, the operational trunk oil pipeline extended over 1,980 miles.
The accelerated development of USSR industry, including the oil industry, was in full swing. Colossal resources (money, materiel, and manpower) went to achieving set goals. During the years of the First Five-Year Plan, the sum invested in the oil business—more than 1.5 billion rubles—was significant for the time.
On April 1, 1931, the directors of the Azneft Association sent a triumphant report to the AUCP(b) Central Committee stating that they had fulfilled the First Five-Year Plan in 2.5 years “by technical renovation of the industry, increased labor productivity, development of new fields, increased drilling, and heroic labor on the part of the oil workers.” Production figures confirmed this: Whereas 1928 oil production on the Absheron Peninsula was 8.38 million tons, in 1931 it was 12.3 million tons. This gave top Soviet leaders an exaggerated idea of the ability of Soviet industry to reach any heights and overcome all obstacles, without having the necessary resources or reserves to do so. Indeed, the achievements and successes hid a great deal that did not reflect the true state of affairs.
In assessing the rates of Soviet industrialization and its achievements, the American historian Professor Hiroaki Kuromiya of Indiana University noted the following in his work Stalin’s Industrial Revolution: Politics and Workers, 1928–1932: “Soviet industrialization gave birth to superhuman efforts that were heroic, romantic, and enthusiastic.”
In 1931, the Grozny oil industry’s share of the USSR’s total production reached 36.1% of its crude oil and 73.0% of its gasoline (the leading product). For its high achievements, the Presidium of the Central Executive Committee of the USSR awarded the Order of Lenin to Grozneft.