Azerbaijan—The Land of Unquenchable Fire

For millennia, Zoroastrian fire worshippers traveled on pilgrimage to pray at temples built where methane seeping from deep underground caused flames to burst from the earth on the Absheron Peninsula near Baku, the capital of today’s Azerbaijan. The Venetian merchant Marco Polo observed such mysterious fires and puddles of oil that bubbled or even gushed as fountains to the surface as he trekked along the Silk Road through the Caucasus Mountains in the 13th century. In a travelogue written in 1298, The Travels of Marco Polo, he is said to have described: “Near the Georgian border there is a spring from which gushes a stream of oil in such abundance that a hundred ships may load here at once. This oil is not good to eat, but it is good for burning and as a salve for men and camels affected with itch or scab.” He was referring to the Khanates of Azerbaijan, a part of the Persian Empire in Marco Polo’s time but absorbed in 1806 into the Russian Empire whose czars took an interest in financing early oil production—hand dug and exported on camel back. Its high paraffin content was valued for producing kerosene lamp oil and lubricants including cannon grease. As the Industrial Revolution swept from West to East in the mid-19th century, many of the innovations and business systems around which the modern oil and gas industry were soon to coalesce were tested in the ancient “Land of Fire.” Czar Nicholas I (1825–1855) financed the world’s first mechanically drilled oil well in 1846 using a cable-tool percussion drilling method. A 21-m-deep (69 ft) exploration well was the result. This happened a decade before Edwin Drake added steam-engine power to a mechanical drill to put Titusville, Pennsylvania, on the map in 1859, as described in the Branobel History archives. By 1871, with Nicholas’ son, the reformer Alexander II now on the Russian throne, boreholes had replaced buckets across the Bibi-Heybat and Balakhani oil fields. The arrival from Sweden in the 1870s of Alfred Nobel’s brothers, Ludvig and Robert, brought a step change to Azerbaijan in terms of industrial innovation, construction, and logistics such that by 1900 Azerbaijan was producing 50% of the world’s oil, historical sources agree. Alexander II had abolished the state monopoly on oil production in 1869, opening the door to foreign industrialists and their capital. Robert Nobel obliged and opened the joint stock Branobel Co. in 1878 with a partner from a weapons plant in the Russian town of Izhevsk. He put down share capital of 3 million rubles ($30,000 in today’s money) to register Tovarishestvo Neftyanogo Proizvodstva Bratyev Nobel—in English, The Brothers Nobel Paraffin Production Company (aka Branobel). The transformation of Baku’s oil fields into a capitalist production sector had begun in 1872 with the auction of 15 blocks in the Balakhani oil field and two blocks in Bibi-Heybat, according to a history prepared by Azerbaijan’s Ministry of Energy in 2020. This drove a 340% growth in oil production between 1876 and 1882, from 24,000 to 816,000 tons, respectively, between those years. By 1894 Azerbaijan’s production equaled that of the US (5.55 million tons per year) though Baku’s fields were 20 times less productive, according to Branobel archivists.