Big Oil Comes Back To Baku

Natural History, March, 1999 by Mark Jacobson

The genesis of the modern Baku oil industry reads like a who's who of late-nineteenth-century international plutocracy. In 1872 imperial Russia opened the Baku fields to foreign investment. Soon after, Robert Nobel, brother of Alfred, the dynamite tycoon for whom the Peace Prize would be named, arrived in Baku. Nominally charged with finding lumber to be used for rifle butts in his brother's Siberian munitions factory, Robert purchased some oil wells instead. By 1880, the Nobel brothers owned the largest oil company in Russia. They built the world's first pipelines, first modern refinery, and first oil tanker, the Zoroaster. In 1883, when the Rothschilds financed the Baku-to-Batumi rail line, allowing Azerbaijani petrol to reach the Black Sea and the rest of Europe, John D. Rockefeller's kerosene monopoly in the world market was shattered.

At the turn of the century in Baku, more than two hundred refineries were belching enough smoke to obscure the noonday sun over "Black Town," an industrial section of the capital. By then, Azerbaijan was exporting nearly 60 percent of the earth's available petroleum. Much of the profit was grabbed by foreign hands, but, as befitted a capital of world industry, a new class--the oil barons--arose in Baku. Like pre-TV "Beverly Hillbillies" peasant farmers, after generations of unhappily picking tar from sheep's wool, found that the bubbling crude on their land was worth a fortune. Cargo loaders and scrap leather dealers became millionaires. Avowed Muslims, the oil barons nevertheless looked to Europe, forging an eccentric syncretism between East and West. Renowned architects were summoned from Germany and Poland. Almost overnight, fanciful "oil palaces" arose along the low-slung Baku skyline. An impossibly ornate opera house, the first in the Islamic world, appeared on the Caspian shore.

In 1920 the oil baron Murtuza Mukhtarov shot dead two soldiers who had ridden their horses up the grand stairway of his block-long French Gothic home (called the Palace of Good Fortune); he then pressed the pearl-handled pistol to his own temple. Baku's oil boom had come to an end. With nationalization, the Bolsheviks dispersed Azeri oil throughout the fledgling U.S.S.R.--gratis. Residents of the former oil capital of the world, suddenly short of heating fuel, found themselves shivering through the winters. Under Stalin, as oil production rose and fell precipitously, depending on the often capricious needs of the Soviet "center," pipelines and refineries were picked up and moved like massive, smoke-choked chess pieces to places elsewhere in the empire. With the subsequent development of oil fields in Texas and the Middle East, Azerbaijan appeared to be largely relegated to the dustbin of hydrocarbon history.

Not everyone had forgotten the former oil capital, however, as documented in a grainy wartime home movie shot at a birthday party for Adolf Hitler. The Fuhrer's cake is adorned by a map of the Caspian Sea, with the letters B-A-K-U spelled out in chocolate cream. Hitler eats a piece and then avidly licks his fingers. "Unless we get Baku oil, the war is lost," he would declare. These words proved prophetic, as the Nazi leader, obsessed with Germany's failure to gain control of Azerbaijani oil during World War I, disregarded his generals' advice to attack Moscow immediately and chose instead to drive toward Baku, a futile campaign that led to the disaster at Stalingrad.