Business & Industry

Feb 1, 2015

And the World Goes Round

The first oil well in the world was drilled in 1849 in the Azeri capital and Azerbaijan produced 75 percent of oil for the U.S.S.R. during the Second World War. In recent years, production has fallen slightly, but remains at significant levels.

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The history of Azerbaijan is very closely linked to the presence of black gold in the country and to its exploitation, which historically has been the only real salvation of the Azeri economic system. The first oil well in the world was drilled in 1849 south of Baku, the Azeri capital on the Caspian Sea. In 1879, the Nobel brothers established an oil company in the region which allowed crude oil to be exported to industrialized countries. In 1949 the first oil was extracted from the sea. According to the figures of the Azerbaijan Embassy in Italy, 75 percent of oil in the Soviet Union during the Second World War came from Azerbaijan.

Azerbaijan basically has three main pipelines: the BTC pipeline (Baku-Tbilisi-Ceyhan), the longest at 1,100 miles, which crosses the whole country from Baku, going on to Georgia and reaching the Turkish port of Ceyhan on the Mediterranean Sea: this pipeline also exports Kazakh oil which travels on ships across the Caspian Sea; the Baku-Novorossiysk pipeline, which reaches Russia transporting 29,000 barrels per day; lastly, the Baku-Supsa pipeline, with a capacity of 145,000 barrels per day, going from the capital of the country to Supsa, on the Black Sea in Georgia: closed between 2006 and 2008 as a result of the conflict between Russia and Georgia, it is currently only used by ExxonMobil operating at a greatly reduced capacity. 

Oil is mainly being extracted from the Azeri-Chirag-Guneshli (ACG) offshore fields which are located 62 miles east of Baku, in the Caspian Sea. In addition to SOCAR (State Oil Company of Azerbaijan Republic), which is the state-owned oil and natural gas company, AIOC (Azerbaijan International Operating Company), a consortium of 10 oil companies, made up of British Petroleum, Chevron, Devon Energy, Statoil Hydro, Turkiye Petrolleri, Amerada Hess, Exxon Mobil, Inpex, Itochu and SOCAR, also operates in the country.

Ancient history
More than 4000 years ago, according to Herodotus and Diodorus Siculus, asphalt was used in the construction of the walls and towers of Babylon; there were oil pits near Ardericca (near Babylon), and a pitch spring on Zacynthus. Great quantities of it were found on the banks of the river Issus, one of the tributaries of the Euphrates. Ancient Persian tablets indicate the medicinal and lighting uses of petroleum in the upper levels of their society. By 347 AD, oil was produced from bamboo-drilled wells in China. Early British explorers to Myanmar documented a flourishing oil extraction industry based in Yenangyaung that, in 1795, had hundreds of hand-dug wells under production. The mythological origins of the oil fields at Yenangyaung, and its hereditary monopoly control by 24 families, indicate very ancient origins.

In 1847, the process to distill kerosene from petroleum was invented by James Young. He noticed a natural petroleum seepage in the Riddings colliery at Alfreton, Derbyshire from which he distilled a light thin oil suitable for use as lamp oil, at the same time obtaining a thicker oil suitable for lubricating machinery. In 1848 Young set up a small business refining the crude oil.

Young eventually succeeded, by distilling cannel coal at a low heat, in creating a fluid resembling petroleum, which when treated in the same way as the seep oil gave similar products. Young found that by slow distillation he could obtain a number of useful liquids from it, one of which he named "paraffine oil" because at low temperatures it congealed into a substance resembling paraffin wax. 

Access to oil was and still is a major factor in several military conflicts of the twentieth century, including World War II, during which oil facilities were a major strategic asset and were extensively bombed. The German invasion of the Soviet Union included the goal to capture the Baku oilfields, as it would provide much needed oil-supplies for the German military which was suffering from blockades. Oil exploration in North America during the early 20th century later led to the US becoming the leading producer by mid-century. As petroleum production in the US peaked during the 1960s, however, the United States was surpassed by Saudi Arabia and the Soviet Union.

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