Petroleum Industry in Azerbaijan - Pre-industrial Period

Pre-industrial Period

In 1806 the Russian empire occupied Baku Khanate and took monopolistic control of oil production. Later exclusive rights to produce oil were given to individuals, thereby creating the otkupchina lease system.

Oil extraction methods in those times were very primitive —mainly hand dug wells, drilled to very shallow depths. The production volume of those years can be judged from data provided in 1842 by the Caspian Chamber of the Department of State Property Ministry. It refers to 136 wells around Absheron, which produced 3,760 cubic metres (23,600 bbl) per year, and this oil was exported to Persia, where it was used in lighting as well as a source for ointments and other traditional remedies.

As a result of otkupschina monopoly and the absence of growing demand, annual oil production in the first half of 19th century remained unchanged at 250–300 poods (4–5 thousand tons). In 1813, the number of producing wells was 116, then 125 in 1825, 120 in 1850, and only 218 in 1860. Otkupschina system meant that oil production was monopolized by set of individuals who saw no incentive to increase production or improve drilling methods.

In 1846, under the supervision of state advisor V.N. Semyonov engineer Alekseev drilled a 21 m deep well using a primitive percussion drilling mechanism, in Bibiheybət to explore for oil, with positive results. More than a decade later, on August 27, 1859, "Colonel" Edwin L. Drake struck oil on American soil for the first time.

A small petrochemical industry sprung up around Baku, as demand for kerosene soared locally. Vasily Kokorev, Peter Gubonin and German baron N.E. Tornow built the first kerosene factory in Surakhany. The factory was used to produce kerosene out of "kir", an asphalt-like substance. In 1859 N.I. Vitte, a Tiflis pharmacist, built the second paraffin-producing factory on Pirallahi island.