No. 4, 2009

In the 1920s, the first stage was initiated of Soviet-American cooperation in the oil industry

After the 1917 October Revolution, when the Bolsheviks came to power in Russia, Russo-American relations needed, in modern language, to be rebooted.  In contrast to today, they were complicated by the particular historical conditions: in Russia, property, including foreign-owned, had been nationalized, and the world powers tried, in response, to organize political isolation and an economic blockade of the new state.  So at that time, a major role was played in restoring relations between the USSR and the USA by unofficial contacts, lacking any support on the part of the US government right up until the Soviet Union was recognized in 1933.

The publishing business of the mining engineer Ivan Gubkin

The party political leadership of Soviet Russia was interested in studying American experience and a major role was played in this by business trips undertaken by Soviet oilmen to the USA.  Before mass visits were organized, however, an information bridge was established between the oil experts of the two countries. An important part in this belonged to the editorial board of the scientific and technical journal The Oil and Shale Business, created on the initiative of the leader of the Bolsheviks Vladimir Ulyanov (Lenin) in 1920 and headed by mining engineer Ivan Gubkin (1871-1939).

In the Soviet oil industry, 1922 was marked by the creation of the Oil Industry Council (OIC). This was a non-governmental organization uniting oil trusts in protection of their interests before government authorities. Given that the management structure of the economy was not yet stable and the oil industry was handed on from one department to another, the OIC played a positive organizational role, including in provision of information to the oil industry.

This organization was headed by Deputy Chairman of the Chief Oil Committee, Ivan Gubkin, who was also the head of the editorial board of The Oil and Shale Business. On the basis of the editorial board of this journal, a structural subdivision of the OIC was organized - a Scientific Publishing Bureau that assumed responsibility not only for publication of the journal, but also publication of scientific and technical literature, including in translation.

Under the conditions of the New Economic Policy, when certain market elements were allowed in the country, the journal had to reorganize its work as well. During 1922, future editorial policy was determined, suitable personnel were taken on in Moscow, Leningrad (where a representative office of the journal was organized) and in oil regions, and the offices of the journal were set up. One achievement was to engage in co-operation the well-known oil economist, former head of the statistical bureau of the Soviet of the Union of Baku Oil Industrialists, Vasily Frolov.

Planning its future steps, the publishers of the journal understood that, above all, the information vacuum that had formed in Russian science had to be overcome. It was decided to organize abstracting of articles by foreign authors on oil industry problems. Given the chronic financial shortage, exchange of publications, a traditional way of obtaining literature in the magazine world, was reanimated. For this purpose, in the early 1920s, the editors sent letters to various foreign periodicals and scientific institutions connected with the oil business.

The mission of geologist David White

1923 was marked by the appearance of the revamped journal. It became a monthly publication and, in addition to scientific and technical articles, events and statistics, a section called "Reviews and Abstracts" was introduced. This covered, sometimes briefly and sometimes at greater length, new publications in the sphere of the foreign oil business and related sectors.

The letters sent out in September 1922 by Ivan Gubkin and editor Vasily Yakubov met with a response. In 1924, the list of abstracted publications included 161 from Germany, the USA, Great Britain, Italy, Canada, Romania, France, Mexico, and other countries. The full list of abstracted journals was published in issue No. 1 for 1924 (pp. 184 - 187).

In addition, Ivan Gubkin corresponded actively with the American geologist David White, whom he had met during a business trip to the USA in 1917 - 1918, and the topics they covered soon went beyond simple pleasantries.

On November 11, 1922, David White answered a letter Ivan Gubkin had sent to the U.S. Geology Service. Together with his letter, he sent six of his own articles on problems of the origins of oil, global and American oil reserves, and so on. In response, on January 15, 1923, Ivan Gubkin sent journals and several books published in Russia during the period of the Civil War and immediately afterwards. Exactly a month later, on February 15, David White replied again:

"Dear Dr. Gubkin,

In reply to your letter of January 15, I heartily thank you for kindly sending twelve of your publications. These, as well as the other works indicated in the contents, demonstrate the major achievements and significance of the research carried out by Russian geologists and engineers in the oil-bearing regions of Russia. Unfortunately, very few Americans can read Russian and, on the other hand, only a small number of the articles are accompanied by a resume in English. For this reason, much valuable material in these works and reports is not accessible for use and for full assessment on our part. Yet even the contents demonstrate the initiative, breadth of approach and essential nature of the scientific and economic studies carried out both by you and your colleagues... I would suggest, if it is suitable and convenient for you, that you send these publications to the Department of Trade, Attn. H.C.Morris, head of the Oil Section of this Department, in Washington.

With the greatest respect,

Yours faithfully,

D.White, Geologist".

It should be noted that the U.S. Geology Service, where David White worked, was set up during the First World War to undertake a detailed study of the topography and geology of the USA. Most of the geologists who later made up the core of the geological bureaus of American oil companies were trained within its walls. They rightfully considered D.White to be their teacher.

The renowned American geologist helped in getting issue No. 4 of the Bulletin of the American Association of Oil Geologists in 1923 to publish a review entitled "Geological and technological works of the Oil Industry Council". In turn, The Oil and Shale Business journal (1923, № 1) brought out an article by D.White called "On global oil reserves", with a foreword by the Geology Committee geologist K.P.Kalitsky.

Also connected with the name of David White was the appearance of the first foreign employee of a Soviet oil journal. This was oil engineer Arthur Knapp from Philadelphia, who had retired from active field work by then and was an oil consultant. On the advice of David White, he offered his services to the Soviet journal.

On January 25, 1923, Ivan Gubkin answered Arthur Knapp, noting that his letter had been a great surprise and offering him to become the U.S. representative of the Scientific Publishing Bureau of the Oil Industry Council. On February 15, an official offer, signed by Ivan Gubkin and Vasily Yakubov, was sent to Philadelphia:

"Dear Sir,

We hereby make the following proposal. In publishing the journal The Oil and Shale Business, individual issues of which have most likely come your way, and in launching publication of a two-weekly oil bulletin, we are in need of a reputable associate". It was proposed that Engineer Knapp forward "from 0.5 to 1.5 printed sheets of correspondence devoted to a review of the oil industry in America, including price movements on the domestic and foreign markets and any data characterizing the life of the oil industry in the country, plus a review of the American press". The active correspondence with journals and mining institutions and the review prepared by David White whet the interest of the oil community, particularly in America, in the Soviet oil press.

First outlines of the USSR-USA energy dialogue

At that time, the leading U.S. oil companies were engaged in seeking new oil-bearing lands and obtaining concessions overseas. After the First World War, international economic expansion continued and the oil industry became trans-national in character. The main "oil" intrigue at the beginning of the 1920s consisted in deciding who would get the exceptionally rich oil-bearing lands in Mexico and the USSR, which held, respectively, second and third place in terms of oil extraction but lacked the funds to develop their own deposits.

The pioneer in the "oil discovery" of Soviet Russia was the American company Sinclair Consolidated Oil Corporation, which was considered in America as an "independent" company, standing on the market against the Big Five that at one time belonged to J. Rockefeller's huge Standard Oil Company.

Its owner, Henry Sinclair, had already obtained concessions in Romania and Persia, concluded a preliminary agreement with the government of the Far Eastern Republic (a pro-Soviet democratic republic existing on the territory of Eastern Siberia and the Far East in 1920 - 1922 - Yu.Ye.) on a concession on Sakhalin, and, in May 1923, the representative office of the company submitted proposals for creating a joint Soviet-American company to run virtually the entire oil industry of the USSR. Henry Sinclair and his specialists were naturally interested in obtaining first hand information.

Through establishment of unofficial contacts, the Soviet-American energy dialogue gradually began to acquire a real outline. American oil industrialists had a practical interest in the Soviet oil press. In 1923 and 1924, following Sinclair Сorp. and Marland Оil Сompany, applications to the editorial board were submitted by such American and European companies as Union Оil Сompany of California, The Texas Сompany Рetroleum and its Рroducts, Anglo-Saxon Petroleum Co. Ltd., Compagnie Française des petroles, Belgo-Caucasienne des petroles et du commerce and others. After these, an interest in the journal was also demonstrated by official U.S. authorities not connected with the oil industry. In particular, the American Trade Commissioner of the Bureau of Foreign and Domestic Commerce of the U.S. Department of Commerce C.J. Mayer took the initiative in proposing to send, in exchange for The Oil and Shale Business, the US Department of Commerce official "Commerce Reports".

From 1924, Soviet engineers and workers made regular visits to American oil fields. From 1923, American drilling, construction and engineering companies operated, though not always successfully, in Soviet Russia and individual consultants visited the country.

Thus, the 1920s were a time of intensive contacts between Soviet and American oilmen, essentially preparing the ground for further contacts in various spheres, which eventually, in 1933, led to establishment of official diplomatic relations between the USSR and the USA.