No. 2, 2010
Prof. Alexander Bessolitsyn, Dr.Sc.
ALONG THE VOLGA OIL ROUTE
At the end of the 19th century, a mighty tanker fleet was established in Russia for bulk oil transportation
The abolition of serfdom in the Russian Empire in 1861 and the subsequent reforms of the 1860s-1870s provided a powerful impetus to the country's industrial development and advancement of its economic structure, and greatly vitalized the business activity of various groups in Russian society. One clear example of this was the creation and subsequent development of a mighty Russian bulk-oil river fleet, which was way before its time in technical terms.
Let there be a Russian bulk-oil fleet!
Since the Russian Empire's main oil production region was the Apsheron Peninsula, oil and petroleum products were delivered from Baku to Central Russia mainly by the Caspian Sea and then along the Volga. Oil cargoes were initially transported in wooden and later in iron barrels, which were quite expensive and this had a considerable impact on the price of kerosene for the consumer.
The priority of inventing a bulk-oil method of transportation in the early 1870s was established by Astrakhan merchants, the brothers Nikolay and Dmitry Artemiev. This is how one of them recalled this: "Having been transporting oil since 1866 and, together with my brother, trying to invent a way of doing so without barrels, in 1873 we refitted the boat Alexander for shipping oil by equipping it with a bunker into and out of which oil was pumped by hand. This experiment, for which the other industrialists jeered at us, produced outstanding results: the Alexander made 10 journeys to every 6 by other vessels."
A new stage in the development of the Russian bulk-oil fleet was ushered in by the appearance, in 1877, on the Caspian Sea, of the world's first ever oil tanker, the Zoroaster. It was built in Sweden at the Motala shipbuilding works according to a design by the Russian industrialist Ludvig Nobel, having a 184-foot long, 27-foot wide and 9-foot deep steel body. It had a capacity of 15,000 poods of kerosene and a maximum speed of 10 knots. The Zoroaster demonstrated its efficiency, effectiveness and reliability in operation. In 1879, Ludvig Nobel built, at his workshops in Tsaritsyn, two bulk-oil barges, the Elena and the Elizaveta, with a carrying capacity of 35,000 poods each, and then, in Sweden, the Nadezhda and Vera barges. Soon, other Nobel tankers appeared in the Baku port: the Budda, Magomet, Moisei, Spinosa, Darwin and Linnei. By 1882, the fleet of Nobel tankers numbered 13 vessels capable of delivering up to 10 million poods of kerosene from Baku to Astrakhan during the shipping season.
Ludvig Nobel's example proved very convincing. The Lebed, Kavkaz i Merkury and Volga shipping companies quickly refitted their vessels for carrying oil in bulk and the merchants Gordeyev and Chernov soon started up specialized oil and petroleum product transportation companies.
Another important stage was the mass building of a new type of bulk-oil river barges. In 1885, the Construction Bureau of Engineer A.V. Bari, built the first steel bulk-oil barges with a carrying capacity of 40,000 and 50,000 poods. These were ordered by the shipowners Baranov and Shitov. Initially, the barges were 70 meter long and 10 meter wide, and then construction was launched of 150-170 meters long "river" giants with a displacement of up to 100,000 poods. Here, too, for the first time in the world, the mechanical engineer Vladimir Shukhov created a rational new type of towed bulk-oil vessel: its bow was spoon-shaped and its afterbody has a substantial aft line. For the first time, the barge body included a sort of caisson system made of crossed lengthwise and crosswise beams, structural and load-bearing elements of the superstructure and partitions to add rigidity. By 1910, over 25 years of work, the Saratov and Tsaritsyn divisions of the Construction Bureau of Engineer A.V. Bari had built 65 barges with an aggregate carrying capacity of 6.8 million poods, which at that time constituted about half the total tonnage of the Volga bulk-oil fleet.
In general, it should be noted that the bulk-oil transportation system made it possible, in a short time, to supply the entire Russian hinterland with kerosene, oil and fuel oil. Thanks to bulk-oil transportation, a pood of kerosene cost consumers in Nizhny Novgorod 70-80 kopecks less. In Tsaritsyn, a pood of kerosene cost, on average, 1 ruble 85 kopecks in 1877, 1 ruble 15 kopecks in 1878 and 75 kopecks in 1879; in 1882, the price fell to 50 kopecks and later, by the end of the 19th century, to 15-25 kopecks.
Combined entrepreneurial efforts
At the beginning of the 20th century, the fleet of the Volga and the Volga basin had an aggregate carrying capacity of over 450 million poods, which was more than the total volume on all the other rivers in the Russian Empire. In terms of the quantity of cargo carried, the Volga was in first place among all the rivers on the European continent, with a freight turnover standing at more than 1 billion poods. Thanks to the Volga and its tributaries, transit links were maintained between the central regions of Russia and the territory beyond the Caspian, the oil-bearing Apsheron Peninsula, Persia and the Urals. Yet the situation within the Russian business community failed to reflect appropriately the role and significance of the Volga as the country's most important transport artery in general and of Volga shipping, providing for transportation of mass cargoes, in particular. This prompted the Volga shipowners to start setting up their own representative organizations (standing assemblies) with the relevant executive bodies.
The first Volga shipping assembly took place in Nizhny Novgorod in December 1908. The permanent members of the assembly were 95 shipowners, including such well-known firms as the Volga Shipping Company, Volga Share Partnership, Kavkaz i Merkury Shipping Company, Kolomna Engineering Works, Mazut Oil Industry and Trading Partnership, Nobel Brothers Oil Production Partnership, Samolyot Shipping Company and others. The list of persons invited to the assembly included 79 representatives of shipowners, as well as representatives of Volga exchanges, insurance companies and correspondents from regional and central media.
The agenda of the assembly includes 9 items, the main one, after election of the assembly's management bodies, being discussion of shipping and other special tariffs detrimental to the Volga shipping industry. In his speech, the chairman of the Nizhny Novgorod exchange committee, a deputy of the assembly's chairman and subsequently chairman of the assembly's council, Dmitry Sirotkin, noted that "shipowners are constantly battling with the railroads, since rail tariffs in recent years have been designed to attract cargoes artificially away from the Volga to the railroads, to the detriment of shipping. Volga shipping was set up without any assistance from the Treasury, by the efforts of the Volga people themselves. The government is still taking care of the railroads. The time has now come to act in the interests of shipping. We must firmly take the path of representation and demonstrate that the waterways have just as much right to patronage since they are of national significance. The government should protect us against abnormal aggressive tariffs."
In essence, this speech constituted an action plan for all subsequent assemblies. At the same time, the main struggle broke out around the tariffs for transporting oil freight, which was in second place in carriage terms after flour and the significance of which, as oil production expanded in the Baku region, constantly increased within the volume of Volga transport shipping. The speech made at the assembly by shipowner and oil producer V.F. Lapshin stressed that the main reasons for the decline in shipping consisted in the cost of fuel and the one-sided tariff policy. He proposed, as a way out of the situation, reviewing the price for crude and petroleum products. In his opinion, by setting a higher price for kerosene, oil-producers would be forced to refine it from oil in as great a volume as possible and this would allow more productive use to be made of the country's natural riches. At the same time, it was proposed to raise the excise duty on crude oil and, accordingly, reduce it on kerosene, allowing it to be exported in large quantities.
Specific work to implement the resolutions adopted at the assembly became the responsibility of the Council of Assemblies of Shipowners of the Volga Basin, which engaged in this work on a regular basis during the period between assemblies. The Council of the Society began its work on December 11, 1908. At the first shipping assembly, the Council consisted of 9 members and 4 candidate members. The Chairman of the Council was the big businessman and public figure, merchant of the 1st guild D.V. Sirotkin and the Vice Chairman was S.A. Petrakov.
It should be noted that the problems of transporting oil cargoes were discussed in one form or another at every shipowners' assembly. A major problem that figured on the agenda for the Council throughout its activities from 1909 through 1913 was associated with the need to curb oil fuel prices, above all those for fuel oil, as the fuel used by the Volga fleet itself. The Council consistently lobbied with respect to this matter before the government authorities, demanding more active intervention in the pricing policy pursued by the leading oil producing companies. This applied, in particular, to the Nobel Brothers' Partnership, which, in addition, controlled up to 25% of the oil production in the Baku area and was also one of the most active refiners and transporters of oil. This engendered price competition with other shipowners of the Volga basin.
At the second regular assembly (December 10-11, 1909), the problem was raised of the vital need for presence of Volga basin shipowners in tariff and other representations in St. Petersburg, which would make it possible to exert a real influence on government authorities with respect to regulation of the prices for transportation of liquid fuel. In order to fulfill this task, a substantial increase was even proposed for the assembly budget from 7,000 to 23,000 rubles a year.
At the third assembly (December 10-13, 1910), in addition to the traditional problems associated with development of shipping, aspects were discussed of future development of new transport routes, which would make carriage by water more attractive. The discussion centered round construction of a Volga-Don canal and linking the Volga with the Siberian rivers, which would open up the extensive Siberian market for transportation of oil freight.
The fourth assembly (January 15-17, 1912), when considering the prospects for transporting bulk cargoes, supported the idea of developing the Mariinskaya water system built back in the 18th century and requiring renovation. A total of 5 sections worked at the assembly, two of them (the first and fourth) being devoted to the problem of developing rules governing transportation, pumping and storage in vessels of oil freight, as well as the oil fuel pricing policy.
The fifth and last assembly (February 10-13, 1913) held a special hearing of a report devoted to measures for combating high oil prices. The report was made on behalf of the All-Russia Council of Congresses of Representatives of Industry and Trade by D.V. Sirotkin. He noted that, in connection with the rise in oil fuel prices, Volga shipping, which carried about 800 million poods of cargoes a year, lost at least 16 million rubles per annum. The conclusion was drawn that, given the increasingly fierce competition with producers, the task would have to be resolved of uniting shipowners in a broader and more representative organization on a national scale.
The problems of transporting crude oil and oil cargoes thus played the main role in the activities of the leading regional organization of entrepreneurs - the Assembly of Shipowners of the Volga Basin, through its history.
