Archive

No. 3, 2012

ALEXANDER MATVEICHUK ,
PH.D., MEMBER, RUSSIAN ACADEMY OF NATURAL SCIENCES

THORNY PATH OF THE OIL INDUSTRY IN 1917


The Russian oil industry during the February and October revolutions of 1917

THE COLLAPSE OF THE RUSSIAN EMPIRE in February 1917, the creation of the Russian Republic in September of the same year, and its abolishment by the Bolsheviks just two months later were three epic events in Russian history of the 1920s that largely defined the country's further far-from-easy path. The year 1917 was also a difficult time of severe trials for the national oil industry, the negative repercussions of which were felt for long years to come.

GREAT HOPES

By the end of 1916, after the Russian army's long and exhausting war efforts and defeats on the fronts of World War I, Russia found itself in an extremely difficult situation. The economic collapse engendered by the war caused high social tension in the country, an increase in anti-war sentiments, and general discontent with the autocratic government policy not only among the leftists and oppositionists, but also among most of the rightist forces. A severe economic, political, and social crisis had emerged, which in February 1917 led to revolutionary upheavals and the collapse of the autocracy.

At the same time, two revolutionary bodies were established: the Executive Committee of the Petrograd Soviet and the Provisional Committee of the State Duma to Maintain Order in Petrograd and for Communication with Various Institutions and Individuals. This latter committee, by agreement of the Executive Committee of the Petrograd Soviet, also formed the Provisional Government of Russia headed by Chairman of the Union of Zemstvos Prince Georgy Lvov (1861-1925).

The Provisional Government's advent to power was welcomed in Russian society by many of those who understood that the country was in need of deep-cutting reforms. As early as the first days of March 1917 a general strike was declared at all of Russia's main oil fields on the Apsheron Peninsula and in the Northern Caucasus, followed by an endless series of various mass undertakings, meetings, manifestations, and demonstrations, among oil workers. A feeling of celebration swept the country and people were filled with the conviction that all-encompassing and favorable changes were in store.

STARVED FOR FUEL

By the beginning of 1917, signs of a fuel famine were clearly visible in the country. Industrial enterprises began to receive less and less oil fuel and coal due to the disruption in rail communications.

As early as the beginning of spring 1917, industry in the Petrograd economic district was suffering from a shortage of 25% of oil fuel and 30% of coal.

In the summer of 1917, rail transport continued to significantly deteriorate, the mounting collapse and increasing shortage of raw material and fuel forcing industrial enterprises to close down en masse not only in Petrograd and Moscow, but also in many other cities of the country.

The Provisional Government carried out various organizational measures in an effort to combat the fuel shortage. On April 15, 1917, the Ministry of Trade and Industry suggested that the Provisional Government broaden the rights of the Special Fuel Council owing to the extreme difficulties in supplying the Central and Northern regions with coal and oil. The same day, the Provisional Government consented to this proposal. On April 29, 1917, the chairman of the Special Fuel Council approved the Provisions on District Authorized Fuel Representatives. Their duties included ensuring that the districts were supplied with fuel and that it was distributed among consumers. The following 11 districts were established: the Volga, Caucasian, Kievan, Petrograd, Ural, Central, Southern, Siberian, Turkestanian, East Siberian, and Far Eastern. At the end of April 1917, an attempt was made to create an Association of Russian Oil Industrialists that was to become a national industrial organization capable of extricating the industry from its crisis. Later, on May 30, 1917, chief authorized representative of the Special Fuel Council Karl Kirsh (1877‒1919) proposed that the Provisional Government approve the Provisions on an Oil Inspectorate. This document envisaged the Oil Inspectorate as a new special government body with broad powers in oil production, including in carrying out full mining supervision at oil fields and managing the work of regional commissions on protecting oil fields. But the government and regional administration bodies could not come to terms on the provisions for the Oil Inspectorate, and after months of unsuccessful negotiations the project was abandoned.

On August 15 (2), 1917, Minister of Commerce and Industry Sergey Prokopovich (1871‒1955) approved the Temporary Provisions on the Special Post of Authorized Representative of the Special Fuel Council (OSOTOP) for the Caucasian District, who was endowed with broad rights with respect to maintaining oil production on the Apsheron Peninsula and ensuring reliable transportation of petroleum products to the central provinces of the country.

However, all of these measures by the Provisional Government did not yield the desired result and the situation at the oil fields continued to deteriorate. The active efforts of so-called working committees had a detrimental effect on the industry. The incompetence and permissiveness of these inofficial bodies soon led to negative results. Unauthorized seizures of production units, expelling engineers and technicians from oil fields, and setting up workers' management proved to be unprofessional and ineffective steps. They only intensified the negative trends and resulted in the complete and logical collapse of the Russian oil business.

THE COSSACK OIL COMMUNITY

In the spring of 1917, tempestuous revolutionary events unfolded in the oil-bearing lands of the Northern Caucasus - the Grozny oil district and the Kuban.

On March 13, 1917, a former member of the State Duma of the fourth convocation, Cossack sub-captain Mikhail Karaulov (1878‒1917), was elected by the First Community of the Terek Cossacks in Vladikavkaz as ataman of the Terek Cossack Army and head of the district Provisional Military Government. On March 14, 1917, a congress of representatives of the Chechen population of the Terek Region was held in Grozny where the Chechen Executive Committee was elected headed by Akhmetkhan Mutushev. At the same time, another body was established in Grozny - the Soviet of Workers', Soldiers', and Cossack Deputies. Later, on the basis of an agreement, they formed the so-called Joint Bureau. It included representatives of the Civilian, Cossack, and Chechen committees and of the Soviet of Workers', Soldiers', and Cossack Deputies. This bureau existed from March 9, to May 20, 1917. Then at a congress of representatives of the Cossacks, rural population, urban municipalities, and Soviets of Workers' and Soldiers' Deputies held on May 18‒20, 1917, a district Executive Committee of the Terek Region was formed. Akhmetkhan Mutushev was elected as its chairman and Mikhail Karaulov as his deputy.

Similar events also took place in another oil-bearing district of the Northern Caucasus - the Kuban Region. During the February 1917 revolution, a Kuban Military Rada and Provisional Military Government headed by military ataman Colonel Alexander Filimonov (1866‒1948) were established in the Kuban.

On March 19, 1917, War Minister Alexander Guchkov approved the Temporary Provisions on Public Administration of the Terek Cossack Army drawn up by the First Military Community in which Item 5 of Article 11 referred to the community's obligations: "management of military revenues, capital, and property (forests, land, water, subsurface, salt lakes, and so on)". Based on the draft approved by the First Military Community, the Terek Cossack Army has adopted, particularly with respect to the oil industry, all the rights that used to belong to the Russian government.

The military government in the Kuban also directed its efforts toward establishing control over the regional oil industry. According to the results of 1916, only 1 million 946 thousand poods of oil were produced there (pood is an obsolete Russian unit of mass, equal to about 16.38 kg), although in 1914, the production volume amounted to 4 million poods. Consequently, the Kuban military government requested War Minister Alexander Guchkov to grant the Cossacks "freedom in the oil business." A similar request was sent to the ministry from the Terek military government in Grozny. As a result, in May 1917, the Military Soviet of the Provisional Government approved the Rules for the Oil Industry on the Lands of the Kuban and Terek Cossack Armies that gave broad rights to the Cossacks for carrying out business activity in the oil industry. This document was to ensure full loyalty of the monarchic Cossacks toward the new democratic government.

At the same time, the proposal of the Provisional Government to create an Oil Inspectorate came up against staunch opposition from the military governments of the Kuban and Terek regions. After declaration of the Russian Republic in Petrograd in September 1917, the Second Territorial Rada in the Kuban, in turn, declared itself a supreme body not only of the army, but also of the entire Kuban territory, adopting its own constitution - Temporary Provisions on Supreme Power Bodies in the Kuban Region, which set forth the right of main control over the activity of the oil industry.

The Grozny oil industrialists, in turn, were against this administrative innovation. On September 30, 1917, the Council of the Congress of oil industrialists of the Novogroznensky district sent a letter to Minister of Commerce and Industry A. Konovalov asking for the Provisions on the Oil Inspectorate to be postponed and listing the immediate needs of the Grozny oil industry, which was at the epicenter of intensifying ethnic strife. Alas, the Provisional Government, which was on its last legs, did not heed this desperate plea.

AMERICAN ODYSSEY OF IVAN GUBKIN

The foreign policy manifesto of the Provisional Government of March 20(7), 1917 served as the basis for its rapid recognition by Western countries. And the U.S. was first to recognize the new Russian government. On March 22(9), 1917, the American government recognized the Provisional Government. On April 25, 1917, a decision "On Sending a Russian Emergency Mission to the United States of America" was adopted at a meeting of the Provisional Government. Deputy Minister of Trade and Industry Boris Bakhmetiev (1880‒1951) was appointed as head of the mission "making him responsible, for the duration of the mission's stay in the United States, for administration of the Russian embassy in Washington and endowing him during this time with the title of ambassador extraordinary and plenipotentiary."

At the suggestion of Director of the Geological Committee Valerian Weber, his coworkers became members of the Russian mission: specialist in oil geology, mining engineer Ivan Gubkin (1871‒1939), and expert on coal deposits, geologist Avenir Snyatkov (1877‒1919).

In mid-May 1917, the mission set off by train via the Great Siberian Railway to Vladivostok, from where it embarked on an equally long steamship journey to New York.

At the beginning of June, the Russian mission arrived in the U.S. and its members found themselves in the throes of intensive work. Back in Petrograd, head of the Oil Sector of the Geological Committee Dmitry Golubyatnikov (1866‒1933) gave mining engineer Ivan Gubkin the daunting task of comprehensively studying the experience of the American oil workers, to which end he was to visit all the oil-bearing provinces of the country.

The American odyssey of mining engineer Ivan Gubkin lasted for almost eight months. During this time, he traveled extensively around the country, going from New York to Washington, then on to Pennsylvania, Virginia, California, Texas, Ohio, Oklahoma, Kansas, Arizona, and New Mexico.

In the state of  Virginia, at the head office of the United States Geological Survey (USGS), Ivan Gubkin was greeted by its director George Otis Smith (1871‒1944), a recognized authoritative specialist who by that time had headed this department for more than ten years. Gubkin's acquaintance with USGS Chief Geologist David White was extremely beneficial for the Russian mining engineer. Mr. White permitted him full access to the geological research documents of all the American oil-bearing provinces.

His visit to Oklahoma also made a great impression on Ivan Gubkin. There he became acquainted with the activity of the recently established American Association of Petroleum Geologists and had a productive meeting with its president, chief geologist of Sinclair Oil and Gas Co. John Elmer Thomas (1892‒1949). In the same state, he visited oil fields at which oil production was carried out by the 101 Ranch Oil Company that belonged to well-known oil industrialist Ernest Whitworth Marland. Here the company's chief geologist Irving Perrine gave him comprehensive explanations.

Mining engineer Ivan Gubkin continued his trip to the oil fields of Virginia, Kansas, California, and Texas. Everywhere he was welcomed most congenially by American geologists, oil workers, and businessmen. They saw him as a representative of new Russia that was about to embark on the road of democratic changes and create a society of freedom and equality.

On March 1, 1918, Ivan Gubkin returned to Washington where his colleague, geologist Avenir Snyatov, was already waiting for him. Together they decided to return home. In the dangerous conditions of the active military operations that continued at sea, they did not reach Stockholm until two weeks later on a trade ship, and from there, after hiring a fishing trawler, travelled on to Murmansk by a roundabout route. Mining engineer Gubkin's brief preliminary report on the results of his American business trip was soon printed in one of the official publications of the Soviet government - Bulletin of the Supreme Soviet of the National Economy. He did not visit the U.S. again for another 15 years. In 1933, the 16th Session of the International Geological Congress was held in the U.S. capital of Washington, where, as head of the Soviet delegation, Academician of the Soviet Academy of Sciences Ivan Gubkin presented a comprehensive report.

ON THE RUINS OF THE OIL EMPIRE

On September 1, 1917 Russia was declared a republic and power went first to a directorate of five people under the leadership of Alexander Kerensky and then, at the end of September, the third coalition government headed by him was formed. Despite the democratic rhetoric and the repeated declarations about a radiant future, the power of the government of the Russian Republic weakened with each passing day.

Toward the end of October 1917, its power was essentially paralyzed: decrees and orders were sabotaged and ignored. Anarchy reigned in all the gubernias and uezds. This largely explains the ease with which the republic was overturned in Petrograd on November 7 (October 25), 1917 by the uprising masses led by the Bolsheviks.

But the new authorities, the Council of People's Commissars headed by Vladimir Ulyanov (Lenin), were unable to immediately stop the momentum of the approaching national disaster. The seeming unlimited freedom declared by all the revolutionary groups provoked aggravation of nationalistic and separatist moods in different ethnic and social groups of Russian society, which was also directly manifested in the tragic events in the oil industry. In November 1917, in one of their raids on the Novogroznensky fields, Chechen abreks set several drilling derricks alight, which resulted in an enormous fire. The scope of the destruction was huge, all the oil field equipment and mechanisms were destroyed, as well as the main infrastructure facilities.

On the whole, the revolutionary upheavals of 1917 had the most direct negative effect on the production performance. The volume of oil production at the Apsheron fields alone for the whole of 1917 amounted to 402.8 million poods, which was 73.7 million poods less than in 1916. A total of 68 million 530 thousand poods were produced in the Grozny oil district. The disappointing year-end results in the industry were only the beginning of the profound upheavals that subsequently befell the Russian oil industry in the extremely difficult period of the bloody Civil War of 1918-1920 that followed.



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