The Turbulent History of Foreign Involvement in the Russian Oil and Gas Industry

The history of the Russian oil industry dates back to the middle of the 19th century when oil was dug from pits near Baku, but the country’s emergence by 1900 as a major global oil producer had much to do with the involvement of foreign investors. Indeed the development of one of the world’s major oil companies, Shell, was based on its work in establishing production in southern Russia and a transport network to move its oil to the developing global market. In this chapter, we chart this early period of Russian oil history, which ended with the departure of foreign investors following the 1917 revolution, before describing the subsequent development of the Soviet oil industry. This occurred largely without foreign involvement, as first the oil fields in European Russia were brought on-stream in the 1930s and 40s and then the giant resources of West Siberia were explored and developed from the 1960s onwards. Russian oilmen remain rightly proud to this day of the achievements of their Soviet predecessors as they not only found and produced oil in vast quantities in the harshest of conditions but also constructed the massive infrastructure of rigs, pipelines and supply routes that still service the industry today.