In the mid-1960s, Azerbaijan's oil industry began to grow faster than in previous years. The main reason for the increase in oil production was the growing demand for kerosene.
Crude oil was already used not only as a means of lighting, but also mainly as a fuel in industry. The emergence of drills and hand pumps in Baku fields, which have a significant impact on the growth of oil production, belongs to this period.
Considering the importance of creating more opportunities for those who want to invest in oil, the government of the Russian Empire decided to replace the existing system of commitments for the development of the oil industry in the Caucasus with the transfer of oil resources to private hands.
The decree on the abolition of the obligation system in 1872 was a turning point in the history of the Baku oil industry. After that, oil sources began to be sold to individuals through auctions. There was a real "oil excitement" in Baku: everyone was trying to buy at least a small amount of oil land.
"Akinchi" newspaper described the atmosphere of that time very accurately: "The word oil and ore is spoken in the streets and markets. It is not enough time to write the papers for buying and selling oil in notaries.
The inhabitants of Badkuba, from the priest to the servant, from the merchant to the hatter, and from the merchant to the candle-thrower, threw away their work, and a few men went to gather with the Sabunchu beys and build a factory in the Black City for a year or two. million. "
After 1872, as a result of the widespread use of the borehole method, wells gave way to boreholes and in 1878 became completely obsolete. Until yesterday, a man unknown to anyone had a great fortune as a result of the impact of fountains, which had a huge power from the boreholes and gave tens of thousands of pounds of oil a day. The rapid development of the Baku oil industry also attracted the attention of foreign capital.In a short period of time, along with local oil industrialists Haji Zeynalabdin Tagiyev, Shamsi Asadullayev, Musa Nagiyev, Murtuza Mukhtarov, Vasily Kokorev, Sidor Shibayev, companies such as Nobel, Rothschild, Vishau and others were established in Baku to invest in "black gold" and earn large profits from it.
Oil production increased so rapidly that in 1870 Baku, which produced 20 times less oil than the US oil industry, produced 5.6 million barrels in 1890 tons of oil, equaling the level of American industry, and in the following years surpassed it
The Absheron Peninsula, where oil production is concentrated, was connected to Russia, Central Asia and Iran by the Volga-Caspian waterway. Ships could transport oil and oil products to Russia and abroad only at certain times of the year - during a six-month navigation period, which was not enough.Russian and European refineries, which did not have crude oil reserves, remained inactive in late autumn and throughout the winter.
At the same time, in 1880-1881, so much crude oil was accumulated in Baku that entrepreneurs were forced to suspend oil extraction and refining in factories for a while, or even dump it into the sea or burn it.
In 1883, the construction of the Baku-Tbilisi railway began, connecting the Absheron Peninsula with the South Caucasus and the Black Sea, and through them with Central Russia and abroad. Thus, Baku already had two access to the markets - sea and rail
In 1907, a white oil pipeline was built along the Baku-Tbilisi railway connecting Baku with the Black Sea port of Batumi.
The rapid growth of the Baku oil industry has led to the active intervention of "black gold" in world markets.
The geography of oil exports expanded significantly: in 1886, Baku oil was exported to England, Austria-Hungary, the Netherlands, India, in 1887 to China, in 1888 to Japan, in 1889 to the island of Java, Siam and the Philippines.
If in 1888 the share of Baku oil region in the supply of white oil to European countries was 15.7%, in 1896 this figure was already 17.85%. Accordingly, the share of American exports fell from 84.3% to 82.5%. Comparative information on the volume of Azerbaijani oil exports in those years is also important: From 1877 to 1882, exports increased fivefold, and from 1883 to 1900 13 times.
The growth of the Baku oil industry was stopped in the early twentieth century. The economic crisis of 1900-1903, the revolutionary events in Russia, the First World War had a negative impact on the oil industry. In general, it should be noted that at the beginning of the twentieth century, especially with the start of mass production of cars and airplanes, the transition of the navy to fuel oil, the importance of oil increased.Oil has become not only a source of energy that drives thousands of engines, but also a valuable raw material for many areas of the chemical industry.
All these factors have led Baku, one of the world's leading oil regions, to become the object of intense struggle of the great powers. Politics was so connected with oil that oil was rightly called "the most political product" then and now. The strategic importance of this type of raw material led to a fierce struggle of the world's leading powers to seize the "black gold".