Issue 3, 2013. June-July

   

THE BATTLE FOR TRANSCAUCASIAN RAILWAY AND OIL: THE NOBELS, ROTHSCHILDS AND ROCKEFELLERS IN GEORGIA

In the hectic days of the Russian Empire, when Georgia was part of Tsarist Russia, three of the world most powerful households - the Nobels, Rothschilds, and Rockfellers - fought to build the Batumi-Baku railway, building up invaluable infrastructure in Georgia in the process.

Emil Avdaliani

Nobels: Creation of the Business Empire

The first Nobel to come to Georgia was Robert, the eldest brother, who came to Tbilisi in 1873 in an attempt to persuade officials to allow him to import duty free dynamite for construction. It was his younger brother Ludwig, however, who recognized Georgia's potential as a transit country to move oil from Baku to Europe.

Robert Nobel

Already a scion of industry in Russia, Ludwig Nobel purchased a kerosene plant and oil-rich territories for 8000 rubles from the "Tiflis Society" in Baku in 1875. Three years later, in 1878, the Petroleum Production Company Nobel Brothers Limited (Branobel), was formed by the special imperial degree of Tsar Alexander II.

In the beginning, the Nobels shipped oil and kerosene to Europe via Poti- a small, dusty and underdeveloped Georgian town, or via the Baltic Sea Ports, since Batumi was still under Ottoman Rule. But once the Tsar reasserted control over Adjara following the Russo-Turkish War and Batumi became a free port, investors like the Nobels started exploring the city's potential, laying the groundwork for the Batumi-Baku railway -- a project that took the region's precious resources out of Russia's orbit and set the course for development in Georgia.

"The 30 Year War" (1880s-1917)

From Baku, Ludwig Nobel turned to his brothers in Petersburg to convince them that Batumi was the best route for their oil.

"From all the routes available for oil transportation from Baku, I recommend... the one through Georgia, because of the friendship and mutual loyalty existing between Georgians and Azeris for centuries. For us, foreigners, this factor is of considerable importance. Since all other routes involve much more danger, and because there are no such favorable conditions elsewhere except for both Baku and Tbilisi, I'm sure that we should choose exactly this route."

Ludvig Nobel

To build the railway line, however, the Nobels had to enlist the Rothschild family, who became interested in developing the oil industry in the region after they were contacted by a group of Russian investors.

The Rothschilds eventually provided $10 million for the railway project, and were able to finish it in 1883, establishing the "Societé Commerciale et Industrielle de Naphte Caspienne et de la Mer Noire," known by its Russian abbreviation - БНИТО (BNITO).

Ludwig Nobel and the Rothschild family was not the only industrial magnate to realize Batumi's potential. Another powerful clan of tycoons, the Rockefellers, also sought to exert influence over the region's oil and transit systems.

Competition between the three families over influence in the region became known as the 30-Year War, and lasted until the Russian Tsar fell and the Russian Empire ended. While the battle was largely fought by lawyers and took place in courtrooms, it obstructed developing the Caucasus' oil potential and fledging business interest in Georgia.

Building Batumi and Georgia's Transit Infrastructure

To protect his company, Ludwig signed new contracts and reinforced his positions in the Black Sea trade by bringing in a 286-feet-long tanker "Свет" (The Light) meant to ship kerosene to England. To keep up with the competition it was absolutely essential for the Nobels to increase oil production output.

Surami Pass


Initially, they added transportation cars and built several new refineries in Batumi. That was not enough, however, and in 1883, Ludwig Nobel tried to convince local authorities to build a pipeline between Baku and Batumi.

Fearing the pipeline would give the Nobels an unfair advantage over the Rockefellers and allow them to drive up prices, the local government refused to support the project.

To circumvent their opposition, Ludwig Nobel founded the first syndicate in Baku, and started work on the 835 kilometer pipeline.

Construction was completed in 1903, and included telephone lines and 19 pumping stations.

The completed pipeline could pump 900,000 tons of hydrocarbons per year; its construction required 400 tons of Alfred Nobel's dynamite and cost 12 million rubles to build.

When the Russian monarchy eventually collapsed in 1917, the new Bolshevik government introduced harsh measures.

Nobels, Rothschilds, Siemens and many other foreign investors did not survive the governmental onslaught, and their businesses were nationalized.

Lasting Legacy

During their decades in business in the Caucasus, however, the Nobel family created a lasting legacy. They built homes for their local staff, a third grade school in Baku, and the consulate of Sweden-Norway in the Caucasus, which became the Nobel Brothers Batumi Technological Museum in 2007.