Branobel

In 1873 Robert NobelRobert NobelRobert Nobel (1829–1896) was a Swedish engineer and industrialist, the elder brother of Ludvig Nobel and Alfred Nobel, who bought a refinery in Baku, Azerbaijan, in the 1870s, starting the Nobel family’s oil business, and was one of the co-founders of the oil company Branobel.Open the full entry became the first member of the Nobel family to visit Baku, Azerbaijan. The same year Russia abolished the monopoly-contract system for leasing oil deposits, and fields in the Caucasus were instead awarded at public auction.⁠[1][2]

In 1874 Robert bought a refinery and a plot of land in Baku and began producing paraffin in autumn 1875. In April 1876 he started drilling his first well on plot 52 of the Sabunchi estate; the same year Ludvig NobelLudvig NobelLudvig Nobel (1831–1888) was a Swedish-born engineer and industrialist based in St. Petersburg, a brother of Alfred Nobel and Robert Nobel, who founded the Ludvig Nobel engineering works and in 1879 co-founded the Baku oil company Branobel, building oil pipelines and the tanker Zoroaster.Open the full entry and his eldest son Emanuel visited Baku. The 300,000 roubles the brothers had invested soon proved insufficient, and more capital was needed.⁠[3][2][4][1][5]

In 1877 pipes ordered by Ludvig from Glasgow, Scotland, arrived in Baku. In 1878 the Nobels built Russia’s first oil pipeline with a steam pump, running 9 kilometres from the Balakhany field to Baku’s Black Town with a capacity of about 1,300 tonnes a day; three other firms followed by the end of that year.⁠[6][2][4]

In 1878 the Zoroaster, a tanker designed by Ludvig and built in Sweden, entered service; regarded as the world’s first successful modern oil tanker, it ran between Baku and Astrakhan, and Zoroaster later also became the company’s symbol.⁠[7][2][8][9]

Branobel’s Russian name was Товарищество нефтяного производства братьев Нобель, its English name Petroleum Production Company Nobel Brothers Limited, and its Swedish name Naftaproduktionsaktiebolaget Bröderna Nobel. Its statutes were confirmed on May 18, 1879, with start-up capital of three million roubles.⁠[4][10][11][12]

The company was formed in St. Petersburg; its co-founders were the brothers Ludvig, Robert and Alfred Nobel and Guard Colonel Peter Bilderling. It was managed by Ludvig in St. Petersburg and by Robert in Baku, and its administration consisted of five directors elected by the general meeting for three-year terms.⁠[12][11][2]

Robert opposed forming the limited company, felt outmanoeuvred by his brothers and left Baku in 1880, after which the Nobels’ employee, the engineer Alfred Törnqvist, became the company’s manager.⁠[5][2]

The company built a vertically integrated system from extraction to sales and is regarded as Russia’s first vertically integrated oil company. Tankers carried products from Baku to Astrakhan at the mouth of the Volga, from where barges and tugs took them to Tsaritsin; the company had storage depots and a barrel factory at Tsaritsin, built its own railway tank wagons, laid private sidings to its depots and tracked the wagons from head office by telegraph.⁠[4][6]

In 1881 the tanker Nordenskiöld was ravaged by fire while loading in Baku; the same year Emanuel NobelEmanuel NobelEmanuel Nobel (1859–1932) was a Swedish-Russian industrialist, the eldest son of Ludvig Nobel and a nephew of Alfred Nobel, who led the Baku oil company Branobel from 1888 and helped carry out Alfred Nobel’s will, fleeing to Sweden after the Soviet nationalisation of 1918.Open the full entry became responsible for the company’s financial matters. In 1882 six tankers were delivered to the company, and the refinery introduced continuous operation using a technology patented by Ludvig.⁠[2]

In 1883 American oil products were driven out of competition in the Russian market. That year Alfred Nobel travelled to Russia to see the company headed by Ludvig, whose factory, office and residence stood near the Samson quay in St. Petersburg.⁠[2][13]

The Rothschild family founded BNITO to compete with the Nobels, and it became number two in the Russian oil market. In May 1884 Alfred Nobel helped convene a conference in Paris at which the two families agreed to cooperate on key business issues. The same year the Villa Petrolea estate in Baku, with housing for some 100 employees, was inaugurated.⁠[14][2][9]

In 1885 the company’s tanker Sviet brought paraffin in bulk to London for the first time. The Petrolea, commissioned in 1886, became the first ocean-going steamship for bulk cargo. In 1886 the company faced a financial crisis, and in 1887 Alfred resigned from its management.⁠[2][8]

In 1888 Tsar Alexander III visited Baku, and Emanuel Nobel received the Imperial Medal and was invited to become a Russian citizen. The same year Ludvig died in Cannes, France, and Emanuel took over Branobel; after his brother Carl died in 1893, Emanuel became sole head of all the Nobel companies.⁠[2][15]

During a cholera epidemic in Baku in 1890, Branobel took the initiative in setting up a cholera hospital. In 1893 the company made a record profit, and its capital reached 20 million roubles.⁠[2]

After Alfred Nobel’s death in 1896 and disputes and legal proceedings over his will, Emanuel bought Alfred’s Branobel shares for SEK 3,840,000; the money went to the newly formed Nobel Foundation, amounting to about 12 percent of its basic capital of roughly SEK 31 million. The same year Emanuel acquired a licence from Diesel.⁠[16][2]

Around the turn of the 20th century Branobel was among the eight biggest oil companies in the world, producing about ten percent of the world’s oil in and around Baku; with its local partners it accounted for about half of Baku’s output. In 1900 the yield on share capital was 20 percent, and almost 60 percent of the oil carried on the Volga came from the Nobel works. The company also produced oil on Cheleken in Turkmenistan and employed some 12,000 workers.⁠[1][16][9]

With Russia’s industrialisation, fuel oil (mazut) replaced paraffin as the company’s foremost product. Its storage capacity totalled 2 million tonnes, and it owned the greater part of Baku’s 140-kilometre pipeline system; Emanuel Nobel led the company as chairman of the board from the head office in St. Petersburg. Between 1879 and 1904 the company processed 1.195 billion puds of oil.⁠[16][10][4]

Wilhelm Hagelin was given a budget of 12 million roubles to build new tankers and convert older ones to run on diesel, with the vessels built at the Kolomna works on the Moskva River.⁠[16]

In 1903 Branobel’s attempts to merge with Standard Oil failed, and social unrest in Baku destroyed 36 of its drilling towers. In 1905 strikes spread to Baku and St. Petersburg, the Baku oil fields were extensively destroyed and the Nobels’ office and works in St. Petersburg were forced to close; it then took the company nine years to regain its former production volume.⁠[2]

In 1909 the company celebrated its 30th anniversary, but Baku’s oil was beginning to run out.⁠[2]

In 1915 the board members of RGO offered their shares to Emanuel Nobel, and Branobel took over RGO’s assets, gaining control of half of the Russian oil industry. The Nobels paid SEK 40 million for RGO’s bank-held equity and issued their own shares worth SEK 55 million. By 1916 Branobel was producing a third of Russia’s crude oil.⁠[17][10]

On May 28, 1918, the Democratic Republic of Azerbaijan declared independence; in June the Soviet regime nationalised the Russian oil industry. Gösta and Emil Nobel were arrested in St. Petersburg but escaped; Emanuel Nobel and his sister-in-law Genia travelled disguised as peasants by horse and cart for seven weeks, reaching Berlin on November 26, 1918, then returned to Sweden, where he renounced his Russian citizenship that year.⁠[2][15][10]

From 1919 Branobel’s business in Russia was run from Paris and later from Stockholm.⁠[2]

In January 1919 Standard Oil paid USD 330,000 to the independent Azerbaijani government for eleven drilling concessions in Baku. On April 12, 1920, Branobel and Standard Oil signed a preliminary contract in Paris for the sale of half of Branobel’s shares for USD 11.5 million.⁠[17]

On April 28, 1920, Azerbaijan was occupied by the Red Army and became a Soviet Republic. That month the Bolsheviks nationalised Branobel’s assets in Petrograd and Baku, including oil fields, factories, houses, shipyards, ships and depots across Russia. Emanuel Nobel described nationalisation as a fine word for a very ugly thing.⁠[2][18]

On July 30, 1920, the final contract was signed in New York, and Standard Oil of New Jersey acquired half of Branobel’s shares. On October 1 that year the company made Stockholm its legal domicile.⁠[10][2][19][18]

In 1922 Nobel, Standard Oil of New Jersey and Royal Dutch/ShellShellShell (Shell plc, formerly Royal Dutch Shell plc) is a multinational energy company headquartered in London; it traces its origins to the group formed in 1907 by Royal Dutch and the “Shell” Transport and Trading Company, became a single listed company in 2005 and was renamed Shell plc in 2022.Open the full entry formed a “Front Uni” under Henri Deterding to boycott all business with the Bolsheviks, but the effort failed; Branobel received £21,000 from a related fund. In 1922–1923 the Swedish Russian Investigation Commission tried without success to obtain compensation from the Soviet regime for lost property.⁠[18][2][20]

Emanuel Nobel died in 1932.⁠[15][2]

In 1934 French bondholders sued over a 1904 loan to force the company into liquidation; the judgement was appealed in 1936, beginning a long liquidation process. A general meeting was held on February 22, 1938, but assets could not be sold during the war. A meeting in May 1959 voted by a sufficient majority to liquidate, and a liquidation meeting was held in 1965.⁠[20][2]

The final meeting was postponed to March 24, 1970, when the assets could be divided, and Branobel was liquidated about 90 years after its founding and 50 years after nationalisation.⁠[20][2]

In 2004 the Baku Nobel Heritage Fund was set up to restore Villa Petrolea; in 2007 the main building of the Nobels’ former oil terminal in Batumi became the Nobel Brothers Batumi Technological Museum. In 2008 Villa Petrolea was restored and the Branobel History Project began, with the Centre for Business History in Stockholm (CBHS) presenting the company’s history online together with archives in Azerbaijan and Georgia and other partners.⁠[2][14][21]