23) The battle for Oil and a brief history of the Romanian petroleum industry

"He who will have the oil will have domination.
The nation that will be the owner of this precious fuel will see billions."
French energy minister Henry Bérenger to French Prime Minister Georges Clemenceau, 12 December 1919.


Following World War I, Romania experienced a serious increase in size and power. During the interwar period, Romania was an important exporter of raw materials, first of all grains, corn, oil and timber. When it came to oil exports it was second, only behind the USSR in Europe, and sixth in the world.
During World War I, the oil field installations were destroyed by sabotage, and were partially rebuilt by Germany between 1916 and 1918. Their rehabilitation continued after the war and was finished around 1924.
Between 1918 and 1924, 101 new companies were registered in Romania, most of them with Romanian capital, whose activity was the extraction, transformation or distribution of crude oil and/or its derivatives. Some of them – like the Creditul Minier, Industria Romana de Petrol (known as IRDP), and Pacura Romaneasca were quite important, while other ones were small enterprises. In 1920 when the Romanian state, through its Liberal government, offered state monopoly-like concession to the IRDP, diplomats of England, the USA, France and the Netherlands exercised serious pressure, even threatening with retrieval of international loan for rebuilding the country from London’s financial markets. The government had to give up the idea.


Among foreign investments, the English was the most important one, and replaced in a successful way former German and Austro-Hungarian interests. The most important company was the British-Dutch Royal Dutch-Shell, through its affiliated branch-company, the Astra Romana. In 1920 other English companies penetrated the Romanian market, like the Anglo-Persian oil Co Ltd., through the Steaua Romana (having previously German capital), the Sospiro Oilfields, and the Phoenix Oil and Transport Co. Ltd.
As a result of peace treaties, French capital received equal share with British one from former interests of German and Austro-Hungarian firms. Just as British investors cooperated with Dutch ones, the French cooperated with Belgians. The most important representative of French-Dutch capital was the cartel-like company Omnium International des Petroles, with its headquarter in Paris. Among its stockholders were firms like  the Banque de Paris at des Pays Bas, Banque Mirabaud at Co., Louis Hirsch et Co., Petroles des Roumanie-Anvers, etc. its main branch company in Romania was the Colombia, founded in 1920. Other companies with French or Belgian interests were the Petrol Block, Aquila Franco-Romana and Compagnie Financiere Belge des Petroles.


American capital missed the opportunity of redistributing “war prey” (investments of Central Powers) between British, French and Romanian capitals. Instead, the Standard Oil invested in the  already existing Romano-Americana company, in which it was the only shareholder. The Romano-Americana quickly became the second major oil producer company after the Astra Romana. US diplomats in general were very active in promoting economic interests from American investors.
Italian capital entered Romania during the mid-twenties, through the AGIP, whose base was in the Prahova valley. Interestingly, unlike England and France, who used refineries on Romanian soil where oil products were transported through pipelines till the port of Constanta, Italians preferred in the mid-thirties to use the AGIP refinery in Fiume. In 1934, Italian authorities asked AGIP to base its supply for the largest part on Romanian oil (around two thirds) leaving the other to short term contracts basically with the Soviet Union. With all this, 1934, exploitation in the Prahova valley declined and Italy never regained its position, facing a far stronger competitor in Nazi Germany. The AGIP often collaborated with American-owned companies, for example, rotary drilling technology was adopted with the help of American engineers.
German direct investments, compared to other ones, were insignificant both under the Weimar Republic and the Nazi Third Reich. On the other hand, Germany in the thirties quickly became the most important partner of Romania when it came to oil import.

Daily Mirror Cartoon showing Romanian King’s dangerous situation between Hitler and Stalin

In 1938 Germany became Romania´s most important trading partner: 48,5 percent of Romanian imports came from Germany, and 35,9 percent was the share in destination of exports toward Germany. In 1939, the “German-Romanian Treaty for the Development of Economic Relations between the Two Countries” was signed, which granted, for ten years, German primacy in Romanian bilateral trade. The treaty provided German priority in Romanian exports for agricultural, timber and oil products. In exchange Germany granted technical know-how and war equipment. Change could be made through direct exchange, products for products, no use of currency needing to be involved.
The treaty strengthened German economic power considerably and contributed on proving an enhanced economic capability of its war efforts. During World War II, Nazi Germany penetrated the Romanian economy even more, subordinating it to its war objectives.


Germany did not have the petroleum to wage a war of any duration. The basic calculations were stark. The Germans estimated that they needed 12 million tons of oil annually to wage war. The synthetic petroleum industry in the Ruhr based on coal liquidficatioin would by the late 1930s produce about 3 million tons, leaving a defivcit of 9 million tons. Germany could not go to war without a secure source of additional oil. The oil could not be imported by sea because of the Royal Navy. The answer to this shortfall was Romania. The Romanian oil fields centered around Ploesti produced about 7 million tons annually. Romania posed some initial problems because the country had sided with the Allies in World War I and as a result had been rewarded with territorial concessions at the expense of its neighbors which had sided with the Central Powers. The Romanian royal family was a German family, but Romania had sided with the Allies in World War I. Romania agreed to sell most of its oil to Germany (1939). British efforts to bid for the oil failed. The Nazis next convinced the Romanians to expel British technicians (July 1940). General Ion Antonescu, who had been the Minister of War, for King Carol when he seized power (September 6, 1940). This meant that the Nazis had essentially turned Romanian into a satellite state and ally.


Operation Tidal Wave was an air attack by bombers of the United States Army Air Forces (USAAF) based in Libya on nine oil refineries around Ploiești (located ~56 km north of Bucharest - capital city of Romania), on 1 August 1943, during World War II. It was a strategic bombing mission and part of the "oil campaign" to deny petroleum-based fuel to the Axis. The mission resulted in "no curtailment of overall product output", and so was deemed unsuccessful.
This mission was one of the costliest for the USAAF in the European Theater, with 53 aircraft and 660 aircrewmen lost. It was the worst loss ever suffered by the USAAF on a single mission, and its date was later referred to as "Black Sunday". Five Medals of Honor and numerous Distinguished Service Crosses were awarded to Operation Tidal Wave crew members.





Two thousand years ago, oil from seeps was exploited in the Roman province of Dacia, where it was called picula. The first attestation of Oil exploitation in Romania dates from the II century a.d. and continues in the next centuries, being proven by the numerous potteries with marks of crude oil on them, dated in the II-XVI centuries.
The first document from the Romanian historical province of Moldavia regarding fuel oil is dated October 4th 1440, while the first records mentioning oil from Wallachia is dated 1517. In the beginning, crude oil exploitation simply meant collection from the shallow pits and ditches in the outcrops of the Sub-Carpathian area. The technique involved digging small holes into the ground, where fuel oil was collected, while the crude oil was channelled through ditches towards a collecting pit.
The beginning of the Romanian petroleum industry dates back to 1769 with the documentation of rudimentary crude oil extraction in Moldavia by Dimitrie Cantemir, a former Prince of Moldavia, who published the account in "Descriptio Moldaviae".

Oil extraction at Moreni, Romania - middle 19th century

Romania was the first country in the world (1857) with a petroleum production officially registered in the international statistics. „The Science of Petroleum” certifies in 1938 the fact that Romania was the first country in the world with an oil production of 275 tones officially registered in the international statistics. It was followed by the United States in 1859, Italy in 1860, Canada in 1862 and Russia in 1863.

Hand-dug oil well at Bustenari, 1900

The first processing equipments of petroleum in the world are considered the “oil pumps” from Lucacesti-Bacau, belonging to N. Choss in 1840 and M. Heimsohn in 1844. This were only simple handmade workshops, equipped with rudimentary methods which were using for refining a system similar to the one for obtaining "țuică" (a traditional Romanian spirit that contains 28%-60% alcohol by volume, prepared from plums) in a rustic boiler. Distillation on industrial way starts with the refinery built by Mehedinteanu brothers at the periphery of Ploiesti city, near the South Station, on 174, Buna Vestire Street. The refinery installations were quite primitive, all the equipment being build up from iron or raw iron cylindrical vessels, warmed up directly with wood fire. This equipment was ordered in Germany from Moltrecht company which was building boilers for bituminous shale distillation, and in December 1856 starts the construction of the gas factory from Ploiesti, on the name of Marin Mehedinteanu.

Oil eruption 1900 - Romania

Bucharest was the world’s first city public illuminated with kerosene. The oil offered by Mehedinteanu brothers for public illumination had incontestable properties: colorless and with no smell, burning with a light flame, with a constant intensity and shape, without smoke and without ash or resinous compounds in the wick. This important properties of the product as well as the offer of 335 lei per year for each street lamp had practically excluded all the competition, the other offers which proposed as a fuel the rape or nut oil were taking the costs up to 600 lei per year.
Teodor Mehedinteanu’s offer was approved on the 8-th October 1856 and so Bucharest would have been illuminated with 1000 street lamps. At 1-st April 1857- the date for coming into operation of the contract for the capital illumination - everything was ready and working well.

Kerosene dealer, Bucharest, ~1900

Romania was the first country in the world which exported gasoline (essence, benzină) from 1900.

Moreni Sonic Drill 1938

The concept of sonic drilling technology was born nearly 100 years ago (~1918) when the civil engineer George Constantinesco wrote a treatise for the British Admiralty called the Theory of Sonics.


In 1912, engineer Virgiliu Tacit patented the blow-out preventer, a remote-controlled valve with a piston, which can stand pressures of up to 100 atmospheres. The invention was then taken over by Germany, the Austro-Hungarian empire and Mexico.

Moreni Oilmen 1911

In 1931, the engineer A. Dragulanescu, the director of “Steaua Romana” Society presented during the “Engineers and Technicians Associations of the Mine Industry Congress” a method of using unique tubage column in the well field. Dragulanescu’s innovations: drilling on right hole, without deviations reductions of the column number etc. concurred to the same economical saving of 50% drilled linear meters.

Ion Șt. Basgan (24 iunie 1902, Focșani - 15 decembrie 1980, Bucharest)

Dr. Eng. Ion Basgan the one that using the sonicity principle have licensed in 1934 in Romania and USA a new drilling system: “Method for improving the efficiency and perfecting the rotative drilling through percussive rotation and hydrodynamic pressure absorption.” Basgan procedure had made a fulminant carrier in USA being used in Romania too after 1944 without its merits being recognized.


Lazăr Edeleanu elaborated in 1907 a method of kerosene refining and later other oil products too, through selective refinement, using liquid sulphur dioxide.
Since 1910 Edeleanu himself settled in Germany there he founded a company called "Allgemeine Gesellschaft für Chemische Industrie". Due to the success of the logo "Edeleanu", since 1930 the company changed its name to Edeleanu GmbH. During the National Socialist regime was bought by the Deutsche Erdöl-AG, later changed several times its owners and in 2002 was acquired by Uhde GmbH, which is owned by Thyssen-Krupp trust. The name Edeleanu stayed in use for the refinery department till nowadays.
Lazăr Edeleanu came back to Romania and died in Bucharest in April 1941.

Team of oil men, Moreni Pascov, 1930

Following World War II, a heavy reconstruction of the petrochemical facilities and expansion was done. Possessing substantial oil refining capacities, Romania is particularly interested in the Central Asia-Europe pipelines and seeks to strengthen its relations with some Arab states of the Persian Gulf. With 10 refineries and an overall refining capacity of approximately 504,000 bbl/d (80,100 m3/d), Romania has the largest refining industry in the region. The refining capacity far exceeds domestic demand for refined petroleum products, allowing the country to export a wide range of oil products and petrochemicals - such as lubricants, bitumen and fertilizers, throughout the region.
Since 2004, most of the industry has been privatized. The major changes in the sector were Petrom's privatization with OMV at the end of 2004 (that resulted in a price increase of the oil refined and petrochemical products in 2005 to a level close to the CEE one; the Petrom privatisation has been plagued by controversy in Romania) and the acquisition of Rompetrol Rafinare by KazMunaiGaz in 2007.




Sources:
http://www.150deanidepetrol.ro/history.html
http://www.popularsocialscience.com/2013/03/13/competition-for-romanian-oil-in-the-interwar-period/
http://furcuta.blogspot.fr/2009/10/romanian-petroleum-history.html
http://en.wikipedia.org/wiki/Blowout_preventer
http://surprising-romania.blogspot.fr/2009/10/intellectual-theft-in-oil-industry-case.html
http://fr.scribd.com/doc/85417328/Ion-Basgan-a-Romanian-Inventor-A6O
http://www.sonicdrilling.com/Flash/press_release/Overcoming%20Challenging%20Drilling%20Conditions.pdf
http://histclo.com/essay/war/ww2/cou/rom/ww2-rom.html
http://archive.is/WBVn
http://www.mgu.bg/sessions/07/1/gcalcan.pdf
http://oldrbd.doingbusiness.ro/en/5/latest-articles/all/254
http://www.historia.ro/exclusiv_web/actualitate/articol/inregistrare-senzationala-hitler-petrolul-romania-nu-fi-atacat-nici

2 comentarii:

  1. Hungary ready to protect MOL, says Orbán.
    ... and Romania was ready to protect Petrom, isn't it?

    Hungary’s oil and gas company MOL is “in good hands”, Prime Minister Viktor Orban said, adding that the government was ready to protect the company “if necessary”.
    “We are proud of it; we hold it in high esteem and will protect it if need be,” he said.
    Source: http://www.politics.hu/20131015/hungary-ready-to-protect-mol-says-orban/

    The Hungarian Parliament adopted, by an overwhelming majority (334 for, 4 against and 3 abstentions), a controversial law that protects state-owned oil and gas company MOL against a hostile takeover by Austria's OMV.The law, which should take effect on January 1, 2008, stipulates that any sale of strategic assets must be approved by the management of the Hungarian group in question.
    Hungary / MOL Law / 2007

    Le groupe pétrolier autrichien OMV, qui tente depuis des mois de reprendre le groupe hongrois MOL, a annoncé mardi avoir engagé une procédure judiciaire devant un tribunal hongrois contre des décisions prises par MOL empêchant son rachat par OMV. Le PDG de OMV, Wolfgang Ruttensdorfer, a menacé de demander la convocation d'une assemblée générale extraordinaire des actionnaires du groupe hongrois si la direction de MOL refusait de s'engager dans un « dialogue constructif ».
    Autriche / Hongrie / OMV / Procédure judiciaire contre MOL

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