could not be developed before, taking on much more complex projects, recovering more oil, or opening up entirely new production provinces.
Altogether, technology widened the horizons of world oil, bringing on large amounts of new supplies that supported economic growth and expanded mobility around the world. Billions of barrels of oil that could not have been accessed or produced a decade earlier were now within reach. All that proved to be “just in time” technological progress. For the world appeared to be on a fast track in terms of economic growth—and, thus, in its need for more oil.
The world was also changing fast in terms of geopolitics. Countries that had been closed or restrictive toward investment by international companies were now opening up, inviting the companies to bring their skills and technology along with their money. The seemingly immutable structure of global confrontation had suddenly buckled.
In particular, changes were unfolding in the successor states to the Soviet Union—Russia and the newly independent countries around the Caspian Sea—that would integrate the region with global markets. It was as if the twentieth century’s end was being reconnected back to the century’s beginning. The effect would be to broaden the foundations of the world petroleum supply. As an article in Foreign Affairs put it in 1993, “Oil is truly a global business for the first time since the barricades went up with the Bolshevik Revolution.”7
This observation had particular significance for Russia, the country that had been home of the Bolshevik Revolution, and that now rivaled Saudi Arabia in its capacity to produce oil.
PART ONE
The New World of Oil
1
RUSSIA RETURNS
On the night of December 25, 1991, Soviet president Mikhail Gorbachev went on national television to make a startling announcement—one that would have been almost unimaginable even a year or two earlier: “I hereby discontinue my activities at the post of the President of the Union of Soviet Socialist Republics.” And, he added, the Soviet Union would shortly cease to exist.
“We have a lot of everything—land, oil and gas and other natural resources—and there was talent and intellect in abundance,” he continued. “However, we were living much worse than people in the industrialized countries were living and we were increasingly lagging behind them.” He had tried to implement reforms but he had run out of time. A few months earlier, diehard communists had tried to stage a coup but failed. The coup had, however, set in motion the final disintegration. “The old system fell apart even before the new system began to work,” he said.
“Of course,” he added, “there were mistakes made that could have been avoided, and many of the things that we did could have been done better.” But he would not give up hope. “Some day our common efforts will bear fruit and our nations will live in a prosperous, democratic society.” He concluded simply, “I wish everyone all the best.”1
With that, he faded out into the ether and uncertainty of the night.
His whole speech had taken just twelve minutes. That was it. After seven decades, communism was finished in the land in which it had been born.
Six days later, on December 31, the USSR, the Union of Soviet Socialist Republics, formally ceased to exist. Mikhail Gorbachev, the last president of the Soviet Union, handed over the “football”—the suitcase with the codes to activate the Soviet nuclear arsenal—to Boris Yeltsin, the first president of the Russian Federation. There were no ringing of bells, no honking of horns, to mark this great transition. Just a stunned and muted—and disbelieving—response. The Soviet Union, a global superpower, was gone. The successors would be fifteen states, ranging in size from the huge Russian Federation to tiny Estonia. Russia was, by far, the first among equals: it was the legatee of the old Soviet Union; it inherited not only the nuclear codes, but the ministries and the debts of the USSR. What had been the closed Soviet Union was now, to one degree or another, open to the world. That, among other things, would redraw the map of world oil.
Among the tens of millions who had watched Gorbachev’s television farewell on December 25 was Valery Graifer. To Graifer, the collapse of the Soviet Union was nothing less than “a catastrophe, a real catastrophe.” For half a decade, he had been at the very center of the Soviet oil and gas industry. He had led the giant West Siberia operation, the last great industrial achievement of the Soviet system. Graifer had been sent there in the mid-1980s, when production