"Red FDI: The Case of Russian Oil Products, Ltd. in the British Isles, 1924-1948"

By January 1912, ninety-seven Anglo-Russian oil companies had registered in London. Distributed between western Caspian shores and Central Asian steppes, these free-standing entities reportedly controlled a combined nominal capital of over seventeen million pounds, or more than one hundred times that value in today’s dollars. And though most disappeared within a decade’s time thanks to the Bolsheviks, Anglo-Russian collaboration in the oil business endured, albeit in a radically different form. The case of Russian Oil Products, Ltd. (ROP), a rare example of Soviet foreign direct investment, illustrates just how effective, and just how fraught, such collaboration proved to be during the early twentieth-century.
ROP sold top grade Soviet gasoline throughout the United Kingdom and Ireland for nearly a quarter century, from its establishment in July 1924 until its sale to a British competitor in November 1948. For much of that time, the company held its own against the UK’s so-called Combine of three major oil suppliers, even capturing an 8.1 percent share of the country’s motor spirit market in 1931. Unlike its competitors, however, ROP operated for reasons other than profit. At first, the company prioritized acquiring British Sterling, a convertible currency that Soviet leaders used to purchase modern machinery on global markets and industrialize Russia at a breakneck pace. Later, it prioritized acquiring trade secrets through bribery and espionage, facts well-known to British intelligence that contributed to its closure.
“Red FDI” contributes to the 2020 BHC Meeting by broadening notions of “collaboration in business history” to include promises and pitfalls that transcend traditional balance sheets. Drawing on untapped archival sources from London and Moscow, including declassified reports from MI5 and “Neftesindikat,” ROP’s Soviet parent company, the project will encourage discussions of exchange, innovation, as well as competition from non-market points of view.