After the 1917 revolution the Soviet power was established in Baku. In accordance with the Decree of the Baku Soviet of the National Commissars of June 1, 1918 the oil industry, as well as the Caspian commercial fleet were nationalised. All in all in Baku about 400 private oil firms were nationalised. 1.3 million tons of oil was exported to Russia by the Bolsheviks for the 4 months of 1918 without any compensation. When in 1918 the Musavat government came to power, the process of nationalisation was stopped (Decree of October 6, 1918) and all the properties taken away were returned to their former owners. However, the frequent change of the owners, the limited possibilities of the oil export led to the serious fall in the oil industry. The extraction of 1919 was 3.7 million tons of oil, which comprised only half of the extraction in 1916.

The extreme importance of the Baku oil for the Soviet Russia predetermined the occupation of Baku in April 1920 by the military units of Red Army. As a result the government of the Azerbaijan Democratic Republic, which had existed almost for two years fell. Only from April 30 to May 2 1920, that is immediately after the establishment of the Soviet power in Baku twelve tankers with 1.3 million poods of oil were sent to Russia, and in May of the same year the quantity of the exported oil increased to 15 million poods, and in June – to 21.2 million poods of oil and oil products. The oil industry was completely nationalised.

In 1921 the oil extraction in Baku reached its lowest level of 2.4 million tons. The Soviet government, wonderfully realising the significance of the Azerbaijani oil, actively carried out measures on the restoration and development of the oil industry. As a result of the work carried out in the 1920s and 1930s, the oil extraction in Azerbaijan in 1940 reached 22.2 million tons, which comprised 71.5% of the entire oil extraction in the USSR. Within that period new oil fields were opened, the drainage of the Bibi Heibat bay finished (1927), the construction work of the Baku-Batumi oil pipe-line was completed (1925) and for the first time in the world the drilling of the oil well in the open sea was carried out.

In the years of the Great Patriotic War the Azerbaijani oil played a decisive role in the victory over the fascist Germany. Taking into consideration the growing requirements in oil, the oil workers of Baku reached the record level of oil extraction in 1941 – 23.482 million tons. Never before was in Baku extracted so much oil, this record has not been surpassed up to now. Thousands of oil workers went to the front to fight and their places in the fields were taken by the women. By the summer of 1942 25 thousand women had been working in the oil industry which comprised 33% of all the workers. By 1944 their number reached 60%.

The German army was approaching Baku. Hitler even fixed the day of the city’s capture – September 25, 1942. Under these conditions the city was preparing for the evacuation. By the autumn of 1942 764 wells were stopped and prepared for destruction and 81 sets of drilling equipment together with the personnel were sent to Turkmenia. At the same time, Baku provided the front with oil, restoring and exploiting the old wells. Taking into account the fact that the Germans blocked the traditional ways of transportation, it was decided to transport oil through Middle Asia. For the first time in the world practice the railway cisterns with oil were tugged afloat in the sea from Baku to Krasnovodsk. In accordance with the decision of the State Defence Committee about 11 thousand oil specialists and a great number of equipment were evacuated from Baku to Tataristan, Bashgiria and other regions of Russia in October 1942. Most of them were transported to the vicinities of the city of Kuybishev (Tataristan) where with the help of the Baku oil workers and equipment the oil extraction was developed. As a result these places were nicknamed “a second Baku”. From the end of 1943 when the danger around Baku was over, the restoration of the oil industry started. But as a result of the weakened industrial potential of Azerbaijan the level of oil extraction fell, reaching 11.5 million tons in 1945. Only from 1947 the oil extraction began to grow again.

At the end of the 1940s the construction of the “Oil Rocks” (“Neft Dashlari”) started. On November 14, 1948 the first troop of oil workers headed by Nikolay Baybakov landed in the open sea on a group of rocks 42 km to the south-east of the Apsheron Peninsular called “Gara Dashlar” (“Black Rocks”). The staff of the troop included Sabit Orujov and geologist Agagurban Aliyev, the author of the idea that there is oil in the sea. All of them later became living legends. After finishing the construction of a small house on piles and an electric power station, M.Kaverochkin’s brigade started drilling the first well on June 24, 1949. On November 7, 1949 this well at a depth of 1100 m gushed out oil with a daily output of 100 tons. In honour of this event it was decided to rename “Black Rocks” as “Oil Rocks”. And on February 18, 1951 the first tanker with oil was ceremoniously sent to the shore. It was decided to create an artificial island of 7 thousand hectares around the Oil Rocks. Half a million cubic metres of rocky blocks and sand were brought from the islands of Zhiloy and Urunos. Breakwaters, moorings and shelters for vessels were built around. And in 1952 for the first time in the world practice there started the construction of a pier which connected the artificial islands. There were times when the length of the pier connecting the numerous areas reached 300 km. The grand construction started on the Oil Rocks in 1958. In the open sea at 110 km distance from Baku electric power stations, five- and even nine-storey buildings of hostels, hospitals, Palaces of Culture, bakery factories, lemonade workshop were constructed (its product was even “exported” to the shore), a park with trees was laid too. Since 1949 there have been drilled 1940 wells here, more than 160 million tons of oil and 12 billion cubic metres of gas have been extracted. At present the Oil Rocks is the furthest eastern settlement in the country. More than 2000 people are working here at present.

In 1964-1968 the level of oil extraction rose to the stable level and comprised about 21 million tons per year. From 1969 to 1985 the quantity of the extracted oil began to decrease from year to year, as a result within five years the oil extraction remained on the point of 13 million tons per year. The reasons for the fall of the level of the oil extraction in the 60s of the XX century were the exhaustion of the on-shore oil fields, and the high cost price of oil extracted in the sea, as well as the discovery of big deposits of oil in the Western Siberia, Kazakhistan and other regions of the Soviet Union. All these factors led to the decrease of the share of Azerbaijan in the overall oil extraction in the USSR (in 1950 – 39.1%, by 1960 – 12%, in 1970-1980 correspondingly from 5.7% to 2.4%). As a result of it, Moscow ceased paying a due attention to the oil industry of Azerbaijan.

However, despite all the above-mentioned, within this period, several big off-shore oil and gas fields on the Caspian shelf were put into operation, some oil-refineries and machine-building factories were constructed. In 1971 the extraction of the first billion tons of oil since the beginning of the industrial development in Azerbaijan was ceremoniously celebrated in the Republic. In 1981 the record quantity of gas was extracted – 15 billion cubic metres.

The next fall in the oil extraction began in 1990. Its main reasons were the overall fall of the economy of the USSR in the 80s and violation of the economic relations among the subjects of the former Soviet Union after gaining independence.