Close ties between business and politics Dr. Karsten Linne

In September 1940, Ernst Rudolf Fischer, head of the mineral oil department in the Reich Ministry of Economics and IG Farben manager, considered how the foreign oil companies that had come into German possession during the war and those that would in the future could be taken over and utilised in the interests of the Reich. He came to the conclusion: “It goes without saying that the state cannot leave the development of the oil industry to private enterprise alone.” Fischer dreamed of creating a state-controlled, vertically integrated oil company that could compete on an equal footing with international rivals such as Standard Oil and Shell. 

However, the capital required to develop oil fields, process the oil, transport it and carry out research exceeded the financial resources of the smaller and medium-sized German oil companies. For that reason, a state-controlled company was to be founded that could draw on the personnel and expertise of the large private oil companies. At the start of November 1940, Reichsmarschall Hermann Göring informed the head of the War Economy and Armament Office (Wehrwirtschafts- und Rüstungsamt), General Georg Thomas, “that he wanted to found a central fuel company that would manage buying up and utilising all fuel reserves in Central Europe. The company was to be privately organised by the industry, but the Reich should hold the majority.” Its name: Kontinentale Öl AG.

New company to exploit foreign oil reserves

No wells were planned in the “old Reich”, but abroad it should be possible to operate in any oil sector. This demarcation corresponded to an agreement reached with the private oil industry (Gewerkschaft Elwerath, DEA, Wintershall AG and Preussag). The aforementioned production companies were to continue their German wells and operations under their own management. Their foreign holdings were to remain in private hands, but new acquisitions would only be made in agreement with the new company. 

The four oil companies took over twelve million Reichsmarks (RM) of the share capital, with a further 30 million RM being borne by the state-owned “Borussia Beteiligungsgesellschaft mbH”, which was founded specifically for this purpose. In addition, the lignite and hard coal industry contributed a combined eight million RM. These ordinary shares, totalling RM 50 million, were given fiftyfold voting rights, so that even with a huge increase in capital, they always retained control, especially of course the state, thanks to Borussia. 

State wanted to control the activities of the private oil companies

To ensure state control of the company, Reich Economics Minister Walther Funk acted as Chairman of the Supervisory Board. The representative composition of the supervisory board included representatives of all “four pillars of power” (Franz Neumann) of the Nazi regime, i.e. the party, bureaucracy, industry and the army. The founding meeting of the new company took place on 27 March 1941 in the conference room of the Preussenhaus in Berlin. Representing the oil companies on the DEA side were Director Karl Schirner as Chairman of the Board and former mining assessor Albert Ritter as a member of the Board. 

Unfortunately, very little information can be found on the question of voluntary or compulsory participation by the German oil industry in Kontinentale Öl AG, which is undoubtedly of crucial importance. After all, representatives of the oil companies were involved from the outset in the foundation of the new company. After talks with State Secretary Erich Neumann at the start of 1940, Hans Brochhaus from the Gewerkschaft Elwerath was able to note with some reassurance that it was intended as a holding company for the expansion of the German mineral oil industry. The rights of the oil companies in Yugoslavia, Hungary and Slovakia were not to be affected by the new company. 

The representatives of the oil companies considered “participation in this company controlled by the Reich of little interest to the individual companies from a private economic perspective”. Obviously, there was also repeated friction later on. On the occasion of the planned appointment of Karl Große from DEA as Chairman of the Board of Karpathen Öl AG, Schirner pointed out “the unsatisfactory cooperation with Kontinentale Öl AG”. 

Oil companies hoped for a share of the spoils of war

Nevertheless, the oil companies maintained their hopes of a later share in the spoils of war and, two months before the German troops began to withdraw from the Caucasus, demanded “entrepreneurial activity in the Caucasus at the appropriate time” as “compensation for the overexploitation and lack of exploration in Germany”. 

Rainer Karlsch is undoubtedly right when he describes the foundation of Kontinentale Öl AG as “a break in the history of the German mineral oil industry”. For the first time, the state took matters into its own hands, albeit in what was already a state-affiliated industry. It should be noted, however, that the private German oil industry, including DEA and Wintershall AG, integrated comparatively smoothly into this company, participating in it in terms of finance, personnel and know-how, and thus benefited from the military and economic expansion of the Nazi regime during the Second World War, including the exploitation of the occupied countries and the employment of forced labourers.