The history of the city of Baku goes back to the great antiquity, though the exact date of its origin is not known. The archeological excavations carried out in the city of Baku and its vicinities prove the existence of the settlement here before current era. Since its early days, a “burning soil” around Baku, that is its oil and gas deposits, has been known far beyond its borders. The Medieval written sources related to Baku, invariably referred to “the eternal flames” in its vicinities. These flames, along with the waves of Caspian Sea, on whose coast Baku is located, are now depicted on the City Seal of Baku.
First documented 885 A.D, Baku developed into one of the major cities of Shirvan (historical part of Northeastern Azerbaijan) in the second half of the IX century, and became its capital in 1191. In the 13th century Baku, along with many other cities of Central Asia and Eastern Europe, found itself under the Mongolian yoke. In 1230s after a long siege Baku was captured, and Azerbaijan was ravaged. But in the 14th century trade, particularly marine trade, revived the city. Baku traded with the Golden Horde, the Moscow princedom, European countries, and India.
In 1501 Shah Ismail of Persia invaded Shirvan and captured Baku. The second half of the 16th century and the beginning of the 17th century were marked by the sequence of wars between Persia and the Ottoman Turkey. At that time Baku changed hands. In early 18th century Russian Czar Peter the Great tried to establish a stronghold in Baku, but after his death in 1725 Baku fell again under the Persian domination.
In 1813 the region was annexed from Iran to Russia as a result of the Russo-Persian War. Eventually Baku became a capital city of Baku province, which consisted of roughly Eastern part of modern Azerbaijan.
Oil extraction played an important role in the development of the city. In 1872 oil reserves were transferred to individuals by auction. The oil fever could be compared only with the gold fever in Klondike. An intensive exploitation of the Baku oil fields provided a big flow of capitals of foreign oil companies. Within a short period of time departments and representations of Swiss, English, French, Belgian, German and American firms were established in Baku, the most famous among them being the companies of the Nobels and the Rothschilds.
It was in Baku that the first oil well in the world was drilled in 1848, the first tankers for oil transportation were constructed (1880-1885), the first oil pipeline (Baku-Batumi, 1897-1907) was laid. By the beginning of the 20th century almost half of the oil reserves in the world were being extracted in Baku.
Baku was developing not only economically, but culturally as well. In 1864 the first national public library was founded. In 1873 the first Azerbaijani National Theatre was founded. The first newspaper began publication in 1875. In 1908 the first opera in the East “Leili and Majnun” was staged.
The economic boom brought about the increase in the struggle of workers and raise of Azerbaijani nationalist movement, which culminated in the declaration of independence from Russia and establishment of the Azerbaijan Democratic on Republic May 28, 1918. However, the Azerbaijan Democratic Republic existed for just 1 year 11 months and was overthrown by Soviet Russian troops on April 28, 1920.
The development of Baku also continued under the Soviets. Built over a thousand of years, Baku has three distinct areas. The old town, which is a fortress, was classified in 2000 as a World Heritage Site by UNESCO. Containing a maze of narrow streets, two ancient inns (caravansaries), a palace and many mosques, the city represents the earliest period of building in the city. Representing the next period of building is the boomtown, built right after the discovery of oil. This area has distinctive beaux-arts architecture, and now houses many fine art, history and literature museums. The third region is the Soviet-built town. The central part of the city is situated in the amphitheater with descending terraces towards the Baku Bay. The layout of Baku is rectangular, only in the oldest part of the city within the fortress walls the streets are crooked and narrow. In the center and along the highways the construction is dense and it is free in the outskirts. The suburbs of Baku are the centers of oil extraction where the enterprises of railway transportation, of machine-building and construction materials are located and where one can see mineral sources. In the vicinities of the city there are a number of mud volcanoes and salt lakes. The boundaries of the city include a health resort area of the Apsheron Peninsula with coastal beaches. The coastal area of Baku is 84 ft (28 m) below the world ocean level.
In 1991 the nation of Azerbaijan gained independence from the Soviet Union, and Baku became the capital of the new republic. The signing of a Production Sharing Agreement in 1994 covering the Baku offshore oil fields created the need for an additional export route for Caspian crude oil. Construction of the Baku-Tbilisi-Ceyhan (BTC) pipeline, the second longest oil pipeline in the world started in early 2003. BTC project is a $3 billion investment to unlock a vast store of energy from the Caspian Sea by providing a new crude oil pipeline from Azerbaijan, through Georgia, to Turkey for onward delivery to world markets. The pipeline was officially opened on May 25, 2005. Trade ties between Houston and Azerbaijan are strong. More than 180 Houston-based firms report doing business with Azerbaijan. 33 businesses headquartered in Houston operate 40 subsidiaries in Azerbaijan, and total trade between Azerbaijan and Houston was valued at $171.2 million in 2009.