Petroleum

Also called: Mineral oil, Crude oil · Topic: Energy Resources of India: Conventional and Non-conventional · NCERT: Class 10, Ch 5 "Minerals and Energy Resources"; Class 12, Ch 5 "Mineral and Energy Resources"

Meaning

Petroleum (also called crude oil or mineral oil) is a natural mix of liquid and gaseous hydrocarbons (compounds of hydrogen and carbon). It is found mainly in Tertiary sedimentary rocks, which are rock layers laid down in old seas and basins roughly 66 to 2.6 million years ago.

It is called "liquid gold" for two reasons: it is scarce and cannot be replaced, and it has a great many uses. India buys about 88% of its crude oil from abroad, so petroleum is central to India's energy security [5].

Explanation

How petroleum forms

• Cause: tiny sea plants and animals died and sank to the floor of old seas and basins.
• Process: mud buried their remains. Over millions of years, heat and pressure turned them into hydrocarbons.
• Result: oil and gas now lie in the porous layers of Tertiary sedimentary rocks.
• The old, hard rocks of the Peninsular plateau were never sea-floor basins of this kind, so they hold almost no oil.

How oil is trapped underground

• Oil and gas rise: they form in deep source rocks. They are lighter than water, so they slowly move upward.
• They pass through porous rock: porous rock has tiny holes, like limestone or sandstone.
• A seal stops them: a non-porous layer above, such as shale or clay, works like a lid.
• Anticline trap. An anticline is an upfold, an arch-shaped bend in rock layers.
• Oil and gas collect at the crest (top) of the arch, under the non-porous cap rock.

• The fluids settle in layers by weight: gas on top, oil in the middle, water at the bottom.

• Fault trap. A fault is a crack in the rock along which the blocks on each side have moved.

• The movement pushes a porous layer up against a non-porous layer.
• Oil rising through the porous layer is blocked at the fault plane and collects there.

Trap	Rock structure	Seal	Where oil collects
Anticline	Upfold (arch)	Non-porous cap rock above	Crest of the arch; gas above oil
Fault	Broken and shifted layers	Non-porous rock moved against porous rock	Against the fault plane

Uses: why it is a nodal industry

• Fuel: for vehicles, railways and aircraft.
• Feedstock (raw material): for fertiliser, synthetic rubber, synthetic fibre, medicines, lubricants, wax and cosmetics.
• Nodal industry (NCERT Class 10): an industry that many other industries depend on.
• A refinery splits crude oil into petrol, diesel, kerosene, naphtha and other products.
• Petrochemical, fertiliser, plastics and textile units then use these products as their inputs.

Refineries: where they are built

• Field-based refinery: built near the oilfield and uses local crude.
• It saves the cost of moving crude oil.

• Example: Digboi. Guwahati, Bongaigaon and Numaligarh in Assam also stand close to the region's oilfields.

• Market-based refinery: built near the buyers, in cities and demand centres. Crude reaches it by pipeline.

• It saves the cost of moving many different finished products.
• Barauni (Bihar) was first fed with Assam crude by pipeline.
• Mathura (Uttar Pradesh) is fed by the Salaya–Mathura pipeline from the Gujarat coast.

• Panipat (Haryana) is also fed by pipeline from the Gujarat coast.

• Coastal refineries mainly process imported crude, which arrives by tanker at their ports.

• Examples: Jamnagar, Vadinar, Mumbai, Kochi, Mangaluru, Visakhapatnam and Paradip.

• Capacity: India has 22 working refineries with a capacity of 256.8 MMTPA (million metric tonnes per annum) [4].

• The plan is to reach 309.5 MMTPA by 2028 [4].
• Long-term plans aim for 400–450 MMTPA [6].

Where it occurs

History of oil exploration in India

• Digboi (Assam, upper Brahmaputra valley): oil was struck here in 1889.
• Until 1956 it was India's only producing oil area.

• The Digboi refinery (1901) is Asia's oldest refinery still working.

• ONGC (Oil and Natural Gas Commission) was set up in 1956 to search for and produce oil and gas. It became a corporation in 1994. After 1956, new fields were found in Assam, Gujarat and offshore.

Main oil regions of India

• Assam (upper Brahmaputra valley):
• Digboi (1889).
• Naharkatiya (Dibrugarh district), found in 1953. It was the first big find after Digboi.

• Moran-Hugrijan.

• Gujarat (Cambay basin): the Cambay basin is a long, narrow basin. It runs north–south through mainland Gujarat towards the Gulf of Khambhat.

• Ankleshwar (Bharuch district, near the Narmada), found in 1960, is the most important field in Gujarat.

• Other fields: Kalol, Mehsana, Nawagam, Kosamba, Lunej.

• Mumbai High (Arabian Sea):

• It lies on the continental shelf (the shallow sea floor at the edge of a continent), about 160 km north-west of Mumbai.
• It was found in 1974 (NCERT says 1973) and has produced oil since 1976.

• It is India's largest offshore oilfield. Bassein, a gas field, lies on the same western shelf.

• Rajasthan (Barmer basin, Thar desert):

• Mangala was found by Cairn in 2004. It is the main field of the Rajasthan block, which now supplies a large share of India's own crude.
• Pachpadra refinery (Balotra district) is being built by HPCL Rajasthan Refinery Ltd (HRRL). HRRL is a joint venture of HPCL (74%) and the Government of Rajasthan (26%) [10].

• The refinery is designed for 9 MMTPA. It will process local Mangala crude along with imported crude and will make more than 2.4 million tonnes of petrochemicals [10].

• East coast:

• Krishna-Godavari (KG) basin: in Andhra Pradesh, both on land and offshore in the Bay of Bengal. It is built from sediment laid down by the deltas of the Krishna and Godavari rivers, and it yields both oil and gas.
• Kaveri basin: in Tamil Nadu, on land and offshore around the Kaveri delta.

Strategic Petroleum Reserve (SPR)

• What it is: a stock of crude oil that the government keeps for emergencies, such as a war or a break in world supply.
• How it is stored: in underground rock caverns, large tunnels dug into hard rock. This is safer and cheaper than tanks on the surface.
• Who runs it: ISPRL (Indian Strategic Petroleum Reserves Ltd) builds and runs it [2].
• Phase I (5.33 MMT, complete) [2]:
• Visakhapatnam (Andhra Pradesh): 1.33 MMT.
• Mangaluru (Karnataka): 1.5 MMT.

• Padur (Udupi, Karnataka): 2.5 MMT.

• Phase II (6.5 MMT) [3]:

• Chandikhol (Jajpur, Odisha): 4 MMT.
• Padur (Karnataka): 2.5 MMT.
• The Union Cabinet approved Phase II on 8 July 2021 [3].
• It is to be built by Public–Private Partnership (PPP), with single point moorings (offshore buoys where tankers unload) and pipelines [3].

Exploration policies

• NELP (New Exploration Licensing Policy, 1999) used Production Sharing Contracts, where the company shared the oil it produced with the government. 254 blocks were signed under NELP [9].
• HELP (Hydrocarbon Exploration and Licensing Policy) was notified on 30 March 2016. It brought Revenue Sharing Contracts, where the government takes a share of the company's revenue instead [7].
• OALP (Open Acreage Licensing Policy) started on 1 July 2017. It runs alongside the National Data Repository (NDR), and companies choose their own areas after studying NDR data [7].
• Rounds I–IX: 172 blocks covering 3,78,652 sq km have been awarded [8].
• Round X (launched 15 April 2025) offers 25 blocks covering about 1,91,986 sq km [8].

Don't confuse with

• Natural gas: petroleum is mainly liquid crude. Natural gas is the gaseous hydrocarbon that often sits above the oil in the same trap. Bassein, on the western shelf, is a gas field, while Mumbai High is mainly an oilfield.
• Coal: coal formed from buried land plants and is found mostly in Gondwana rocks of the Peninsula. Petroleum formed from tiny sea organisms and is found in Tertiary sedimentary rocks on India's edges.
• Syncline: a syncline is a downfold, the opposite of an anticline. Oil collects at the crest of an anticline (the upfold), not at the bottom of a syncline.
• Field-based refinery vs market-based refinery: a field-based refinery (Digboi) is built near the crude. A market-based refinery (Barauni, Mathura, Panipat) is built near the buyers and gets crude by pipeline.

Prelims Hooks

• Digboi (Assam): oil struck in 1889; its refinery (1901) is Asia's oldest working refinery. It was India's only producing field before ONGC was set up in 1956.
• State-matching trap: Naharkatiya (1953) and Moran-Hugrijan are in Assam. Ankleshwar, Kalol, Mehsana, Nawagam, Kosamba and Lunej are in Gujarat.
• Mumbai High is about 160 km offshore in the Arabian Sea, not the Bay of Bengal. It was found in 1974 (NCERT: 1973) and has produced since 1976.
• Mangala (Barmer, Rajasthan) was found by Cairn in 2004. Its refinery is at Pachpadra, with an HPCL 74 : Rajasthan 26 split [10].
• SPR: Phase I (5.33 MMT) is at Visakhapatnam, Mangaluru and Padur. Phase II (6.5 MMT) is at Chandikhol and Padur. Padur is the only site in both phases [2][3].
• Contract types: NELP (1999) used production sharing. HELP (2016) uses revenue sharing [7][9].

Mains Points

• Uneven distribution (GS-I): most of India's oil lies in Tertiary sedimentary basins on the country's edges: Assam, Gujarat, the western offshore, Barmer, and the KG and Kaveri basins.
• The old, hard rocks of the Peninsular plateau hold almost none.

• So refineries in the interior depend on pipelines, and refineries on the coast depend on imported crude.

• Energy security (GS-III): India imports about 88% of its crude and 51% of its gas [5]. This exposes it to price shocks and to trouble at choke points such as the Strait of Hormuz.

• More suppliers: crude now comes from about 40 countries [5].
• Safer routes: about 70% of crude imports now come by routes outside Hormuz, up from about 55% earlier [5].

• Buffer stocks and new exploration: SPR caverns [2][3] and OALP blocks [8].

• Refining as an economic strength and a tool for regional development:

• India is the 4th-largest refining nation and among the world's top seven exporters of petroleum products. It exported products worth over USD 45 billion in FY 2024-25 [6].
• So India imports most of its crude but is a net exporter of refined products.
• Some refineries are placed to develop backward regions: Pachpadra uses local Mangala crude in a desert district [10], and Numaligarh in Assam follows the same logic.

Related concepts

• Anticline trap
• Oil and Natural Gas Commission
• Digboi oilfield
• Naharkatiya oilfield
• Cambay basin
• Mumbai High
• Barmer oil fields
• Krishna-Godavari basin
• Field-based and market-based refineries
• Strategic Petroleum Reserve

Read more

• Petroleum: occurrence, oilfields, refineries and reserves