Petroleum: occurrence, oilfields, refineries and reserves

Detail

What petroleum is

• Petroleum (crude oil): a mix of liquid and gaseous hydrocarbons (compounds of hydrogen and carbon).
• It is found in Tertiary sedimentary rocks. These are rock layers laid down in old seas and basins, roughly 66 to 2.6 million years ago.

• It formed from the remains of tiny sea plants and animals. They were buried under mud, then heat and pressure acted on them for millions of years.

• Why it is called "liquid gold":

• It is scarce. Reserves are limited and cannot be replaced.

• It has many uses.

  • 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 into petrol, diesel, kerosene, naphtha and other products.
• Petrochemical, fertiliser, plastics and textile units then use these products as inputs.

How oil is trapped underground

• Anticline trap: an anticline is an upfold, an arch-shaped bend in rock layers.
• Step 1: Oil and gas form in deep source rocks. They are lighter than water, so they move upward.
• Step 2: They pass through porous rock (rock with tiny holes, such as limestone or sandstone).
• Step 3: At the top (crest) of the upfold, a non-porous layer above (such as shale or clay) stops them from rising further. This layer acts like a lid.

• Result: The fluids settle in layers by weight. Gas sits at the top, oil in the middle and water at the bottom.

• Fault trap: a fault is a crack in the rock along which the blocks have moved.

• A porous layer is moved until it touches a non-porous layer along the fault.
• The oil moving up the porous layer is blocked 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

History of oil exploration in India

• Digboi oilfield (Assam, about 27.4°N, 95.6°E; upper Brahmaputra valley):
• Oil was struck here in 1889.
• Until 1956 it was India's only producing oil area.

• Digboi refinery started in 1901. It is Asia's oldest refinery still working.

• Oil and Natural Gas Commission (ONGC):

• Set up in 1956 to search for and produce oil and gas.
• It became a corporation in 1994.
• After it was set up, new fields were found in Assam, Gujarat and offshore.

Oilfields of India

1. Assam (north-east, upper Brahmaputra valley)

• Digboi (1889), the oldest field.
• Naharkatiya oilfield (Dibrugarh district), found in 1953. It was the first big find after Digboi.
• Moran-Hugrijan.

2. Gujarat (Cambay basin)

• The Cambay basin is a long, narrow sedimentary basin. It runs north–south through mainland Gujarat towards the Gulf of Khambhat (Cambay).
• Ankleshwar (Bharuch district, near the Narmada): found in 1960. It is the most important field in Gujarat.
• Other fields: Kalol, Mehsana, Nawagam, Kosamba, Lunej.

3. Mumbai High (Arabian Sea offshore)

• Location: on the continental shelf, about 160 km north-west of Mumbai, in the Arabian Sea.
• Discovery: found in 1974 (NCERT: 1973).
• Production: started in 1976.
• It is India's largest offshore oilfield. Nearby offshore structures such as Bassein (gas) lie on the same western shelf.

4. Rajasthan (Barmer basin)

• Barmer oil fields are in western Rajasthan, in the Thar desert.
• Mangala was found by Cairn in 2004. It is the main field of the Rajasthan block.

• The block now supplies a large share of India's domestic crude.

• Refinery at Pachpadra (Balotra district): built by HPCL Rajasthan Refinery Ltd (HRRL).

• HRRL is a joint venture (a company owned by two partners) of HPCL (74%) and the Government of Rajasthan (26%) [10].
• Capacity: designed to process 9 MMTPA (million metric tonnes per annum) of crude [10].
• Crude mix: it will process local Mangala crude along with imported crude [10].
• Petrochemicals: it will also produce more than 2.4 million tonnes of petrochemicals [10].

5. East coast

• Krishna-Godavari (KG) basin: in Andhra Pradesh, on land and offshore in the Bay of Bengal.
• The basin is built from sediment laid down by the deltas of the Krishna and Godavari rivers.

• It is an important source of both oil and gas.

• Kaveri basin: in Tamil Nadu, on land and offshore around the Kaveri delta.

Region	Basin / setting	Key fields	Key date
Assam	Upper Brahmaputra valley	Digboi, Naharkatiya, Moran-Hugrijan	1889; 1953
Gujarat	Cambay basin	Ankleshwar, Kalol, Mehsana, Nawagam, Kosamba, Lunej	1960 (Ankleshwar)
Offshore west	Arabian Sea shelf	Mumbai High	Found 1974, producing 1976
Rajasthan	Barmer basin	Mangala	2004 (Cairn)
East coast	KG and Kaveri basins	Onshore and offshore Andhra Pradesh and Tamil Nadu	—

Opening up exploration to more companies

• NELP (New Exploration Licensing Policy, 1999) was the first policy to offer exploration blocks to private and foreign companies.
• The contracts were Production Sharing Contracts (PSCs): 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 [7].

• It replaced PSCs with Revenue Sharing Contracts (RSCs): the government now 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) [7].

• Under OALP, companies pick the areas they want to explore after studying the NDR data.

• Progress so far:

• OALP Rounds I–IX: 172 blocks covering 3,78,652 sq km have been awarded [8].
• OALP Round X (launched 15 April 2025): offers 25 blocks covering about 1,91,986 sq km [8].

Refineries: field-based and market-based

• Field-based refinery: built near the oilfield.
• Example: Digboi.

• Assam's other refineries (Guwahati, Bongaigaon, Numaligarh) also stand close to the region's fields.

• Market-based refinery: built near the people who buy the products. Crude reaches it by pipeline.

• Barauni (Bihar): first fed with Assam crude by pipeline.
• Mathura (Uttar Pradesh): fed by the Salaya–Mathura pipeline from the Gujarat coast.

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

• Coastal refineries (Jamnagar, Vadinar, Mumbai, Kochi, Mangaluru, Visakhapatnam, Paradip and others) mainly process imported crude.

• Imported crude arrives by tanker at their ports.

Basis	Field-based	Market-based
Location	Near the oilfield	Near cities and demand centres
Crude supply	Local crude	Crude brought by pipeline or from a port
Example	Digboi	Barauni, Mathura, Panipat
Advantage	Saves cost of moving crude	Saves cost of moving many finished products

Refining capacity and trade

• Refining capacity: 22 working refineries with 256.8 MMTPA (Year End Review 2024) [4].
• It is planned to reach 309.5 MMTPA by 2028 [4].

• Long-term plans aim for 400–450 MMTPA [6].

• Import dependence: India buys about 88% of its crude oil and 51% of its gas from abroad [5] (NCERT-era figure: about 85–88%).

• Crude now comes from about 40 countries [5].

• About 70% of crude imports now come by routes outside the Strait of Hormuz, up from about 55% earlier [5].

• Exports: India is the 4th-largest refining nation [6].

• It is among the world's top seven exporters of petroleum products [6].
• In FY 2024-25 it exported products worth over USD 45 billion to more than 50 countries [6].
• So India imports most of its crude, but it is a net exporter of refined petroleum products.

Strategic Petroleum Reserve (SPR)

• Strategic Petroleum Reserve: a stock of crude oil that the government keeps for emergencies, such as a war or a break in world supply.

• It is stored in underground rock caverns: large tunnels dug into hard rock. This is safer and cheaper than tanks on the surface.

• Who builds and runs it: ISPRL (Indian Strategic Petroleum Reserves Ltd), a company set up by the Government of India for this purpose [2].

• Phase I (complete): 5.33 MMT at three sites [2].
• Visakhapatnam (Andhra Pradesh): 1.33 MMT
• Mangaluru (Karnataka): 1.5 MMT

• Padur (Udupi, Karnataka): 2.5 MMT

• Phase II: 6.5 MMT at two sites [3].

• Chandikhol (Jajpur, Odisha): 4 MMT
• Padur (Karnataka): 2.5 MMT
• The Union Cabinet approved it on 8 July 2021 [3].

• It is to be built by Public–Private Partnership (PPP), with dedicated single point moorings (offshore buoys where tankers unload) and pipelines [3].

• Location logic: all sites are on the coast.

• Imported crude can be unloaded straight from tankers into the caverns.
• The stored oil can be sent quickly to nearby refineries when needed.

Prelims Hooks

• Digboi (Assam): oil struck 1889; refinery 1901, Asia's oldest working refinery. It was India's only producing field before ONGC (1956).
• Ankleshwar (Gujarat, Cambay basin, 1960) is the most important Gujarat field. Kalol, Mehsana, Nawagam, Kosamba and Lunej are also in Gujarat, not Assam.
• Naharkatiya (1953) and Moran-Hugrijan are in Assam. This is a common state-matching trap.
• Mumbai High is about 160 km offshore in the Arabian Sea, not the Bay of Bengal. Found 1974 (NCERT: 1973); producing since 1976.
• Anticline trap: oil collects at the crest of an upfold, with gas above the oil, sealed by non-porous rock. A fault trap forms where porous rock meets non-porous rock along a fault.
• Mangala (Barmer, Rajasthan) was found by Cairn in 2004. The refinery is at Pachpadra (HPCL 74 : Rajasthan 26) [10].
• Field-based vs market-based refineries: Digboi is field-based. Barauni, Mathura and Panipat are market-based and fed by pipeline.
• SPR Phase I (5.33 MMT): Visakhapatnam, Mangaluru, Padur. Phase II (6.5 MMT): Chandikhol (4 MMT) and Padur (2.5 MMT) [2][3]. Padur is the only site in both phases.
• HELP (2016) brought revenue sharing contracts. NELP (1999) used production sharing contracts [7][9].

Mains Points

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

• This is why refineries in the interior depend on pipelines, and why refineries on the coast depend on imports.

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

• Ways India is responding:

  • Buying from more countries: about 40 suppliers now [5].
  • Strategic reserves: SPR caverns [2][3].
  • More exploration: OALP blocks [8].
  • Moving away from oil: more non-fossil energy.

• Refining as an economic strength: India imports crude but is a net exporter of refined products (over USD 45 billion in FY 2024-25) [6].

• Coastal refineries and market-based inland refineries show how location choice depends on balancing raw material against market.

• Regional development: some refineries are placed to develop backward regions.

• Pachpadra (HRRL) uses local Mangala crude in a backward desert district [10].
• Numaligarh in Assam is another example of this logic.