The word 'petroleum' comes from two Latin words — Petra (rock) and Oleum (oil). Thus petroleum is oil obtained from rocks, particularly the sedimentary rocks of the earth. This is why it is also called mineral oil.

Technically, petroleum is an inflammable liquid composed of hydrocarbons, which make up 90 to 95 per cent of petroleum. The remainder is chiefly organic compounds containing oxygen, nitrogen, sulphur, and traces of organo-metallic compounds.

Crude petroleum is a mixture of hydrocarbons — solid, liquid and gaseous — including compounds of the paraffin series, some unsaturated hydrocarbons, and a small proportion belonging to the benzene group.

Utilisation of Petroleum

●        Mainly used as motive power — a compact, convenient liquid fuel that has revolutionised transportation on land, in the air and on water.

●        Easily transported from producing to consuming areas by tankers, and more efficiently and economically by pipelines.

●        Emits very little smoke and leaves no ash (unlike coal) and can be used up to the last drop.

●        Provides the most important lubricating agents.

●        An important raw material for various petro-chemical products.

Petroleum has an organic origin and is found in sedimentary basins, shallow depressions and in the seas (past and present). Most Indian reserves are associated with anticlines and fault traps in sedimentary rock of Tertiary times.

Oil and natural gas originated from animal or vegetable matter in shallow marine sediments — sands, silts and clays deposited when land and aquatic life was abundant, especially microscopic flora and fauna. Conditions were especially favourable in the lower and middle Tertiary period, when dense forests and sea organisms flourished in gulfs, estuaries, deltas and surrounding land. The decomposition of this organic matter in sedimentary rocks led to the formation of oil.

Three Prerequisite Conditions for an Oil Reservoir

Though oil is found in sedimentary rocks, not all sedimentary rocks contain oil. Three conditions must be met together:

●        Porosity — so as to accommodate sufficiently large amounts of oil.

●        Permeability — to discharge oil and/or gas once a well has been drilled.

●        An impervious cap — the porous sand beds, sandstone, conglomerates or fissured limestone containing oil must be capped by impervious beds, so oil is not dissipated by percolation into surrounding rocks.

Where Oil Collects

Oil on a commercial scale is usually found where the sedimentary strata are inclined and folded — in a sort of chamber or reservoir, in the highest possible position, e.g. the crests of anticlines.

Oil is normally associated with water. Being lighter than water (specific gravity 0.8 to 0.98), it collects in anticlines or fault traps above the water surface. Gas is lighter still and occurs above the oil. Thus on drilling an oil well, one finds gas first, followed by oil — although gas seepage alone is not always a sure indication of an oil reservoir.

India's Sedimentary Area

●        About 14.1 lakh sq km — roughly 42% of India's total area — is covered with sedimentary rocks.

●        Of that, about 10 lakh sq km form marine basins of Mesozoic and Tertiary times.

●        Offshore: 2.5 lakh sq km up to 100 m depth, plus 0.7 lakh sq km between 100 and 200 m.

●        Total continental shelf of probable oil-bearing rocks: 3.2 lakh sq km.

●        The total sedimentary area comprises 27 basins — studied in 14, exploratory drilling in 9.

●        Most productive areas: Mumbai High, the Gulf of Khambhat and Assam.

This is the most important update to older notes. India's crude oil production is not rising — it has been falling steadily for a decade.

Crude Oil Production — the Decline

Production has fallen 22.3% from 36.94 MMT in 2015-16. The Standing Committee on Public Undertakings attributes the decline to: (i) long development periods in exploration, (ii) ageing oil fields, and (iii) natural decline in reservoir pressure.

Imports and Dependency

●        Crude imports (2024-25): 243.22 MMT

●        Import dependency: 88.2% — up from 87.7% in FY24 and 82.9% in 2017-18

●        The crude import bill is about 25% of all merchandise imports

Reserves Are Shrinking Too

●        Proved crude reserves: 672.07 million tonnes (2025) — down 12% from 762.73 MT in 2014

●        Natural gas reserves: 1,073 BCM (2025) — down nearly 25% from 1,427 BCM in 2014

State-wise Share of Crude Production

On-shore fields are located in the Brahmaputra valley of north-east India, the Barmer area of Rajasthan, the Gujarat coast, and the Cauvery on-shore basin in Tamil Nadu. Andhra Pradesh has both on-shore and off-shore reserves.

Assam — the Oldest Oil-producing State

The main oil-bearing strata extend 320 km in upper Assam along the Brahmaputra valley. Assam's fields are relatively inaccessible and far from consuming areas, so oil is refined mostly at Digboi, Guwahati, Bongaigaon, Barauni and Numaligarh.

Digboi — India's oldest oil field

●        North-east of the Tipam hills in Dibrugarh district, Upper Assam.

●        Oil-bearing strata cover about 13 sq km, with oil at 400 to 2,000 m depth.

●        Over 800 oil wells drilled so far.

●        Before the western Indian fields opened, Digboi accounted for three-fourths of India's total production.

●        Key centres: Digboi, Bappapang, Hassapang and Paintola.

Naharkatiya

●        32 km south-west of Digboi, on the left bank of the Burhi Dihing river.

●        Oil discovered 1953, production started 1954; oil at 4,000–5,000 m.

●        Of 60 successful wells, 56 produce oil and 4 produce natural gas.

●        Annual production: 2.5 million tonnes of oil and 1 million cubic metres of gas.

●        Oil piped to Noonamati, Assam (443 km) and Barauni, Bihar (724 km).

Moran–Hugrijan

●        About 40 km south-west of Naharkatiya.

●        Discovered 1953, production started 1956.

●        Oil-bearing Barail horizon proved at 3,355 m depth.

●        Potential about one million tonnes per annum; 20 wells yield oil and gas.

Other Assam fields: Rudrasagar, Sibsagar, Lakwa, Galeki, Badarpur, Barholla and Anguri. Arunachal Pradesh has reserves at Manabhum, Kharsang and Charali. Tripura has fields at Mamunbhanga, Baramura-Deotamura, Subhang, Manu, Ampi Bazar and Amarpur-Dambura. Nagaland also has oil-bearing strata.

Gujarat

●        ONGC exploration yielded oil-bearing strata over about 15,360 sq km around the Gulf of Khambhat.

●        The main oil belt extends from Surat to Amreli.

●        Main producing districts: Kachchh, Vadodara, Bharuch, Surat, Ahmedabad, Kheda, Mahesana.

Ankleshwar (1958)

●        The first major oil-find, about 80 km south of Vadodara.

●        The anticline is 20 km long and 4 km wide; oil at 1,000–1,200 m.

●        Capacity 2.8 million tonnes per annum; about 170 wells bored.

●        So prolific that Pt. Jawaharlal Nehru called it the 'fountain of prosperity'.

●        Oil sent to refineries at Trombay and Koyali.

Khambhat / Lunej

●        ONGC drilled test wells at Lunej in 1958; oil obtained 4 September 1959.

●        Till 1969, 62 wells drilled — 19 yielded gas, 3 yielded oil.

●        Annual production: 15 lakh tonnes of oil; total reserves about 3 crore tonnes.

Ahmedabad and Kalol

About 25 km north-west of Ahmedabad. This field and part of the Khambhat basin contain 'pools' of heavy crude trapped in chunks of coal. Important producers: Nawgam, Kosamba, Mahesana, Sanand, Kathana.

Rajasthan — Barmer

●        One of India's largest inland oil discoveries, made in 2004; the block covers about 5,000 sq km.

●        Initial estimates of oil in place: 63 to 153 million tonnes.

●        In 2002, Saraswati and Rajeshwari were discovered, with 35 million tonnes in-place reserves.

●        The Mangala field (2004) is the largest oil discovery since 1985 — nearly one billion barrels recoverable.

●        Rajasthan is now India's largest on-shore oil producing state.

ONGC has surveyed the offshore areas of Kachchh, Khambhat, Konkan, Malabar and Coromandel coasts, the Krishna-Godavari delta and the Sunderbans. Commercial success has been achieved at Mumbai High, Bassein and Aliabet.

Mumbai High

●        ONGC's greatest offshore success, discovered 1974.

●        On the continental shelf, 176 km north-west of Mumbai.

●        Miocene strata over 2,500 sq km.

●        Reserves: 330 million tonnes of oil and 37,000 million cubic metres of gas.

●        Commercial production began 1976; oil taken from over 1,400 m via the Sagar Samrat platform.

●        Production rose from 85 lakh tonnes (1982) to over 189 lakh tonnes — 62% of all India — in 1991-92.

●        Production declined between 1989-90 and 1993-94 due to over-exploitation; remedial measures reversed the trend from 1994-95.

Bassein

Located south of Mumbai High. A recent discovery with reserves that may prove higher than Mumbai High's. Huge reserves found at 1,900 m depth.

Aliabet

At Aliabet island in the Gulf of Khambhat, about 45 km off Bhavnagar.

East Coast

The basin and delta regions of the Godavari, Krishna and Cauvery hold great potential. The Rawa field in the Krishna-Godavari offshore basin is expected to produce 1 to 3 million tonnes of crude annually. Tamil Nadu produces less than 1% of India's oil (Narimanam and Kovilappal fields). Andhra Pradesh also produces less than 1%.

Probable Areas for Future Discovery

●        Jawalamukhi, Nurpur, Dharamsala and Bilaspur — Himachal Pradesh

●        Ludhiana, Hoshiarpur and Dasua — Punjab

●        The Gulf of Mannar off the Tirunelveli coast

●        Offshore between Point Calimere and the Jaffna peninsula

●        Bay of Bengal deep water, between 12°N–16°N and 84°E–86°E

●        Marine delta regions of the Mahanadi, Godavari, Krishna and Cauvery

●        Sea between South Bengal and the Baleshwar coast

●        Offshore area of the Andaman and Nicobar Islands

Oil from the well is crude and contains many impurities. It is refined before use, yielding kerosene, diesel, petrol, lubricants, bitumen and other products.

●        India's first oil refinery started in 1901 at Digboi, Assam — and remained the only refinery in India for more than half a century.

●        Only in 1954 did another refinery at Tarapur (Mumbai) join it.

●        Capacity grew from 62 MMTPA in 1998 to 258 MMTPA in 2024-25, across 23 refineries.

●        India is the fourth-largest refining nation globally; the target is 309.5 MMTPA by 2030.

●        Reliance's Jamnagar is the world's largest single-site refinery.

●        India is a net exporter of refined products while importing 88% of its crude — the 'refining-hub paradox'.

Pipelines are the most convenient, efficient and economical mode of transporting liquids like petroleum, petroleum products, natural gas, water and milk. Even solids can be transported as slurry.

Advantages

●        Ideally suited to transport liquids and gases

●        Can be laid through difficult terrain and under water

●        Very low energy consumption

●        Needs very little maintenance

●        Safe, accident-free and environmentally friendly

Disadvantages

●        Not flexible — usable only for a few fixed points

●        Capacity cannot be increased once laid

●        Difficult to make security arrangements

●        Underground pipelines cannot be easily repaired; leak detection is difficult

Network Growth

India had about 5,035 km of pipelines in 1980. The natural gas network alone is now 24,945 km operational (up 62.6% from 15,340 km in 2014), with 10,805 km under development and about 34,233 km authorised in total by PNGRB.

The Major Pipelines

1. Naharkatiya–Nunmati–Barauni (1,167 km)

●        The first pipeline constructed in India.

●        Naharkatiya–Nunmati operative in 1962; Nunmati–Barauni in 1964.

●        Barauni to Kanpur and Haldia completed in 1966.

Branches: Nunmati–Siliguri; Lakwa–Rudrasagar–Barauni; Barauni–Haldia (1966); Barauni–Kanpur; Nunmati–Bongaigaon; Haldia–Rajbandh–Maurigram.

2. Mumbai High–Mumbai–Ankleshwar–Koyali

A 210 km double pipeline connects Mumbai with Mumbai High, carrying crude oil and natural gas. The Ankleshwar–Koyali section was completed in 1965.

3. Salaya–Koyali–Mathura (1,256 km)

From Salaya in Gujarat to Mathura in UP via Viramgam, supplying crude to the Koyali and Mathura refineries. Extended to Panipat (Haryana) and Jalandhar (Punjab). Has an offshore terminal for imported crude.

4. Hazira–Bijapur–Jagdishpur (HBJ) Gas Pipeline (1,750 km)

●        Constructed by GAIL — connects Hazira (Gujarat) to Bijapur (MP) and Jagdishpur (UP).

●        Carries 18 million cubic metres of gas every day.

●        Serves three power houses — Kawas (Gujarat), Anta (Rajasthan), Auraiya (UP).

●        And six fertilizer plants — Bijapur, Sawai Madhopur, Jagdishpur, Shahjahanpur, Aonla, Babrala — each producing 1,350 tonnes of ammonia per day.

●        Cost over ₹1,700 crore; passes through 343.7 km of rocky area, 56.3 km of forest, 29 railway crossings and 75 rivers.

●        The world's largest underground pipeline. Extended up to Delhi.

5. Jamnagar–Loni LPG Pipeline (1,269 km)

●        Built by GAIL at ₹1,250 crore — Jamnagar (Gujarat) to Loni near Delhi.

●        Passes through Gujarat, Rajasthan, Haryana and UP.

●        The longest LPG pipeline in the world.

●        Equivalent to moving 3.5 lakh LPG cylinders daily — capacity being raised to 5 lakh.

●        Net saving of ₹500 crore per year; reduces about 10,000 tonnes of pollutant emission annually.

●        Phase I completed 2001, Phase II in 2003.

6. Kandla–Bhatinda (1,331 km)

Constructed by IOC at an estimated cost of ₹690 crore, for transporting crude to the Bhatinda refinery.

Other Notable Pipelines

The Jagdishpur–Haldia gas pipeline (2,050 km) is GAIL's longest and most expensive (about ₹7,600 crore). The Karanpur–Moradabad–Rudrapur pipeline is 275 km. Cairn built a 582 km pipeline from Barmer to Salaya (150,000 barrels/day). The Mundra–Delhi pipeline is 1,054 km, dedicated 2 February 2009, at ₹1,757 crore, carrying 5 MMTPA. A 6,000 km national gas pipeline grid is proposed at over ₹30,000 crore.

Natural gas usually accompanies petroleum accumulations. Whenever a well is drilled for oil, it is natural gas that is available before oil is struck.

Current Figures

●        Production: 36.44 BCM (2023-24), up 5.8% — projected 45.3 BCM by 2026.

●        Demand: about 71 BCM in FY25.

●        50% of gas availability is imported LNG, up from 40.7% a decade ago.

●        Target: raise gas to 15% of the energy mix by 2030 (currently about 6%).

●        About four-fifths of gas comes from offshore sources. Assam produces over 5%; the rest comes from Gujarat, Andhra Pradesh, Tamil Nadu, Tripura and Rajasthan.

Major Discoveries

●        Discovery of gas made rapid strides after 1985.

●        1988-89: oil strikes at Cauvery offshore and Nanda (Khambhat basin); gas at Talot, Jaisalmer basin.

●        September 1988: production began from the South Bassein gas field.

●        1997: a survey in the Andamans revealed 1,700 billion cubic feet — enough for 30 years of national requirement.

The Krishna-Godavari Discovery

●        Gas discovered by Reliance Industries in the deep waters of the K-G offshore basin.

●        Reported as the largest natural gas discovery in the world in 2002.

●        Reserves estimated at 14 trillion cubic feet.

●        The field is 200 km into the sea from Vishakhapatnam; wells drilled at 1,350–2,700 m — the deepest oil exploration in India.

●        Believed to yield 60–80 million cubic metres per day from a single field.

●        In June 2005, ONGC made a significant find in the shallow waters of the K-G basin, about 12 km from the Amalapuram coast.

●        In June 2004, Reliance struck gas off the Odisha coast — reserves of 4 to 5 trillion cubic feet.

GAIL (India) Limited

●        Incorporated in August 1984 for the transportation, processing and marketing of natural gas.

●        Its immediate task was to complete the HBJ gas pipeline.

●        Now the largest natural gas processing, transmission and distribution company in India.

●        Supplies gas to power plants generating about 5,500 MW.

●        Feedstock for fertilizer plants producing about 10 MMTPA of urea.

●        Has seven LPG plants with capacity over one million tonnes per annum.

●        Joint ventures: Mahanagar Gas (Mumbai, with British Gas) and Indraprastha Gas (Delhi, with BPCL).

Who Does What

One Nation, One Grid, One Tariff

PNGRB notified a levelised unified gas tariff of ₹80.97/MMBTU with effect from 1 June 2024, creating three tariff zones: up to 300 km from the gas source, 300–1,200 km, and beyond 1,200 km. This means distance no longer penalises far-flung consumers.

HELP and OALP — the Licensing Regime

●        HELP — Hydrocarbon Exploration and Licensing Policy, which replaced the older NELP.

●        Introduced a uniform licence for all hydrocarbons (oil, gas, CBM, shale), an open acreage system, and revenue sharing instead of profit sharing.

●        OALP — Open Acreage Licensing Policy lets companies pick blocks themselves rather than waiting for a government round.

●        144 blocks covering over 242,056 sq km awarded across eight concluded OALP rounds.

●        The 10th OALP round offered 25 new blocks; a Special CBM round targets unconventional gas.

City Gas Distribution (CGD)

●        307 geographical areas authorised by PNGRB — covering close to 100% of India's area and population, excluding the islands.

●        1.36 crore domestic piped natural gas (PNG) connections.

●        7,259 CNG stations nationwide.

●        Four segments: CNG as auto-fuel, and PNG for domestic, commercial and industrial use.

Coal Bed Methane (CBM)

●        Commercial production began July 2007 at the Raniganj (South) block, West Bengal.

●        Producing states: West Bengal, Madhya Pradesh and Jharkhand.

●        An unconventional gas source — methane adsorbed onto coal seams, released by lowering water pressure in the seam.

Pradhan Mantri Urja Ganga

The Jagdishpur–Haldia–Bokaro–Dhamra Pipeline (JHBDPL), branded Pradhan Mantri Urja Ganga, extends the gas grid into eastern India — Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha — a region historically left out of the network. The Barauni–Guwahati pipeline links it onward to the north-east.