• Petra means rock; Oleum means oil.
  • Petroleum is also called ‘Black Gold ‘
  • Petroleum is obtained from sedimentary rocksof the earth.
  • Petroleum fuels on burning gives little smoke and leaves no ash. So they are better than coal.






  • All sedimentary rocks do not contain oil.
  • An oil reservoir must have three prerequisite conditions.



  1. Porous reservoir rock to accommodate appropriately large amounts of oil;
  2. Permeable rockto allow liquids or gases to pass through it to discharge oil and/or gas on drilling of the oil well.
  3. the porous sandstone beds or fissured limestone containing oil should be capped below by impervious bed rock.



  • More than half of the world’s proven oil reserves are located in the Middle East.
  • Canada, United States, Latin America, Africa, and the region occupied by the former Soviet Union contains less than 15 percent of the world’s proven oil reserves.
  • The amount of oil a given region produces is not always proportionate to the size of its proven reserves but depends on technology deployed and capital infusion to extract those reserves.
  • United States has less than 2 percent of the world’s proven reserves but produces nearly 10 percent of the world’s oil. Whereas the Middle East contains more than 50 percent of the world’s proven reserves but accounts for 30 percent of global oil production.



A) Super giants – These are huge oil fields

  • Petroleum is contained in a few extremely huge fields worldwide and the rest of the fields are insignificant.
  • The two largest classes of fields are-
    1. Super giants, fields with > 5 billion barrels of ultimately proven recoverable oil, and
    2. world-class giants, fields with 500 million to 5 billion barrels of recoverable oil.
  • Fewer than 40 supergiant oil fields have been discovered yet worldwide.
  • The Arabian-Iranian sedimentary basinin the Persian Gulf region contains two-thirds of these supergiant fields.
  • The remaining super giants are distributed in the United States, Russia, Mexico, Libya, Algeria, Venezuela



B) Oilfields in Saudi Arabia

  • Saudi Arabia has the secondlargest proven oil reserves and Venezuela has the largest proven oil reserves.
  • Saudi Arabia has 20 percent of the world’s proven reserves.
  • Al-Ghawār oil field’s (marked as 7 in the map)discovery transformed Saudi Arabia into a leading oil producing country.
  • Another important discovery was the Safaniyah (marked as 9 in the map)offshore field in the Persian Gulf. It is the third largest oil field in the world also being the largest offshore oil field.



C) Oil Fields in Iraq, Kuwait, & Iran

  • The Middle Eastern countries of Iraq, Kuwait, and Iran are each estimated to have 25 percentof all proven reserves in the world.
  • These countries harbour a huge number of supergiant fields.
  • Al-Burqan oilfield of Kuwait is the world’s second largest oil field.

D) RUSSIAN oil fields.

  • Russia has the best potential for new discoveries.
  • It has significant proven reserves of 5 percent of the world total—and is the world’s leading petroleum producer.
  • There are two supergiant oil fields – Western Siberia and Yenisey Khatanga.
  • Kamchatka peninsula and Sakhalin Island are said to have significant oil reserves.
  • Volga-Caspian Region has many oil and gas fields.

E) Oil Fields in United States, Mexico, & Canada

  • North America has many sedimentary basins.
  • Many oilfields have been found in North Slope region of Alaska and East Texas.
  • United States is producing more oil than any other country because of its Large cash rich oil companies, even when the proven oil reserves amount to 2 percent of the world total, which is miniscule when compared to their production.
  • The Great Salt Basin, Permian Basin etccontains an enormous amount of petroleum reserve.
  • Mexico has more than 10 billion barrels of proven oil reserves and is one of the top 10 oil producers in the world.
  • Canada has less than 10 billion barrels of proven reserves of conventional liquid oil.
  • But huge deposits of TAR sands oil in the Athabasca region in western Canada bring the country’s total proven oil reserves to approximately 175 billion barrels, behind only oil giants Saudi Arabia. Extraction of Tar sands oil are known to cause maximum environmental degradation.



F) Oilfields in Venezuela & Brazil

  • Venezuela is the largest oil exporter in the Western Hemisphere.
  • Venezuela has 300.88 billion barrels of proved oil reserves, ahead of Saudi Arabia’s 266.46 billion barrels of reserves.
  • Most of these reserves are located in the Orinoco belt and Bolivar Coastal fields
  • Brazil has 14 billion barrels of proven oil reserves.

G) Oilfields in United Kingdom

  • The United Kingdom is an important North Sea oil producer, and with proven oil reserves of 3 billion barrels, being the largest in the European Union.

H) Oilfields in African Region

  • The main oil-producing countries of Africa are: Libya, Algeria, Nigeria and Egypt.
  • Niger delta in Nigeria contains huge amount of oil; Egypt is self-sufficient in oil production.
  • Algeria is a significant producer of petroleum where much of the national income comes from oil-export.
  • Libya became a consistent petroleum producer. The total oil reserve of Libya is around 3 per cent of global reserve.




A) On-shore Oil Production in India( please learn the map)

  • Brahmaputra valley of north-east India.
  • Barmer region of Rajasthan.
  • Gujarat coast in western India.
  • Cauvery on-shore basin in Tamil Nadu.
  • Andhra Pradesh has both on-shore and offshore (KG BASIN) oil reserves.

 Assam Oilfields

  • Oldest oil producing state in India
  • The main oil-bearing strata extend for a distance of 320 km in upper Assam along the Brahmaputra valley.
  • Oilfields of Assam are relatively inaccessible and are distantly located from the main consuming areas.
  • Oil from Assam is therefore, refined mostly in the refineries at Digboi, Guwahati, Bongaigaon, Barauni.

Gujarat Oilfields

  • Ankleshwar, Khambhat or Lunej, Ahmedabad and Kalol, Nawgam, Kosamba, Kathana, Barkol, Mahesana and Sanand are important oilfields of this region.
  • Ankleshwar: Oil from this field is sent to refineries at Trombay and Koyali.

B) Off-Shore Production in India

Western Coast

  • Mumbai High, Bassein and Aliabet.
  • Mumbai High: 1974; rock strata of Miocene age.
  • Sagar Samrat, Bassein: south of Mumbai High.
  • Aliabet: Aliabet island in the Gulf of Khambhat.

Eastern Coast

  • The basin and delta regions of the Godavari, Krishna and Cauvery rivers hold great potential for oil and gas production.
  • The Rawa fieldin Krishna-Godawari off-shore basin is important.
  • The Narimanam and Kovilappal oilfields in the Cauvery on-shore basin is also important.




A) Upstream Sector

  • Oil exploration, prospection and extraction, production from oil wells.

New Exploration Licensing Policy, 1997

  • To Promote exploration by providing a level playing field to private players in line with public enterprises.
  • Oil blocks are allotted under ‘Production Sharing Contracts’(PSC)
  • In ‘Production Sharing Contracts’, investment and revenues is shared between the private player and the government.
  • The private companies exaggerated or inflated their investment accounts and siphoned public funds.

Open Acreage Licensing Policy (OALP)

  • There are demands to replace NELP with OALP.
  • Under OALP, oil blocks will be available for throughout sale.
  • It allows ample time for explorer to study the fields and bid for block of his choice.
  • ‘National Data Repository’ is prerequisite for functioning of OALP.
  • It will be a ‘hydrocarbon data centre’ which facilitate prospection of resources.

The Revenue Sharing Contracts

  • Is a better alternative to both OALP and NELP.
  • Government gets share in revenue from the very beginning.
  • In contrast PSC (Production Sharing Contracts), allows government to have revenue share only after costs are recovered by the explorer.
  • In PSC, explorers inflate investment by classifying revenue expenditure as capital expenditure (equipment, technology etc.).
  • This resulted in lower government share and also delaying the revenue to the government.

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B) Revenue Sharing Contracts as an alternative to Production Sharing Contracts (PSC)

  • Under revenue sharing model, government gets share in revenue from the exploration from very beginning. In contrast PSC, allows government to have revenue share only when costs are recovered by explorer.
  • There is demand from civil organisations and watchkeepers of government revenue to shift to revenue sharing model, this is because –
    • It is felt that explorers are trying to inflate investment by classifying revenue expenditure as capital expenditure. PSC allows company to recover their investments first before they start sharing the revenue with the government. But private parties in the past have tried to inflate their total investments and have delayed the sharing of revenue generated to the government, thereby making huge profits at the cost of government revenues. This way government will lose revenue.
    • It delays revenue to the government – Since capital outlays are huge, it may take decades to recover the costs.


C) Midstream sector

  • This sector involves transportation of oil and gas from blocks to the refineries and then from refineries to distribution centres.
  • Although the most cost-effective and environment friendly way is through pipelines when compared to roads and railways (They also leads to pilferage and delays)
  • Current pipeline infrastructure in India is skewed in favour of North and West India accounting for 60% of gas pipelines and 80 % of gas consumptions.
  • Union government has come up with a plan to set up National Gas Grid under which additional 15000 km of pipelines will be laid down. It will benefit the lack of pipeline infrastructure in east and also expand it throughout the county’s geographical reach.
  • Further, Gas Distribution networks are available in only few cities. In most of cities gas is transferred through bottling plants and distribution agency. This result in wastage by leakages and theft.

Viability Gap Funding

  • In some PPP projects in India, Central and state governments undertake to provide support funding to successful bidders for fulfilling the economic viability of the project.
  • Projects are awarded to those whose requirement for state funding is least.
  • Indian Oil Corporation and Gas Authority of India are involved in this sector.


  • Indian government has been building underground storage capacity of 15 million metric tons for petroleum and related products.
  • The first phase construction is in progress in coastal cities of Vishakhapatnam, Mangalore and Padur.
  • Storage facilities are essential for safeguard against shortages or supply disruptions.

D) Downstream sector

  • This sector involves refining, processing and marketing of products and by-products of crude oil.



  • Consists primarily of methane and
  • Propane, butane, pentane, and hexaneare also present in small amounts.
  • Liquefied petroleum gas (LPG) = Mixture of butane and propane.
  • Commonly occurs in association with crude oil.
  • Natural gas is often found dissolved in oil or as a gas cap above the oil.
  • Sometimes, pressure of natural gas forces oil up to the surface. Such natural gas is known as associated gas or wet gas.
  • Some reservoirs contain only gas and no oil. This gas is termed non-associated gas or dry gas.
  • Often natural gases contain substantial quantities of hydrogen sulphide or other organic sulphur compounds. In this case, the gas is known as “sour gas.”
  • Coalbed methane is called ‘sweet gas’ because of its lack of hydrogen sulphide.


Oil + Gas = Associated Gas / Wet Gas,

Gas and no oil = Non-Associated Gas / Dry Gas,

Hydrogen Sulphide in gas = Sour Gas,

Coalbed Methane = Sweet Gas.


  • In practice, purchases of natural gas are usually denoted as MMBTUs (millions of British thermal units (BTU or Btu)) = ~1,000 cubic feet of natural gas.






  • Electric power generation.
  • Industrial, domestic, and commercial usage.
  • City transport system – buses, auto-rickshaws, CNG powered cars, commercial automotive fleets now operate on CNG.
  • It is an ingredient in dyes and inks and is also used in rubber compounding operations.
  • Ammonia is manufactured using hydrogen derived from methane. Ammonia is used to produce chemicals such as hydrogen cyanide, nitric acid, urea, and a range of fertilizers.


















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