Petroleum Policy

4. How petroleum is formed

Petroleum is a combination of liquid crude oil and natural gas and is called a fossil fuel. Natural gas and oil are formed from the remains of plants and animals trapped in or between layers of fine-grained sediment called ‘shale’ laid down in oceans and large lakes millions of years ago. It thus generates in subsoil but may evaporate or escape to the surface and when in contact with the atmosphere may turn into a solid, such as asphalt. Different geographical locations and conditions cause petroleum to be formed differently.



Classification of oil

The oil industry classifies ‘crude’ by the location of its origin and by its relative weight or viscosity (‘light’, ‘intermediate’ or ‘heavy’). The relative content of sulphur in natural oil deposits also results in referring to oil as ‘sweet’, which means it contains relatively little sulphur, or as ‘sour’, which means it contains substantial amounts of sulphur. Petroleum can be separated into fractions including natural gas, gasoline, naphtha, kerosene, fuel and lubricating oils, paraffin wax, and asphalt and is used as a raw material for a wide variety of derivative products. Natural gas can be exploited in association with oil or coal (non-associated natural gas).