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Crude petroleum consists of hydrocarbons of liquid and gaseous states varying in chemical composition, colour and specific gravity. It is an essential source of energy for all internal combustion engines in automobiles, railways and aircraft. Its numerous by-products are processed in petrochemical industries.
Crude petroleum occurs in sedimentary rocks of the tertiary period. Oil exploration and production was systematically taken up after the Oil and Natural Gas Commission was set up in 1956. Till then, the Digboi in Assam was the only oil producing region but the scenario has changed after 1956. In recent years, new oil deposits have been found at the extreme western and eastern parts of the country. In Assam, Digboi, Naharkatiya and Moran are important oil producing areas. The major oil fields of Gujarat are Ankaleshwar, Kalol, Mehsana, Nawagam, Kosamba and Lunej. Mumbai High which lies 160 km off Mumbai was discovered in 1973 and production commenced in 1976. Oil and natural gas have been found in exploratory wells in Krishna-Godavari and Kaveri basin on the east coast. According to a newspaper report (The Hindu, 05.09.2006) the Oil and Natural Gas Commission has found potential zones of natural gas reserves in Ramanathapuram district. The survey is still in the initial stages. The exact quantity of gas reserves will be known only after the completion of the survey. But the results are encouraging. Oil extracted from the wells is crude oil and contains many impurities. It cannot be used directly. It needs to be refined. There are two types of refineries in India:
(a) field based and
(b) market based. Digboi is an example of field based and Barauni is an example of market based refinery. There are 18 refineries in India.