PETROLEUM

PROJECT REPORT

Introduction:

What is Petroleum?

A thick, flammable, yellow-to-black mixture of gaseous, liquid, and solid hydrocarbons that
occurs naturally beneath the earth's surface, can be separated into fractions including natural
gas, gasoline, naphtha, kerosene, fuel and lubricating oils, paraffin wax, and asphalt and is
used as raw material for a wide variety of derivative products.

The word petroleum comes from the Latin petra, meaning “rock,” and oleum, meaning “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 sulfur in natural oil
deposits also results in referring to oil as "sweet," which means it contains relatively little
sulfur, or as "sour," which means it contains substantial amounts of sulfur. Petroleum is
referred to as “Black Gold.” This name itself is an indication of its importance to humans.
Crude oil is considered to be the “mother of all commodities” as it is used to manufacture
various products such as pharmaceuticals, plastics, gasoline, synthetic fabrics, etc. Petroleum
or oil has also been the world’s leading source of energy since the 1950s. The below picture
shows the presence of petroleum under the Earth’s surface.

How is Petroleum Formed?

 Petroleum is formed from the remains of dead plants and animals.

 When plants and animals die, they sink and settle on the seabed.
  Millions of years ago, these dead wildlife and vegetation decomposed and got mixed
with sand and silt.
 Certain bacteria helped in the decomposition of this organic matter and caused
some chemical changes.
 Matter consisting of largely carbon and hydrogen was left behind. However, as there
is no sufficient oxygen at the bottom of the sea, the matter could not decompose
completely.
 The partially decomposed matter remained on the seabed and eventually was covered
with multiple layers of sand and silt.
 This burying took millions of years, and finally, due to high temperature and pressure,
the organic matter decomposed completely and formed oil.

Petroleum Refining

An oil refinery or petroleum refining is an industrial manufacturing facility where crude oil is
extracted and converted into more valuable goods, such as petroleum naphtha, gasoline, jet
fuel, asphalt foundation, heating oil, petroleum kerosene, and liquefied gas. Oil refineries are
usually huge, vast industrial facilities with extensive pipelines running throughout, holding
fluid streams in between.

 Petroleum is a mixture of many substances such as gas, petrol, diesel, kerosene,

lubricating oil, paraffin wax, etc.
 As these constituents serve different purposes, it is important to separate them, or in
other words, refine the crude oil. This process of separation of various constituents of
petroleum is called petroleum refining.
 This is done in oil refineries. It is a three-step process.
 The first step is separation where the crude oil is separated into various components
through distillation process. The heavier constituents remain settled at the bottom
whereas lighter constituents rise up as vapour, or remain liquid.
 Next, these constituents, which are still quite heavy are converted into gas, gasoline,
and diesel. Thus, the next step is conversion.
 These have certain impurities, so the last step is treating, where they are treated to
obtain pure forms of various products.

The oldest and most common way of separating things into different components (called
fractions) is to do it using the boiling temperature differences. That process is known as
fractional distillation. You essentially heat up crude oil, let it spray, then condense the
vapour.

New methods, in a method called conversion, use Chemical processing on certain fractions to
produce others. For example, chemical processing may split lengthier chains into shorter
chains. This allows a refinery to convert diesel fuel into gasoline, depending on the gasoline
demand.
In industry, the refining process is generally called the “downstream” sector, while the
“upstream” sector is known as the raw crude oil output. The word downstream is
synonymous with the idea of sending oil down the supply chain of a commodity to an oil
refinery to be refined into petrol. The downstream phase also includes the actual sale of
petroleum products to other companies, governments or private individuals.

History of Petroleum

To survive in the agrarian era, people burned wood for warmth and cooking. In addition to
use as a building material, wood remained the chief global fuel for centuries.

The invention of the first modern steam engine, at the beginning of the 18th century, heralded
the transformation from an agrarian to an industrial economy.

Steam engines could be powered by either wood or coal, but coal quickly became the
preferred fuel and it enabled massive growth in the scale of industrialization.

A half-ton of coal produced four times as much energy as the same amount of wood and was
cheaper to produce and, despite its bulk, easier to distribute.
Coal-fired steam locomotives dramatically reduced the time and cost of inland transportation,
while steamships traversed oceans. Machines powered by coal enabled breakthroughs in
productivity while reducing physical toil.

With the dawn of the 20th century, environmental concerns and new technologies led to
another energy source shift from coal to oil.

What are hydrocarbons?

A hydrocarbon is an organic compound consisting of only hydrogen and carbon atoms. They
are group 14 hybrids, which means they contain hydrogen, as well as atoms of the carbon 14
group; carbon, silicon, germanium, tin, and lead. Carbon has 4 electrons, which means it has
exactly 4 bonds to make, to be stable. Another type of hydrocarbons are aromatic
hydrocarbons, which include alkanes, cycloalkanes, and alkyne-based compounds.
Hydrocarbons can form more complex compounds, like cyclohexane, by bonding to
themselves. This is known as catenation.
Common hydrocarbons:

Methane (CH4)
Ethane(C2H6)
Propane(C3H8)
Butane(C4H10)
Pentane(C5H12)
Hexane(C6H14)

Where are hydrocarbons found?

Almost all hydrocarbons occur naturally in crude oils, like petroleum and natural gas. Since
crude oil is made of decomposed organic matter, it is abundant in hydrogen and carbon
atoms. They are also present in different trees and plants, and form a natural pigment called
carotene, that can be found in carrots and green leaves. The majority of natural crude rubber,
98%, is made of a hydrocarbon polymer; this is formed when a chainlike, molecule forms,
consisting of many units linked together.

Crude Oil

Crude oil is a finite resource that is found in the Earth’s crust. It is the remains
of organisms that lived and died millions of years ago - mainly plankton which was buried in
mud.
Crude oil is a complex mixture of hydrocarbons. The carbon atoms in these molecules are
joined together in chains and rings. In the ball and stick models below, carbon atoms are
black and hydrogen atoms are white.

Crude oil is an important source of fuels such as petrol, diesel, kerosene, heavy fuel oil and
liquefied petroleum gases feedstock for the petrochemical industry.
A feedstock is a raw material used to provide reactants for an industrial reaction. A
petrochemical is a substance made from crude oil using chemical reactions. For example,
ethene is produced from crude oil. It is used as feedstock to make poly(ethene), a polymer.

Other useful substances made from compounds found in crude oil include:

solvents
lubricants
detergents

Natural Gas

Natural gas is a hydrocarbon mixture consisting primarily of saturated light paraffins such

as methane and ethane, both of which are gaseous under atmospheric conditions. The mixture
also may contain other hydrocarbons, such as propane, butane, pentane, and hexane. In
natural gas reservoirs even the heavier hydrocarbons occur for the most part in gaseous form
because of the higher pressures. They usually liquefy at the surface (at atmospheric pressure)
and are produced separately as natural gas liquids (NGLs), either in field separators or in gas
processing plants. Once separated from the gas stream, the NGLs can be further separated
into fractions, ranging from the heaviest condensates (hexanes, pentanes, and butanes)
through liquefied petroleum gas (LPG; essentially butane and propane) to ethane. This source
of light hydrocarbons is especially prominent in the United States, where natural gas
processing provides a major portion of the ethane feedstock for olefin manufacture and the
LPG for heating and commercial purposes.
Societies Dependence on Petroleum

Quite apart from petrol, diesel, jet fuel and a few other “fossil fuel” type products, which
many environmental groups would like us to live without, refined petroleum products are
used for many items that we need to maintain our lives and quality of life. Thus, if we
stopped exploring for and developing petroleum, we’d also have to forego most of those
every day items produced from petroleum or potentially produce them with more costly less
environmentally sensitive materials.

It is fair to say that the world we know would not exist were it not for crude oil. One of the
major products made from crude oil are plastics. Without plastics, alternative materials would
need to be found for the literally thousands of items that we depend on every day such as
computers, mobile phones, credit cards and children’s toys.

Other products, including nylon and polyester, contribute to many other items that we depend
on daily. Even a partial list of products would be difficult to provide in a short article but the
products of petroleum can be found in most areas of our daily lives. These, with some
examples, include agriculture (fertilisers, irrigation piping); the office (ink cartridges, pens,
binders, Scotch tape, copiers); clothing/textiles; recreation (waterproof clothing, golf
balls/bags, back-packs, surf boards, playground equipment); medical (latex gloves,
antihistamines, syringes, heart valves); household (freezer containers, lunch boxes, bags,
paint, microwave cookware); furnishings (carpets, curtains); cosmetics (shampoo, Vaseline,
moisturising cream); transportation (asphalt, tyres) and a huge array of miscellaneous items
(candles, guitar strings, balloons). THUS, PETROLEUM OR CRUDE OIL IS
INTEGRATED INTO OUR DAILY LIVES!

Uses of Petroleum

 Refined products obtained from crude oil have a number of uses.

 Liquefied Petroleum Gas or LPG is used in households as well as in the industry.
 Diesel and petrol are used as fuels for vehicles. Diesel is generally preferred for heavy
motor vehicles.
 Petrol is also used as a solvent for dry cleaning, whereas diesel is also used to run
electric generators.
 Kerosene is used as a fuel for stoves and jet planes.
 Lubricating oil reduces wear and tear and corrosion of machines.
 Paraffin wax is used to make candles, ointments, ink, crayons, etc.
 Bitumen or asphalt is mainly used to surface roads.
Petrochemicals 

Petrochemicals are chemical substances made primarily from coal, oil, and natural gas. They

are used to make consumer products such as aspirin, detergents, shampoo, pesticides, milk
jugs, gasoline, carpeting, and more. Petrochemicals are considered feedstock, which is raw
material used for processing or manufacturing another product.

Plastics

Plastic is any synthetic or semisynthetic organic polymer. In other words, while other

elements might be present, plastics always include carbon and hydrogen. While plastics may
be made from just about any organic polymer, most industrial plastic is made
from petrochemicals. Thermoplastics and thermosetting polymers are the two types of plastic.
The name "plastic" refers to the property of plasticity, the ability to deform without breaking.

Impact of Petroleum on Economic Development

Energy as a driving force of development plays a significant role in the country's economic
growth. A key notion in the economics of production procedure is the reproducibility. Some
inputs that engaged in the production procedures are non-reproducible such as energy, while
other production factors such as capital, labour and natural resources in the long-run are
reproducible. Petroleum components (crude oil, natural gas pipeline, refined petroleum
products and, other liquids) although being one of the most valuable and scarce natural
endowments, are used both the final consumption product and an energy input.

Role of Petroleum in Pakistan’s Economy

Pakistan is the country which is blessed up with enormous reserves of natural resources. The
economy of Pakistan is growing at the rate of 2.7%, and consequently the growth demands
higher energy consumption. The major energy sources of Pakistan are oil, gas and hydel
energy which are backbone of the country.

Pakistan has the reserves of oil (0.31 billion barrels), gas (30 TCF), coal (185 billion tons)
and shale gas reserves of 51 TCF. Apart from all these resources Pakistan is an Agri country
and has a strong potential to produce energy through biomass and Agri waste. Also, Pakistan
has the edge from solar energy and can produce 2.3 million mega watts per annum. Also, the
country can produce energy from biofuels using its own land and resources for cultivation.
But possessing all these resources we are still lacking in fulfilling our energy demand due to
several reasons. With the total reserves of 0.31 billion barrels of oil we are not able to fulfil
the demand of oil through home resources because the production of oil in the country is only
59.08 thousand bbl./day and the consumption is 426.72 thousand bbl./day, rest of the demand
is fulfilled by oil imports. While in the gas sector we have 30 TCF reserves of gas and the
natural gas consumption is growing rapidly.

Due to sudden increase in CNG the current supply of natural gas is not meeting the energy
demand in gas sector. Pakistan is suffering the worst shortage of oil, gas and electricity. The
oil and gas sector of a country is an important part of its economy. The oil and gas sector of
Pakistan has massive share in the country’s economy. Development of oil and gas sector is
the key to boost up a country’s economy. Government is trying to offer a better and
competitive policy that should meet to the international standards to attract the foreign
investments in the country. The need for fulfilling the energy needs is to improve law and
order situation in the country for the sake of foreign investments, proper optimization of the
sources, improvement in the government policy focus, adequate rationalizing of oil and gas
prices and focus management for utilization of resources.

The picture below shows the sector-wise petroleum consumption in Pakistan.

Pakistan’s import of oil

Pakistan remains a net importer of refined oil because of the low capacity of domestic
refineries to process crude oil. Total refining capacity of Pakistan is 19 million tons, however,
the capacity could not be fully utilized owing to non-upgradation of refineries, technical and
financial constraints. In 2019, the country produced 4.3 million metric tons of crude oil,
enough to meet only 20 percent of the country’s total petroleum requirements. The remaining
80 percent was met through imports of crude oil and refined petroleum products worth $15-
$16 billion annually. There are currently five large oil refineries running mostly on imported
crude oil.  In October 2018, Pakistan and Saudi Arabia agreed to build another refinery in
Gwadar, Baluchistan in an attempt to reduce the country’s reliance on refined oil imports.
Natural gas contributes 38 percent of the country’s total primary energy supply mix.  Total
domestic gas production has hovered around 4 billion cubic feet per day (bcfd) while
domestic demand is estimated at 6-8 bcfd.  Thus, there is a natural gas supply-demand
gap.  Pakistan’s natural gas production reached a peak in 2012, and since then, Pakistan’s
production (from existing fields) has started to decline and recent small natural gas
discoveries are barely able to offset production declines. According to the Energy
Information Administration, Pakistan holds sizeable shale gas reserves and the Pakistani
government has provided investment incentives for shale gas development.  Challenges to
develop shale resources include complex geography, environmental constraints, water
resource constraints, security, and low natural gas prices in Pakistan.

Given depleting natural gas resources (in existing fields), Pakistan started importing LNG in
FY 2015 to meet growing domestic demand. Pakistan commissioned its first regasification
terminal - the Engro Elengy floating, storage, and regasification unit (FSRU) - at Port Qasim
Karachi in 2015. The second LNG terminal started commercial operations in December 2017.
With growing demand of gas among private sector (power, cement, textile industry),
Government opened up LNG sector for private firms where they can import LNG for
respective industry’s consumption. In this regard, a third LNG terminal is underway and
undergoing bureaucratic approvals.

The Largest Producers of Oil

The 10 largest oil producers and share of total world oil productionn

Country Million barrels per day Share of world total

United States 18.88 20%
Saudi Arabia 10.84 11%
Russia 10.78 11%
Canada 5.54 6%
China 4.99 5%
Iraq 4.15 4%
United Arab Emirates 3.79 4%
Brazil 3.69 4%
 Iran 3.46 4%
Kuwait 2.72 3%
Total top 10 68.82 72%
World total 95.57

The Largest Consumers of Oil

The 10 largest oil consumers and share of total world oil consumption

Country Million barrels per day Share of world total

United States 20.54 20%
China 14.01 14%
India 4.92 5%
Japan 3.74 4%
Russia 3.70 4%
Saudi Arabia 3.18 3%
Brazil 3.14 3%
Canada 2.63 3%
South Korea 2.60 3%
Germany 2.35 2%
Total top 10 60.81 61%
World total 100.23

Conclusion

Import of the crude oil and oil-based product put a lot of burden on the countries economy.
There are currently five major oil refineries operating in the country which are not able to
fulfil the demand requirements, hence the government should take some vital steps in policy
matters so that it can attract more foreign investors not only in downstream sector but also in
upstream sector. Indigenous resources of gas, coal and hydro should be properly utilised for
power generation. These resources should be actively promoted to reduce dependence on
imported crude oil, and to reduce heavy burden on foreign exchange resources. In addition if
the government takes bold and firm steps to improve hydel power generation, then it not only
adds higher value to power sector, but also shows its impact on oil import budget. This will
also help in supplying the power at cheaper rate for both industrial and residential sectors
Consumption of HSD in the country has grown dramatically due to lower prices and lower
taxes while gasoline experiences higher taxes and higher prices. Promotion of CNG has also
affected the motor gasoline market in recent years. The government should rationalize taxes
and prices of transport fuels to reduce the differential between motor gasoline and diesel
prices and to rationalize price of CNG and motor gasoline.

Due to Indigenous reserves of Natural gas in the country government should encourage the
transport sector to switch over to CNG. As transport sector is the main user of High-speed
diesel (HSD) and conversion of HSD to CNG will reduce import bill of the country.
Refineries face severe problems in transportation of oil from ports. More options of
transportation of crude from ports should be available for refineries. Government policy of
using the locally available crude at any cost should be techno economically evaluated before
taking any final decision. Refineries should be taken into confidence before finalisation of
any crude oil import.