During 19^th century, use of petroleum was limited. Since petroleum is dangerous, India needed legislations for regulating petroleum. Finally Indian Petroleum Act, 1899 was passed. With the rapid developments in the use of petroleum that took place in subsequent years it became unsuitable in several ways. As early as 1903, the attention of the Government of India was drawn to the inconvenience arising from the existence in different provinces of separate sets of rules to regulate the importation, possession and transport of petroleum. In 1925-26 Local Governments and the interests concerned were consulted on the subject of revising the Indian Petroleum Act, 1899 and it was agreed by all the Local Governments that the rule-making power should be transferred to central Government. To achieve this objective the Petroleum Bill was introduced. Petroleum Bill having been passed by the Legislature received its assent on 6th September, 1934 and came into effect on 30^th March, 1937. Petroleum Rules, 1976 were notified under this Act, however these rules were repealed by the Petroleum Rules, 2002. Like other Acts, person importing, transporting or storing needs to obtain license under this Act. To understand the type of licenses we have to understand categories of petroleum first. Petroleum is divided in three categories:

1. Class A: Petroleum having a flash point below 23 degrees Centigrade-
   Petrol, Hexane, Toluene, Naphtha, Acetone, Ethanol, Methanol, M.E.K, Benzene, Pentane,
   SBP Solvent etc.
2. Class B: Petroleum having a flash point of 23 degrees Centigrade. and above but below 65 degrees Centigrade – Diesel (HSD), Kerosene (SKO), MTO, Aromax etc.
3. Class C: Petroleum having a flash point of 65 degrees Centigrade. and above but below 93 degrees Centigrade – LDO/Furnace oil

Following licenses are to be obtained particularly for import, transport or storage:

1. Class A:  No need of license for import, transport or storage if quantity in possession exceeds 30 liters.
2. Class B: No need of license for transport or storage if total quantity in possession at any one place does not exceed 25,00 liters and none of it is contained in a receptacle exceeding 1,000 liters in capacity.
3. Class C:  No need of license for transport or storage if total quantity in possession at any one place does not exceed 45,000 liters. However if no license is required and quantity in possession exceeds 5,000 liters, prior report of storage is to be given to the authority.

Further in case of heavy oil (e.g. Lubricants, LSHS etc.) which has its flash point 93 degrees Centigrade or more, no license is needed.

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