Transformer Oil Basics
What Is Transformer Oil? Definition and Main Components
Transformer oil, also known as insulating oil, is a natural hydrocarbon mixture refined from petroleum. It belongs to the mineral insulating oil family. Its composition contains about 2,900 different compounds. Most of them belong to three types of hydrocarbons: paraffins, naphthenes, and aromatics. Transformer oil is used in all kinds of electrical equipment. The most important application is in transformers.
Four Core Functions of Transformer Oil
- Insulation: It greatly improves the insulation strength between windings and the core. It prevents high-voltage breakdown and short-circuit faults.
- Cooling and heat dissipation: The oil removes heat from the windings and the core through convection. The heat is then released through radiators.
- Arc extinction: During the opening process of an oil circuit breaker, the oil cools the arc. This helps extinguish the arc.
- Protection and anti-corrosion: The oil blocks oxygen and moisture. This slows down the aging and corrosion of insulating paper and metal parts.
Timeline of Transformer Oil Types and Current Applications
Transformer oil is the most important insulating medium inside a transformer. Its insulation performance directly affects the transformer itself. It even affects the safe and stable operation of the whole power system.
Mineral oil
As early as 1887 mineral oil was first used as transformer oil. This opened the application of liquid insulating media in power equipment. Mineral oil comes from petroleum fractions. It has a balanced combination of insulation and heat dissipation performance. The raw materials are easy to get and the cost is low. So it became the mainstream material for transformer insulation.
Polychlorinated biphenyls (PCBs)
In 1931 Polychlorinated biphenyls (PCBs) entered the market as synthetic transformer oil. But PCBs are highly toxic and hard to break down. They pose a serious environmental hazard. So they were gradually phased out and eventually banned.
Silicone oil
In 1956 silicone oil began to be used as insulating oil. Silicone oil has a high flash point, good low-temperature fluidity, and excellent thermal stability. However, several limits stopped it from being used on a large scale in power transformers. First, silicone oil costs 4 to 5 times more than mineral oil. Its economy is poor. Second, silicone oil has high viscosity. Its heat dissipation is weaker than mineral oil. After arcing or partial discharge, its insulation performance tends to degrade. So it is mostly used in small equipment rated 35 kV and below. Besides, silicone oil is hard to biodegrade. The regeneration and recycling process is complicated. After synthetic ester insulating oil appeared, the application scope of silicone oil was further squeezed. Today, silicone oil is only used in a small amount in special conditions with strict fire protection requirements, such as high-rise buildings and underground tunnels.
Synthetic ester insulating oil
In the 1970s after PCBs were fully banned, the industry urgently needed a safe and environmentally friendly flame-retardant insulating medium. Synthetic ester insulating oil became commercially available. MIDEL 7131 pentaerythritol ester insulating oil is a typical example (https://mv-lub.com/). Synthetic esters are polyol esters made by artificial chemical synthesis. They have a high flash point and are biodegradable. Their thermal oxidation stability is good. Their low-temperature performance is better than natural esters. So they suit applications with strict fire protection requirements, such as subways, wind power, and high-rise buildings. But the synthesis process is complex. The cost is much higher than mineral oil. They also have strict compatibility requirements for insulating paper and sealing materials. So they are mostly used in special working conditions. They still cannot shake the dominant position of mineral oil.
Mineral Oil Properties
Transformer oil is a man-made mineral oil. It uses natural petroleum as the raw material. It is made through multiple distillation and refining processes. Its main chemical component is naphthenes, accounting for about 80%. The rest are mainly aromatics and paraffins. Different hydrocarbon components have obvious effects on oil performance. Naphthenes have excellent low-temperature fluidity. Aromatics have good gas absorption, but too much aromatics accelerates oil aging. Paraffins have excellent oxidation resistance, but their low-temperature performance is relatively weak. This medium has stable physical and chemical properties. Its relative density is 0.895. Its freezing point is usually below -45℃ and flash point is not lower than 136℃.
China’s Mineral Oil Classification
China’s transformer oil is mainly divided into two types. The first is paraffinic base oil from the Daqing oilfield. It has strong oxidation resistance, but poor low-temperature fluidity. The second is naphthenic base oil from the Karamay oilfield in Xinjiang. It has excellent low-temperature performance. It is more suitable for operation in cold regions.
Mineral oil refined from natural petroleum is the most widely used liquid dielectric in transformers today. When a transformer runs with power for a long time, the oil is affected by multiple factors such as temperature, oxygen, moisture, and arcing. It undergoes oxidative degradation and produces impurities such as water, acids, and sludge. These impurities directly reduce insulation strength. They bring safety risks to equipment operation. For this reason, before transformer oil is injected into power equipment, it must pass multiple tests on insulation performance. The key indicators include breakdown voltage, dielectric loss, and moisture content. This ensures that the insulation characteristics meet the working conditions and keeps the equipment safe and reliable.
The Development Journey of China’s Transformer Oil Industry
Looking back at the development of China’s transformer oil industry, it is an industrial comeback story. It moved from “full dependence on imports” to “full self-sufficiency”. Today, it “leads the world” in UHV mineral oil and EHV green vegetable oil.
1: Laying the Foundation — Finding “Naphthenic” Base Oil and Early Refining (1950s–1980s)
China’s early transformer oil R&D was essentially a campaign to find special petroleum resources. Transformer oil has very high requirements for crude oil quality. Generally speaking, naphthenic base crude oil is the most ideal raw material.
Why is naphthenic base crude oil preferred?
Naphthenic crude oil contains almost no wax. No complex dewaxing is required; it delivers ultra‑low pour and freezing points and keeps flowing down to ‑30 ℃ or even ‑45 ℃. At the same time, oil refined from this crude has a strong dissolving ability for aging sludge. The sludge does not easily pile up on the transformer coil surface and block heat dissipation. It was the ideal raw material for transformer oil in the early power industry.
The strategic value of the Karamay and Liaohe oilfields:
Global naphthenic crude oil reserves are very scarce. They account for only about 2% of the total. China explored high-quality naphthenic crude oil resources in the Karamay oilfield in Xinjiang and the Liaohe oilfield. This became an important foundation for the development of domestic transformer oil.
Shortcomings of early refining processes (acid-alkali refining and solvent refining):
Before the 1980s, China mainly used the traditional process of sulfuric acid refining, alkali washing, and clay finishing. This process had a low crude oil yield. It also produced a large amount of environmentally polluting acid sludge. The refining depth was limited. The No. 10 and No. 25 mineral oils produced by this process had poor gassing performance. Their oxidation service life was short. They could barely fit medium and low voltage distribution grids at 110 kV and below. For oil used in extra-high voltage grids, China still had to rely on overseas suppliers such as the American “Sunoco (SUNOCO)”.
2: Technology Leap — Full Two-Stage Hydrotreating and the UHV Milestone (1990–2010)
In the 1990s, China launched the world’s largest grid construction boom. As 500 kV, 750 kV, and even 1000 kV UHV projects were planned and built one after another, oil produced by traditional processes could no longer meet the needs of high voltage levels.
Introduction and Independent Advancement of Hydrotreating (Early 21st Century)
CNPC and Sinopec fully phased out the old acid-alkali refining process. They introduced and improved the high-pressure two-stage hydrotreating technology. That is, hydrotreating plus hydroisomerization / isodewaxing.
Through high-pressure hydrogenation, sulfur, nitrogen, and aromatics are deeply removed. The harmful sulfides and nitrogen compounds in the oil are reduced to ppm (parts per million) level. This greatly improves the electrical insulation strength and chemical stability of the oil.
KI50X and UHV localization: The KI50X UHV transformer oil developed by CNPC Kunlun Lubricants is an important milestone for the industry. UHV transformer oil stays in a strong electric field for a long time. If the oil has poor gassing performance, it releases bubbles such as hydrogen under a high electric field. This easily causes partial discharge. In serious cases, it can even cause an explosion. KI50X successfully resolved the conflict among high gassing resistance, high fluidity, and high thermal stability. It has been applied on a large scale in various UHV AC and DC transmission projects of the State Grid.
Besides, non-naphthenic oil (hydroisomerized paraffinic base oil) also gradually emerged (after 2013). As China’s annual transformer oil demand rose to 400,000–500,000 tons, the originally scarce naphthenic crude oil began to face capacity pressure. To solve this, domestic refineries used hydroisomerization technology to transform the abundant paraffinic crude oil. The transformed oil also has a low freezing point and high stability. This technical breakthrough completely broke the resource constraint on China’s transformer oil development.
3: Green Revolution — The Full Breakthrough of Natural Ester (Vegetable Oil) (2000–2026)
Although traditional mineral oil (naphthenic / paraffinic) has excellent overall performance, it has shortcomings. It cannot biodegrade. Once a leak happens, it seriously pollutes soil and water. Its flash point is also low, around 160℃. With the proposal of the “dual carbon” goal, China officially started technical research on vegetable insulating oil.
From “borrowed oil” to independent development (2007–2015):
In 2007, domestic enterprises such as Xi’an XD tried to make the first vegetable oil transformer. Due to the domestic technology gap at that time, they could only buy Cooper’s FR3 soybean insulating oil from the United States at a high price. After 2010, R&D teams led by the China Electric Power Research Institute, the research institutes of China Southern Power Grid, and major universities started to carry out modification research on soybean oil and rapeseed oil. They finally achieved the localization of vegetable insulating oil.
Overcoming two inherent technical weaknesses of vegetable oil:
Natural ester, that is vegetable oil, has outstanding advantages. But it is born with two technical problems. Its viscosity is high, so the fluidity is poor and heat dissipation is limited. It oxidizes easily after contact with air, and may even solidify. Domestic R&D teams mainly solved these from two aspects: (1) Molecular modification plus high-efficiency antioxidants: Adjust the saturation structure of fatty acids in vegetable oil. At the same time, compound special antioxidants. This extends the oxidation service life of the oil several times. (2) Optimize the fully sealed transformer structure design: Use corrugated oil tanks or metal expansion conservators. This physically isolates the vegetable oil from air throughout its whole life cycle.
500 kV vegetable oil transformer achieves an international technical breakthrough (2023–2025):
Before this, the highest voltage level of vegetable oil transformers in operation worldwide was Siemens’ 420 kV product. In November 2023, Guangzhou Power Supply Bureau of China Southern Power Grid developed the world’s first fully domestic 500 kV vegetable insulating oil transformer. In August 2025, the equipment was officially put into operation at the Zengcheng substation in Guangzhou. The R&D team solved many technical problems under EHV conditions, such as oil-paper insulation matching, large-flow thermal circulation, and electric field distribution distortion. This marks China’s international leadership in high-voltage green insulation equipment. During the whole life cycle, the equipment can reduce about 70 tons of carbon emissions. The environmental benefit is remarkable.
Conclusion & Review
Current Overall Market Landscape
Looking at the decades of industrial development in China, the transformer insulating oil industry has formed a mature structure. Naphthenic mineral oil provides the basic guarantee. Hydroisomerized oil expands the capacity. Environmentally friendly ester oil upgrades and iterates. The product system, production process, and application scenarios continue to improve and optimize. At present, the domestic insulating oil market shows a diversified and differentiated competitive situation. Mineral insulating oil (naphthenic + hydroisomerized non-naphthenic) relies on mature technology, high cost performance, and wide application scenarios. It holds a 78.3% market share. It is still the core choice for main grid equipment.
Synthetic ester and natural ester environmentally friendly insulating oils account for about 14.7% in total. They continue to penetrate high-end special application scenarios. Silicone oil and other special insulating oils account for about 7%. They mainly suit special fire protection conditions in small markets. From the market competition perspective, domestic industry concentration is relatively high. CNPC Kunlun and Sinopec Great Wall, two central state-owned enterprises, rely on their resource, technology, and engineering support advantages. They hold more than half of the domestic market share. They dominate the supporting of core UHV and EHV projects. Foreign brands such as Shell and Nynas focus on the high-end niche market. Small and medium private enterprises mainly focus on medium and low voltage distribution. This forms a clear and well-divided industrial competition system.
Market share data (2025, China market) are estimated from Boyan Consulting 2026 China Transformer Insulating Oil Industry Report, for reference only, not official national statistics.
Future Development Trends of the Industry
From the long-term industry development trend, traditional mineral oil will still hold the mainstream market position for a long time, thanks to its stable performance and mature application system. In the future, China’s transformer oil industry will focus on three major directions.
- Continue to optimize the production process of environmentally friendly insulating oil, reduce costs and increase efficiency, and promote the large-scale adoption of green oil products.
- Improve the operation evaluation, fault diagnosis, and acceptance standards for high-voltage environmentally friendly insulating oil, and improve the industry standard system.
- Deepen the R&D of new materials such as modified insulating oil and nano-composite insulating media, continue to improve the insulation safety and green level of power equipment, and push the domestic insulating oil industry from technological leadership to all-round industrial scale, high-end, and green upgrading.
References
[1] MV-LUB. MIDEL Ester Transformer Fluids Technical Introduction[EB/OL]. https://mv-lub.com/, 2025.
[2] Wang Jianyi. Latest Progress and Prospects of Hydroisomerized and Naphthenic Transformer Oil[EB/OL]. http://zbqinrun.com/technology, 2020. (in Chinese)
[3] Southcn.com. The World’s First 500 kV Domestic Vegetable Insulating Oil Transformer Successfully Developed[EB/OL]. https://news.southcn.com, 2023. (in Chinese)
