Petroleum sludge is a complex mixture containing different quantities of waste oil, waste water, sand, and mineral matter. Petroleum industries are responsible for the generation of large quantities of sludge, which is a major source of environmental pollution. Oily sludges are hazardous wastes according to Environment Protection Act and Hazardous Wastes Handling Rules. These sludges cannot be disposed off as landfill, even if they are de-oiled unless they are totally remediated. Sludges generated by petroleum industries accumulate in crude oil tanks, refinery products tanks, desalters, and elsewhere during oil production and processing. The sludges containing recoverable oil less than 40% are considered as low oil content sludges. These sludges have to be treated and made harmless before disposal. Bioremediation process can be used for this purpose. Generally, the refinery sludges contain oil content more than 40% and several methods are used to separate the oil, water and solids. The recovered oil is pumped back into the refinery process, while the solids and water are supposed to be treated before disposal. Several methods are available for processing and disposing of slop oil such as thermal, mechanical, biological, and chemical. Each method of processing has its advantages and disadvantages, and it is a common practice to utilize a combination of the four methods to maximize the output of usable oil from sludge. The first step in the process of disposing of the sludge is reclamation. In order to extract as much oil from the sludge as possible, a combination of chemicals and deemulsifiers is used. Topmost layers of oil are collected by the use of pumps and barges. The separation of the sludge is done with a centrifuge. The oil recovered is then delivered to a refinery or sold in the market. Hard particles, from which oil cannot be recovered, must then be disposed of. Hard particles are disposed of by the following ways: Incinerating unusable sludge (hard hydrocarbons-based substances mixed with water and emulsions) and harnessing heat and gases. Dehydration of sludge – the cleaned water is returned to the environment, and the hard particles are buried. Use of consolidating solutions for turning the sludge into a solid state. The solids can then be used in building projects. Use of Sludge as heat source. Biological remediation. The use of surfactants and emulsifiers will break up the old sludge and allow it to be removed from the container. Rhamnolipids, as a natural surfactant are useful in extracting these oil sludges and recovering them for use. These recovered sludges containing the rhamnolipid surfactants have most of the main properties of the original oil except for less viscosity.