Reservoir numerical simulation is considered to be the most powerful predictive toolavailable to a reservoir engineer. Simulation is the only way to describe quantitativelythe flow of multiple phases in a heterogeneous reservoir having a production scheduledetermined not only by the properties of the reservoir, but also by market demand,investment strategy and government regulations. A prototype reservoir model can bedeveloped by integrating detailed geological data to characterize the reservoir.A reservoir model is a representation of the geology in the reservoir and is a result ofthe depositional environment, burial history, tectonics etc. The more complex areservoir is with stratigraphic and structural relationships, the more important it is for usto also know which parameters are most important to predict correct flow patterns in thereservoir. Meticulous precision must be given in creating simulation models that are notonly geologically realistic but that can also predict fluid behavior. The reservoirsimulation study has been done using Eclipse simulation software developed bySchlumberger.This dissertation is done on the development of Geng271low permeability Oilreservoir. It studies the reservoir’s low permeability and creates a numerical simulationfor the reservoir. Meticulous study and analysis of the reservoir is made and thegeological model is created. The model provides the condition of the oil reservoir like thestorage characteristics, flow condition, production capacity etc. This research points outthe problems encountered in the simulation of a low permeability oil reservoir. It alsopredicts and puts forward solution for possible problems that can arise in thedevelopment process of the reservoir, which can ensure the oil fields have high yield andstable production, and also improve the recovery of oil, by doing that some unstableelements can therefore be disposed in the development process. Through further analysisfor the development plan of the Oil reservoir, resources can be evaluated distinctivelyand can therefore give guidance to the development and utilization of the work. Lowpermeability reservoirs take a certain proportion in the developed oil fields and most ofuntapped reserve is low permeable. In the period of low permeability oilfielddevelopment, porosity and permeability in low permeable layers change obviously withthe changing process of the overburden pressure and the low flow curves deviate form linear Darcy law, therefore it is important that we study numerical simulation inlow permeable reservoir.The reliability of modern simulators and the ready availability of the computerssuggest that simulation is practical for use on all sizes of reservoirs for day-to-daydecision making as well as for the planning. If it is to reach its potential, simulation mustbecome a tool that is used confidently by a large number of reservoir engineers.In order to meet future demands, petroleum engineers, geologists and geophysicistshave a responsibility both jointly and independently to develop new tools, techniquesand innovations to save time, money and effectively manage and exploit resources. Thisproject is an attempt to integrate all the above stated fields of work and develop a newimproved and efficient method for accurate evaluation of potential reservoirs.