Treatment of oil sludge generated from a pilot-scale upgrading process plant using supercritical water (SCW) was studied in detail to ascertain alternate ways of valorizing. SCW is a highly active agent, providing a suitable medium for converting heavy residues into lighter fuel compounds. Various operating conditions such as temperature and reaction time were investigated in this study; the results showed that a considerable amount of valuable oil and gas compounds can be recovered from the waste feedstock (up to similar to 18.6 wt% recovery). The gas produced was a hydrogen and methane-rich stream, which potentially can be utilized as fuel. In addition, the quantity of oil produced was significant considering the source feed, and rich in valuable saturate and aromatic hydrocarbons. Simulated distillation showed the oil contained mainly naphtha and light gasoil. It was concluded that a high reaction temperature and severity accelerated the product recovery yields, although the amount of coke generated increased. To address the current literature debate regarding the role of water and whether or not hydrogen is supplied from water, a detailed oxygen element balance was performed. The results proved that hydrogen is mainly supplied from hydrocarbon materials and not from water. Moreover, water acted as an excellent dispersant and solvent in the recovery of light compounds from heavy molecules through various radical reactions. Crown Copyright (C) 2015 Published by Elsevier Ltd. All rights reserved.