The conversion of residual oil to natural gas by anaerobic microorganisms could substantially improve the exploitation and utilization of oil resources. The recovery of methane gas as an alternate form of energy from unrecoverable crude oil may offer a route to economic production of energy from petroleum reservoirs. This review summarizes recent progress about microbial communities, reactions thermodynamics and kinetics involved in the anaerobic biodegradation of petroleum hydrocarbons and the subsequent conversion to methane gas. The feasibility and potential for energy recovery via methanogenesis of residual oil is also discussed. Furthermore, we provide new insights for further studies about this forefront technology.