Transformer Oil provides mainly tow purposes 1st it is liquid insulation in electric power transformer and the 2nd it dissipates heat of the transformer e .i . acts as coolant . In addition to these , this oil provides other two purposes , it helps to preserve the core as well as winding as these are fully immersed inside oil and the another important purpose of this oil is , it prevents direct contact of atmospheric oxygen with cellulose made paper insulation of windings , which is susceptible to oxidation .