There are two common ways that the Agarwood oil is extracted, the oldest method being water distillation and the newest method being steam distillation.

Water Distillation

In water distillation also known as hydro-distillation, the Agarwood is washed thouroughly with the best available source of water to remove all dirt and grime and then chopped into fine pieces (chips) usually by hand in Asia.

The chips are then soaked in water for five to ten days, the soaked Oud chips are then placed in big burners know as 'stills' or 'degs' in Hindi, from which a pipe connects with a condensing unit, carrying the Agarwood oil and some water, the precious Agarwood oil is then separated.

Water distillation knowledge is passed through generations of Oudh producing families, it requires great skill and patience, many things like maintaining the temperature and pressure to the correct levels comes with years of experience and practice. This method was invented and perfected in India many centuries ago and still continues to this day in the Assam province of India, using similar equipment and resources that was used for centuries like burning wood rather than gas to heat the stills.

Steam Distillation

Steam distillation is used to extract the Oud oil from Oud chips by heating it up to boiling and then collecting the vapors containing the oil by passing them through a cooling system and condensing them into another container, the condensed vapors are then separated into water and Oud. The temperature needs to be controlled so as not to burn the oil or the wood, just enough to release the oil.

A number of factors determine the final quality of a steam distilled Agarwood oil. Aside from the Aquileria wood itself, most important are time, temperature and pressure, and also the quality of the distillation equipment makes a huge difference, if the distillation equipment has been used over and over again, it isn't as robust. Agarwood oils are very complex, they are made up of many distinct molecules which come together to form the oil's aroma. Some of these molecules are fairly delicate structures which can be altered or destroyed by adverse environmental conditions, such as over heating.

In steam distillation the oil produced is lighter in colour and less thick. This type of Agarwood perfume oil is preferred by some but most Middle Eastern and Asian consumers prefer their Oud oil to be thick and black which is only produced through water distillation. It doesn't mean that Oudh oil produced by steam distillation isn't as strong, the quality of the raw material (age of the tree etc) makes the most difference. Steam distillation sometimes produces better results, especially when extracting Agarwood oil from infected wood from Indonesia.