The analysis of enhanced oil recovery using surfactants is presented here. Surfactants lower the surface tension between oil and water and hence the capillary resistance to flow. The mathematical description of this problem requires modelling of multi‐phase flow in a porous medium. A pressure‐based formulation has been used in the present study. The governing partial differential equations have been solved by a finite difference method. Both Newtonian and non‐Newtonian (shear thinning) behaviour of oil are considered. Results clearly show an improvement in oil recovery in the presence of surfactants. A study of the ideal case where surface tension is reduced to zero shows that oil recovery can be very high.