AbstractAn analysis of the temperature distribution in a laminar annular two‐phase liquid‐liquid flow inside a semi‐infinite circular pipe is given. Graetz's general approach is adopted here so that the arbitrary temperature distribution at the inlet of the pipe is expressed by a series of eigenfunctions. The discontinuities in the physical properties of the fluids at their interface are accommodated by utilizing Graetz's method in a modified form.Attention is focused on the case where the less viscous fluid forms a thin annular film adjacent to the wall. It is shown that in order to heat a viscous oil it is more effective to allow the oil to flow inside a thin water annulus. As compared with the usual method of fuel oil heating, the system proposed has the advantages of improved surface conductivity as well as a reduced pressure gradient (due to the reduced viscosity of the water l