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The UHF method for locating partial discharge (PD) sources in power transformers has become increasingly important in recent research. In order to strengthen our understanding of what is required to locate PD by this method, it is important to study the propagation of electromagnetic waves from PD in transformers. This paper is concerned with ultra-high frequency (UHF) PD signal propagation in power transformers in the presence of conducting obstacles, which may represent the core, winding or other internal structures. The approach is to use the FDTD (Finite-Difference Time-Domain) method which can model the propagation of electromagnetic waves and their interactions with the structure of materials. FDTD is a technique widely used in microwave and radio frequency applications. Being a time domain method, it is particularly suitable for modelling the time-of-flight PD location problem. A 3D geometry has been created to represent a simple oil-filled tank containing a PD source, UHF sensor and an obstacle to line-of-sight UHF signal propagation. The effect of obstacles in delaying the arrival time and attenuating the leading edge of the signal is assessed. Implications of the results for accurate PD location by the UHF method are discussed and further improvements to the modelling study are proposed.