The hole is for the optional secondary pulsed air system . A metal pipe is attached to it an blows fresh air into the the head. The lower half is different in this setup so that that the air reaches the exhaust gases and causes an "afterburn". The point is to heat up the catalytic converter faster so to improve the overall eimisions.
Normaly the hole is empty on cars with no PAIR system and no oil should come out of it.
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Volvo 850 2.5 20V MY95
Pictures
Here what I retroffited so far List
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