Pipeline Transportation and Its Significance to the Marketing of Petroleum Products in Nigeria

Pipeline Transportation and Its Significance to the Marketing of Petroleum Products in Nigeria

Chapter One

OBJECTIVE OF THE STUDY

The main objective of this study is to explore the significance of pipeline transportation mode in the marketing of petroleum products in Southeast, Nigeria while the specific objectives however are:

To determine the effect of the use of pipeline transport mode on the availability of petroleum products in South East, Nigeria.
To identify the major challenges confronting pipeline transportation of petroleum products
To determine the relative effect of pipeline vandalization; capacity underutilization; and PPMC management ulterior motive; on the scarcity of petroleum products in South-East Nigeria.
To determine the strategies for effective management of petroleum products pipeline transportation.

CHAPTER TWO

LITERATURE REVIEW

HISTORICAL DEVELOPMENT OF PETROLEUM PIPELINE TRANSPORTATION

Henry and Miller (1977:131) stated that the first pump operated petroleum pipelines were built in the United States of America in 1863 and the first petroleum product lines appeared there in the 1920s. According to them, by 1960, the network of petroleum pipelines in the United States totaled over 300,000 kilometers. The network has been expanding annually, as petroleum gains more and more prominence as a source of energy. Petroleum pipeline was first introduced into the Nigeria market in 1907 by Mobil. Mobil imported into the country the “sunflower” brand of tinned household kerosene (HHK) coloured blue. This was sold mainly in the big towns, such as Lagos, Ibadan, Kano, Benin city and Enugu for local consumption. It was then that petroleum refinery in Nigeria was established in 1965 in Port Harcourt by British petroleum and shell (PPMC 1996:10).

As a result of the acceptance of the recommendations of the Oputa panel of Enquiry of 1975, the federal government of Nigeria took over the importation of petroleum products into the country through the Nigeria National petroleum corporation (NNPC). In addition, the federal government began work on the construction of refinery and storage facilities and pipeline to link these storage centres. Ndu (1998:98) stated that, the 125,000 barrels per day capacity of Warn refinery was constructed and commissioned in 1979. Government commitment to the pursuit of self- sufficiency in refined petroleum products led to additional investment in the expansion of Old Port Harcourt refinery to 60,000 barrels per day. The construction and commissioning of the new 150,000 barrels per day capacity port Harcourt refinery in 1989, and the phase 111 pipeline and depots interlink in 1995 (PPMC,1998:13). The pipeline phase 111 project was embarked upon in order to provide an interlink pipelines and depots projects were concluded between 1979 and 1980. But lack of interlink facilities did not allow consumers to enjoy the full benefits of the project. Hence, the prime objective that motivated the persecution of the pipeline system into national grid of product pipeline, with the view of improving the network’s capacity, operational flexibility and reliability.

The expansion of the pipelines network together with the construction of storage facilities were thus aimed at satisfying a minimum of 45 days local demand for normal operational up to the year 2010 (Olakunori: 2000: 204).

The below contains the summary of the Nigeria petroleum products pipeline network. The Nigerian pipeline network is classified into five basic systems managed by NNPC through its subsidiary, the Pipeline and Production Marketing Company limited (PPMC).

OVERVIEW OF PETROLEUM MARKETING INDUSTRY IN NIGERIA

Nigeria is blessed with abundant natural resources of which petroleum products play a major role. At present, Nigeria is the ninth world producer and sixth world exporter of crude oil. On the domestic economy, the petroleum sector generates over 90% of the country’s foreign exchange earnings, and provides employment in various forms to Nigerians (Central Bank of Nigeria Annual Report and Statement of Accounts, 2010). In addition, the tremendous growth in oil earnings has influenced significantly Nigeria’s international relations, and sometimes the politics of oil has taken centre stage in the nation’s history of international relations in the last few decades.

Eromosele (1997) observed that after almost half a century of oil exploration in Nigeria, the oil industry is earning a mature status in comparison to other industries in the country such that significant progress has been made in terms of oil exploration and sale of crud oil abroad. Unfortunately, the domestic management of petroleum resources is fraught with a number of problems. There are occasional product shortages, inefficient product distribution and contending pump price of petrol. These problems are compounded by ethnic and civil disturbances in the Nigeria-Delta oil producing areas. This situation sometimes leads to destruction and vandalization of oil pipelines, disturbances in operation of the oil explorations and damage to life and properties.

CHAPTER THREE

RESEARCH METHODOLOGY

INTRODUCTION

This chapter covered the methods employed in carrying out this study. They include the methods used for sample size determination, the population and sample size used, the data collection method, types of data used, data collection instrument, validity and reliability of the instrument, and finally, the data analysis methods used.

RESEARCH DESIGN

The design used for this study is exploratory quantitative research design. The need to explore the significance of pipeline transport mode in the marketing of petroleum products in southeast Nigeria is the justification for choosing this method. Meanwhile, the study is a quantitative one.

AREA OF THE STUDY

This study was carried out at the two NNPC depots in southeast Nigeria. These depots are situated at Aba and Enugu to which network of pipelines were laid from the various pump stations in the country and petroleum products transported. The two depots are strategically meant to serve the five southeastern states. The justification for carrying out the study at these depots is not only because they are situated within the coverage of this study but because the workers of the depots possess the knowledge and information regarding the suitability of pipeline transport mode for effective marketing of petroleum products.

SOURCE AND TYPE OF DATA

The type of data used for this study was primary data. It was collected/sourced from the staff of the two NNPC depots at Aba and Enugu.

POULATION OF THE STUDY

The management and junior staff of the Aba and Enugu NNPC depots constitute the population used for this study. They are 231 (77 management staff and 154 junior staff) at the Enugu depot while at the Aba depot, they are 243 (82 management staff and 161 junior staff). The total of the population however is 474.

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

ANALYSIS OF ADMINISTERED AND RETURNED QUESTIONNAIRE COPIES

Table 4.1: Copies of Questionnaire Distributed, Returned and Unreturned

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

SUMMARY OF FINDINGS

This study, themed ‘Pipeline Transportation and its significance to the Marketing of Petroleum Products in Nigeria’ was premised on the need to determine the veritability and/or suitability of pipeline transportation mode for moving petroleum products, challenges confronting the use of pipelines for transporting petroleum products, relative effect of pipeline vandalisation, capacity underutilisation and PPMC management ulterior motive on the scarcity of petroleum products, and the determination of strategies for effective management of pipeline transportation operations in southeast Nigeria. Findings of the study show that;

Pipeline transportation mode has significant (t_cal= 29.04, t_cal = 28.33 > t_tab = 1.984), suitable effect on the availability of petroleum products in southeast Nigeria.

Small pipeline diameter and pipeline vandalisation are the significant (X²= 68.105, X² = 11.488, p < 0.05) major challenge confronting petroleum products transportation.

Pipeline vandalization, capacity underutilisation and PPMC management ulterior motive have significant (F_{(3, 205)}= 323.004, p < 0.05) relative effect on the scarcity of petroleum products.

Replacing the petroleum product pipelines with the ones with wider diameter and controlling the transportation operations remotely are effective strategies (Z = 4.028, p < 0.05) for aiding management of petroleum products pipeline transportation in southeast Nigeria

CONCLUSIONS

Based on the findings of this study, it can be concluded upon that pipeline transport mode is the most suitable means of transporting petroleum products. It is not only because it is fast but because it can deliver much barrels than trucks could and also, it is safer. The petroleum products are inflammable, particularly the petrol motor spirit (PMS).

RECOMMENDATIONS.

The following recommendations have been put together for use by users of research reports particularly research and government agencies as well as policy makers.

The petroleum pipeline transportation operations should be remotely controlled from the pump stations so that if there is any disruption in the operation, it would be identified on time before it causes any fire outbreak.
In addition to the above recommendation, security guards should be deployed to those areas, particularly the networks through which the pipelines followed. Any attempt of vandalisation would be combated out.
The pipelines should be replaced with wider diameter ones so that they can transport more barrels and quicker than before.
Nigerian consumers’ needs should preclude the oil industry’s operation particularly the production and barrels supplied just as it is in developed countries.
The monopoly of PPMC should be diffused with many private pipeline operators so that their ulterior motive will no longer have effect on the supply of petroleum products

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