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AN EVALUATION OF PIPELINE TRANSPORTATION IN THE MARKETING OF PETROL IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Pipeline transportation is the youngest among the other means of transportation in Nigeria.  It has not received much attention because of two major factors. One is that it is relatively a recent origin.  Two is the its operations and services are not in the hands of private individuals and companies.  Hence everything about pipeline transportation in Nigeria is strictly in the hands of the federal government. According to Kupoheyi (2008) pipelines have been in use for transporting materials for centuries.  Hence in the urban areas, pipelines are used for distributing potable water.  Though the pipelines network for the transportation and distribution of water in urban areas are usually short, they uses the same basic principles as the ones for distributing petroleum products.  The point to note here is that pipelines were first used for distributing water.  Later they were used for mooring gases and a variety of liquids within plants, between plants, as well as between locations for apart.  Today pipelines are widely used for transporting petroleum products and some solids that are suspended in liquids over long distances.

Olakunori (2008) reported that petroleum pipelines made only recent discovery into Nigeria.  According to him, the products pumped through the Nigeria pipelines include the following;

-       Premium motor spirit (PMS) otherwise know as petrol;

-       Automotive Gas Oil (AGO), otherwise known as diesel;

-       Household Kerosene, (HHK).

In addition to these, aviation turbine kerosene (ATW, otherwise known as avgas, is often pumped from Mosimi to Ikeja Airport regularly.  Pumping is usual done in butches of between 15000 to 50000 cubic meters in such a way as to avoid contamination.  Delivery of the various products grades into storage is strictly monitored and controlled from the control centres located in Mosimi, Warri, Kaduna, and Port Harcourt.  Once pumping begins and a product leaves the refinery tanks, its arrival time at any particular depot can easily be forecasted.  (Olusunmade, 2001:07).

Liquefied natural gas (LPG) is pumped through the Escravos – Lagos Pipeline (ELP) dedicated to gas.  This, at present, is the only operational gas pipeline that has been completed in the country (Adeyinka, 2000:78).  According to Udensi (1999:36) the Nigeria government intends to extend the gas pipeline to other West African countries in order to encourage gas utilization and exploit the commercial opportunities in the sub-region.  Some of these countries in this regard include.

-       Togo

-       Benin Republic

-       Ghana

-       Sierra Leone

-       Burkina Faso

-       Cape Verde

-       Gambia

-       Mali

-       Mauritania

-       Guinea and Chad.

Ike (1999) stated the construction of phases I-III pipeline systems enabled the Nigerian government to achieve the following objectives.

-       Benin city

-       Kaduna (Product depots)

-       Port Harcourt (Product depots)

-       Lagos

-       Warri (Product depots)

-       Yola

II.     Provision of additional distribution depots at Suleja, and Minna

III.    Connection of Kaduna Refinery products depot with the refineries a Port Harcourt and Warri, not only to make up the production shortfall there, but also to ensure the continued supply of products to the northern areas in the event of Kaduna Refinery outage.

IV.    Construction of facilities to enable products to be pumped from Port-Harcourt to the Western areas via Benin, not only to augment Warri Refinery production, but also to continue supplies in the event of total outage.

V.     The de-bottlenecking of limited capacity of the existing 6 inches diameter pipelines between Jos and Gombe.

VI     Putting in places some alterations, upgrades and repairs within the existing system necessary to accommodate the new facilities.

In addition, with the completion of the nation’s pipeline interlink project, the total route of Nigeria’s products distribution pipelines and depots complex has grown to 4,950 Kilometers.  This is made up of pipelines of various diameters linking twenty storage depots.

1.2    STATEMENT OF THE PROBLEM

Pipelines has been identified as been vital for efficient transportation and distribution of petroleum products, Although Nigeria had completed and commissioned phases I-III pipeline system, the nation had, on man occasional, suffered from petroleum products scarcity which ahs caused untold hardship to the masses. In addition, the country’s mass media had, on many occasions, carried sad news relating to the victims of kerosene explosions and other related home accidents caused by petroleum products.  Al thee are evidences of inefficiency in the operation and management of the nation’s pipeline system.  Had the construction of pipeline facilitated the distribution of petroleum product in Nigeria? What are the strategies for improving the nation’s pipeline system? These questions present the problems that necessitated this research.

1.3    OBJECTIVES OF THE STUDY

The objectives of this research are as follows:

i.      To examine the relevance of pipelines to the efficient distribution and marketing of petroleum products in Nigeria.

ii.      To identify the constraints/problems of pipeline transportation of petroleum products in Nigeria

iii.     To suggest realistic solutions to thee problems

iv.     To highlight the strategies for improving on the nation’s pipelines so as to ensure efficient marketing of petroleum products in the country.

1.4       RESEARCH HYPOTHESES

The following hypotheses were tested in this study/research:

Hypothesis One

H0:    Pipelines are not reliable means of distributing and marketing petroleum products.  in Nigeria.

H1:   Pipelines are highly reliable means for distributing and marketing of Petroleum products in Nigeria.

Hypothesis Two

H0:   Pipelines do not reduce the cost of transporting and marketing petroleum products in Nigeria.

H1:   Pipelines reduce the cost of transporting and marketing petroleum products in Nigeria.

Hypothesis Three

H0:   Pipeline vandalizations do not impede the effective use of pipelines for distribution and marketing of petroleum products in Nigeria.

H1:   Pipelines vandalization impedes the effective use of pipelines for the distribution and marketing of petroleum products in Nigeria.

Hypothesis Four

H0:   The use of alarm systems and police patrol will not reduce the incidence of pipeline vandalization in Nigeria.

H1:   The use of alarm system and police patrol will reduce the incidence of pipeline vandalization in Nigeria.

1.5    SIGNIFICANCE OF THE STUDY

The findings and recommendations to be made in this study, when implemented, will benefit all Nigerians as well as the government.  For one thing, the implementations of the recommendations of this study will reduce the incidence of pipeline vandalization in Nigeria.  In addition, the problem of fuel scarcity will equally be eliminated.  Thus the average Nigeria will have access to petroleum products at a reduces cost anytime, anywhere.  Also the incidence of kerosene explosion will become a thing of the past.

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