ASSESSMENT OF PIPELINE TRANSPORTATION AN ITS SIGNIFICANCE TO THE MARKETING OF PETROLEUM PRODUCT IN NIGERIA

ABSTRACT

 

This study was carried out on the significance of pipeline transportation mode on the marketing of petroleum products in Nigeria. It was premised on the notion of the scarcity of refined petroleum products across the country in spite of the agitated advantages that pipeline transport mode is said to have over some other alternative transport modes considering the nature of product involved. Other observed problems that prompted the carrying out of this study include: pipeline vandalization, aging pipelines and the ulterior motives of the management of pipeline and products marketing company (PPMC) regarding the volume of petroleum products moved to the various depots (regions) of the country. A number of specific objectives sought to be achieved in the study included: (i) determine the effect of the use of pipeline transport mode on the availability of petroleum products in South East, Nigeria; (ii) identify the major challenges confronting pipeline transportation of petroleum products; (iii) determine the relative effect of pipeline vandalization; capacity underutilization; and PPMC management ulterior motive; on the scarcity of petroleum products in South-East Nigeria; and (iv) determine the strategies for effective management of petroleum products pipeline transportation operation in southeast Nigeria. A cross sectional survey design method was adopted. A random sample of 217 (106 from Enugu and 111 from Aba) staff of the Aba and Enugu NNPC Depots, determined by using Taro Yamane’s sample size determination formula, were covered in the research survey. Hypotheses were tested by using: (i) Spearman’s Ranked Correlation (rho) and t-Test for the first hypothesis; (ii) Univariate Chi-square (X²) for hypothesis two; (iii) Multiple Regression Analysis for hypothesis three; and (iv) Kolmogorov Z-Test for the fourth hypothesis. The findings of the study revealed 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; (ii) Small pipeline diameter and pipeline vandalisation are the significant (X² = 68.105, X² = 11.488, p < 0.05) major challenge confronting petroleum products transportation; (iii) 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; and finally; (iv) 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. Based on the findings and the set main objective of the study, it was concluded that pipeline transport mode remains the most suitable means of transporting petroleum products not only because it is fast but because it can deliver much barrels of petroleum products than trucks/tankers can and also, it is safer. It was however recommended that, 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; also, security guards should be deployed to areas particularly the networks through which the pipelines are laid so that any attempt of vandalisation would be combated out; pipelines should be replaced with wider diameter ones so that they can transport more barrels and quicker than before; the needs of Nigerian petroleum product consumers should be made preclude the oil industry’s operation particularly in the production and volume of barrels supplied just as it is in developed countries. Finally therefore, it was recommended that 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.

 

 

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 (2000) 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 (2000) 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, avaiation 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).

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).  According to Udensi (1999) 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

1. 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.

1. 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.
2. The de-bottlenecking of limited capacity of the existing 6 inches diameter pipelines between Jos and Gombe.

VI        Putting in place 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 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:

1. To determine the effect of the use of pipeline transport mode on the availability of petroleum products in South East, Nigeria.
2. To identify the major challenges confronting pipeline transportation of petroleum products
3. 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.
4. To determine the strategies for effective management of petroleum products pipeline transportation.

1.4              RESEARCH HYPOTHESES

1. Pipeline transportation mode does not have significant effect in the availability of petroleum products in Southeastern Nigeria.
2. Pipeline diameter and pipeline vandalisation are not the major challenges confronting petroleum products transportation through pipeline
3. Pipeline vandalisataion; capacity underutilization; and PPMC management ulterior motive do not have significant relative effect on the scarcity of petroleum products.

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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