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STRATEGIES FOR MANAGING PETROLEUM PRODUCTS SCARCITY IN NIGERIA. (A CASE STUDY OF ENUGU STATE)

 CHAPTER ONE        

1.1            INTRODUCTION

The story and a look into the background of petroleum which is basically a mixture of crude oil and gas is fascinating.  History  has it that several light years ago plants and animals died and their remains become buried deep beneath earth under many thick layers of sedimentary rock such as limestone, shale’s etc through several physical and chemical changes these organic remains formed petroleum and it is found on land.

The search for petroleum  is an expensive and a complex exercise which being with the survey involving geological  mapping rock sampling and analysis  the most prominent method used in this surveys is seismic in which explosives are discharge into the ground.  The feedback is processed analyzed and recorded as a raw seismic data.  The data is then processed and interred probable with the aid of computer to show area as of probable oil and gas accumulation such area as are then selected for further investigation through drilling

When oil is discovered in commercial quantities through drilling the oil is sent to stations where water and gas are separated and oil is piped to refines where it is refined and converted into products such as premium motor spirits (PMS) or (PMS) or popularly know as fuel, Automatic gas oil (AGO) also know as diesel or gas Dual purpose kerosene (DPK) and many other productions however this study is concerned with PMS, AGO and DPK.  These are know (technically) as white product.

It is based on the above historical ground in 1937 shell D Arcy petroleum development  company began their curious search for cruse oil in Nigeria (schatzl, 1969:16)

(schatzl 1969 p.9) said that after the interruption from 1941-1946 caused by the second world war they followed an intensifications of he undertaking. Through geological ground investigation then followed an appraised based on aerial geological photograph.  Definite information as to whether crude oil is actually present in potentially productive geological and geophysical methods of investigation are obtained and also the evidence of oil accumulation can be obtained only through drilling operations.

In the period from 1951-1966, the beginning of drilling activity were carried on and wells are drilled the wells were concentrated only in a territory south of a line drawn through Benin City Owerri and Calabar all located in the tropical rain forest and the mangrove swamp vegetation zones sequel to this , a total of is wells were drilled (schatal 1969, p.14)

 All drillings in the North and East parts of Eastern Nigeria which were dry or only discovered natural gas deposits while wells drilled in the southern part of eastern region especially in Oloibin and Afan found in the Miocene deposits very promising crude oil accumulations at a dept from 9,00 to 11,00 feet’s.

From 1957-1959, shed BP spurred on by the  discovery of crude oil in Oloibin and Afan increased the number of its drillings.  After that they was then a clear concentration of drilling activity in south easternNigeria.  The increased drilling activity was as a result of discovery of lightly productive field in Bomu, Libubu, Imo, River, Olorokoro, drilling intensity was concentrated around port Harcourt and Ughelli and some of the off shore areas in 1964.

 Mobil oil sank its first exploratory wells in 1959. mobile producingNigeriaunlimited.  Jonnesscee in  1962Americaoverseas Gulf  oil both in 1963 and SAFRAP and AGLP in 1964.  especially note worthy among these is GULE OIL for whom 44 out of 57 wells showed oil deposit (Schatzle 1969; 22)

The figures according to schatzle (1969) stated that the proportion of crude oil resources inNigeriawas 0.85% of the total world reserveNigeriahas 13.3% of theAfricaresources.

 CRUSE OIL RESERVES OF NIGERIA 1958-65 IN MILLION TONS

YEAR

CRUDE OIL RECSOURCE IN MILLION TONS

IN MILLIONS

IN YEAR

1958

3

0.256

12

1959

11

0.533

20

1960

`21

0.837

25

1961

14

0.244

18

1962

55

3.274

17

1963

69

3.712

19

1964

137

5.858

23

1965

408

13.324

31

With a production of 20.5 million  tons in 1966 Nigeriastands 13th place in an international ranking of crude oil production inNigeria whose share of world production is 1.32% has only a small significance in the world wide economy.

On the other hand within African Nigeria afterLibyaandAlgeriais the third most important producing country oxford university press (ranking of crude oil producers (this day 2000p13)Nigeriashare ofAfricacrude oil production amounted to over 15 % of 1966.

Commercial crude oil production  began inNigeriain December 1957. then the production volume increased to 6.6million  barrels in 1960.161. this relatively small use in production is due primarily to limited transport capacity. The availability of crude oil inportofBonnyin April 1961 as well as the expansion of he pipeline not caused an immediate and pronounced  rise   in crude oil production in 1961/62 to more than 28 million tons. Since then crude oil production inNigeriaby intensification of  drilling activities and expansion of transport capacity has increased continually.

After the discovery of crude oil commercial quantities in Oloibin now River in 1956Nigeria  psychological and social profile change by 1970.  Oil  accounted for more than 8.5 percent of total  earnings.  And between 1970-2001. Oil has now accounted for more than 94 percent of total income earning ofNigeria.

With such impressive earning Nigeria was involved in prestige projects (new watch October 24, 1994,p8) this was the period of oil boom in Nigeria oil and money was so surplus then a one time “that the problem Nigeria has was not money then how to spend it”

However, following the cessation of hostilities in the  Nigeria civil was in 1970 activities (economic) and for petroleum products was as high that by 1974/75 Sogore shortage of products become the order of the day (Akpieye 1987p.3) Nigeria began to witness a bit of petroleum shortage.

The result of these shortages or scarcity became long queues  and scrambling a service stations and the shortage passed obvious threat to the economic growth of the country     

1.2            PROBLEMS ASSOCIATED WITH THE SUBJECT MATTER

The art of instituting strategies for managing petroleum  product scarcity inNigeriadoes not just occur. There are circumstances fact  environmental influence individual behavioural approach which are statistic to the subject matter.

For effective strategies to petroleum products scarcity inNigeriatwo factor has to be considered first. One is to initiate the plan and the other is to carryout the initiated strategies as regards to managing petroleum products scarcity in our country.  One time petroleum monster in the   Banbangida administration in his interview with the statuary concord quoted that the menace of fuel scarcity in Nigeria does not arise as result of policies set out by his mining and  her superior but as a result of carrying out to its fullest this polices and strategies in order to curtail fuel scarcity in Nigeria (Saturday concord 1998 p11)

 It is pertinent to state that the problems that are linked with  the strategies for  managing petroleum products scarcity inNigeriais necessary as a result of the lack luster attitude of the policies stipulated by the    federal government and her subordinates.  A pointer to the fact is the purported Turn around maintenance (IAM) of Nigeria oil refineries that was awarded by Obasanjo administration in his first tenure bit up till now the turn around maintenance has not being carried out  by the construction firm  handling the contract citing lack of find as the cause . but this is far from the truth as the federal government to release fund   but is being diverted into personal account by some unscrupubus individual who prefer to enrich themselves than to carry out the work they are asked to do.

On the  contary the federal government sometime initiates Kangaroo  policies.  That is initiating strategies that are meant to deceive the masses. They carry propaganda both on spirit and electronic medias that strategies measures have been put in place to work out strategies for managing petroleum products scarcity in the country but all the plans is only on the faces of newspapers. Iam David west after being released from Tirikiri  prison in the book wrote the “ the military government effort to rib the lingering fuel scarcity inNigeriain the   bud is characterized by he more you look the less you see”

On the other hand the persistence of pipeline vandalization by hoodlums and those that are sabotaging the government is also not helping the matter. They have been many cases of 0i8l pipeline vandalization in our country’ which ahs also been a set back on the strategies for managing petroleum products scarcity inNigeria. They  have been many cases of oil pipeline vandalization in Delta  State Imo Sate and so many other area in our country.  To this effect the federal government has put in place stringent measure to put a stop this wholesome act, but it seems that it is in the increase daily despite the measure by the federal government.

Other problem associated with the strategies for managing petroleum product scarcity inNigeriathat it is as serious as the former is petroleum products diversification petroleum products diversification has been a hobby in our country today and it is not helping matter.

 1.3            PROBLEM (S) THAT THE STUDY WILL BE CONCEERNED WITH

In real life no problem whether business or non profit organization problem ever present itself  as a case on which a decision can be taken this problem can better be defined as follows

  • The problem created by petroleum product scarcity in the country is so much that it has much that it has threatened  the socio- political and economic foundation of this country.
  • The problem of discovering the root causes of scarcity and causes of scarcity and causes of shortage of petroleum products
  • The problem of management strategies for proper implementation of these economic decision to lessen the suffering of the people with regards to products scarcity.
  • The problem of transporting petroleum products to service station and  avoidance of diversity
  • The problem of some co-operate bodies in sabotaging the government on their effort to put and end to petroleum products scarcity in the country thereby breaking oil pipeline in order to indulge in petroleum bunkering the problem security agents in the distribution of petroleum products.

Some if not all these mentioned and determined effects problems and their solution will be critically viewed to serve as possible recommendation to this present situation and also forestall a better solution to better management of petroleum products scarcity in Nigeria.  Also the resign of the investigation is elicit the effect of petroleum product scarcity in our country.       

 1.4            THE IMPORTANT OF STUDYING THE AREA

 In the first place this research will go a long way towards finding elasting  solution to the epileptic supply of petroleum product in the country (Nigeria) by offering strategies  and management styles necessary for a steady supply of products with less interruption

This piece of work will also be a source or serve   s a stepping stone for others who will venture into a similar research work. The oil industry has immense potentials and it plays a vital role in the nations economy.  it contributed  significantly in employment generation and raw materials development especially in petrol chemical industries and if properly managed will serve as vehicles for bridging the  rural Urban the nation’s economy and perhaps the future of us all.

Further there are project which under normal situation would have grown and diversities if properly managed. The state is spending a lot of hard currency in purchasing and procuring both foreign refused products and qualified personnel to supplement the   local resource. A  well managed oil industry business will always minimize its profit which will enable it go into research and development

Through this she will eventually start sourcing its raw materials locally thereby sawing the foreign exchange which would have been used for that purpose.  Also this research work as an academic study will be of  great value to those involved in fashioning out strategies for managing petroleum products scarcity in our country (Nigeria)

 1.5            DEFINITION OF IMPORTANT TERMS

For the sake of clarity this study will give operational definition of some important terms in the topic.

*        PETROLUM:     Mineral oil that forms under the ground or the sea and is extracted through holes bored beneath. It is refined to produce petrol

*        SCARICTY:       The lack of something or difficulty of obtaining it

*        EXPLORATION:         This is the act of looking natural oil gas reserves

*        CRUDE OIL:      This is an oil in its natural state i.e oil that has not being refined

*        REFINERY:        A factory where something is refined could  be oil etc

*        VANDLIZE:       To destroy or damage works of art property pipeline etc no good reason

*        PIPELINE:          This is a series of connected pips usually underground for transportation oil gas etc.  to a distance place

*        PROPAGANDA: Ideas or statement that are intended  as publicity for a particular cause especially a  political one and are often exaggerated or false.

*        DIVERSON:       This is the action of turning something aside or  changing its direction

*        SERVICE STATION:  Petrol or oil/fuel filling station

*        SABOTAGE:      Damage done deliverable to destroy one or something.

 REFERENCE

Akin Dina W. (1994) “Not Their Fat “ News Watch Magazine P.9 Spectrum

Publishing Limited

Akpeiyi J.J (1987) Pipeline Network it   Impact on Petroleum Distribution

News Watch Magazines P.4 Spectrum Publishing Limited.

Jacobs. N (1997) “NNPC Soft- Pedals on Cash and Camp”ConcordP.11

 Concord Publishers Limited

Okeke M (1997) “Oil Refineries Danger Looms” Business Concord p3.

Concord Publishers Limited

Schatzl L (1969) Petroleum inNigeria;IbadanOxfordUniversityPress.

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