CHEVRONTEXACO (MRS)

The production concessions are managed through joint venture companies, in which the Nigerian Government, through the Nigerian National Petroleum Company (NNPC), holds about 60% shareholding. The foreign joint venture partners manage the operations, under a joint equity financing structure regulated by a Joint Operating Agreement. All operating costs are financed jointly, by a system of monthly cash-calls. A Memorandum of Understanding (M.O.U.) defines the commercial agreement between the partners and the government.

The Downstream Segment:

Refining and Downstream

Nigeria's refining capacity is currently insufficient to meet domestic demand, forcing the country to import petroleum products. Nigeria's state-held refineries (Port Harcourt I and II, Warri, and Kaduna) have a combined nameplate capacity of 438,750 bbl/d, but problems including sabotage, fire, poor management and a lack of regular maintenance contribute to the current operating capacity of around 214,000 bbl/d. The Nigerian government is granting permits to build independently-owned refineries in Nigeria. These refineries when completed could save Nigeria as much as $6 billion in costs for refined petroleum imports.

The downstream oil sector is a term commonly used to refer to the refining of crude oil, and the selling and distribution of natural gas and products derived from crude oil. Such products include liquified petroleum gas (LPG), gasoline or petrol, jet fuel, diesel oil, other fuel oils, asphalt and petroleum coke.

The downstream sector includes oil refineries, petrochemical plants, petroleum product distribution, retail outlets and natural gas distribution companies. The downstream industry touches consumers through thousands of products such as petrol, diesel, jet fuel, heating oil, asphalt, lubricants, synthetic rubber, plastics, fertilizers, antifreeze, pesticides, pharmaceuticals, natural gas and propane.

The refining, petrochemical, and transportation sectors of the oil industry in Nigeria are controlled by government and indigenous operators.

i.) Major Players in The Downstream Segment:

The downstream oil industry in Nigeria is another key sector in the country's economy. The country has four oil refineries(Kaduna Refinery, Warri Refinery, Port-Harcourt Refinery 1 & 2 and these are all government owned. The government through its 100% state-owned national oil company, Nigerian National Petroleum Corporation (NNPC) has had an all encompassing control over the industry through its shareholding in all the companies involved and in the setting of wholesale and retail prices. Cross-border smuggling is an ongoing problem and there are frequent reports of large scale corruption in the distribution and marketing chain.

The oil marketers in the downstream sector in Nigeria are divided into two segments: the majors and the independent Nigerian marketers.

Currently, the independent marketers number over 700, with a market share of less than 30%.

The downstream sector has been a major problem for the country over the past three to four years, as the NNPC has found it impossible to maintain the country's four refineries, and to provide adequate supply of petrol, diesel, and kerosene nationwide.

The NNPC recently completed the 3rd phase of their national pipeline distribution system; however large segments of the distribution system are in urgent need of maintenance.

The country has been relying on massive importation of Petroleum products in order to augment the domestic production and hence meets local consumption requirements.

According to the Department of Petroleum Resources’ figures, a total of 1.55 million metric tonnes of Premium Motor Spirit (PMS) otherwise known as Petrol is imported into the country, Automotive Gas Oil (AGO) also known as Diesel showed

323,266 metric tonnes while Dual Purpose Kerosene importation is 165,818 metric tonnes annually. Annual value of these importations is put in excess of $10bn.

Despite the above, there were still reported cases of shortages of the products in some parts of the country. A country whose local consumption rate is put at about 30 million litres per day, eradicating shortages therefore requires the players in the industry to do more in ensuring availability of the products nationwide.

Date: 2015-01-29; view: 1019