Submitted by: Submitted by Sammy2011
Views: 417
Words: 836
Pages: 4
Category: Business and Industry
Date Submitted: 08/23/2011 11:21 AM
Brief Sector Overview
Nigeria
The Oil Industry is the backbone of the Nigerian economy, accounting for over 90% of total foreign exchange revenue. The industry is divided into upstream and downstream sectors. The upstream sector is the single most important sector in the economy and involves such activities as oil exploration and production. While the Nigeria's downstream oil sector is also a key sector and the import of refined product is a core activity in this sector. The sector has been a major
problem for the country over the past years, as the NNPC has been unable to maintain the country’s refineries and provide adequate supply of P.M.S. (Premium Motor Spirit or petrol), diesel (Automotive Gas Oil) and kerosene (Household Kerosene) nationwide, for domestic national consumption.
Supply-Demand Gap
It is important to mention that with the supply-demand gap, importation of petroleum products will continue to be viable. Nigeria’s state-held refineries (Port Harcourt I and II, Warri and Kaduna) with a combined nameplate capacity of 505,000b/d, has been fraught with problems including sabotage, fire, poor management and lack of regular maintenance thereby contributing to a low current capacity of less than 300,000b/d. According to the PPPRA (Petroleum Products Pricing Regulatory Authority) figures, the nation consumes about 35 million litres of petrol per day and this amount to 1.085 billion litres per month and 3.25 billion litres per quarter. At present, supply of petroleum products to meet local demands is met by importation by NNPC/PPMC and private operators. NNPC awards contracts to trading companies i.e. (Vitol, arcadia, Trafigura, Glencore, Sahara, Linetrale, and Oando S&T on a quarterly basis to supply it with refined products on an open account basis. Private operators who are categorized into major marketers based on ownership and number of stations (AP, Oando, Total, Mobil and CONOIL) and independent marketers undertake the importation of...