CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Oil exploration began in Nigeria in 1908 although the documentation of occurrence of the minerals were reported some five (5) years earlier in 1903. The exploration efforts were punctuated by two world wars but eventually yielded results with discovery of oil in Oloibiri in 1956 by sheel Bp. Bayeri (1996:7)

Production increased from a more five thousand (5,000) barrels per day in 1957   to seventeen thousands ( 17,000) per day by independence in 1960  and leapfrogged to four hundred and fifty thousand (450,000) barrels a per day by 1966. Although, this upgrade trend was slowed down by the civil war, by 1970 daily production had reduced the level of one million barrels per day. A peak production level of two million four hundred thousand (2.4 million) barrel per day was achieved during the second quarter of 1979.

However, before 1990 production fell to one million. Six hundred and eleven million (1.611 million) per day both on technical grounds and adherence to OPEC, quota brought about by the need to control production, to support price in a globally avert supplied to the market. As at (1999) OPEC  quota for Nigeria stands at 1.865 million per day as set in 1990

The first marketing of oil from Nigeria occurred in 1958. DETEGE (1996:9). As most multinational oil comprise operating in the country has 100% equity in their operations up till 1973, there was no active government on Nigeria oil until then.

Prior to 1973, all Nigeria oil was marketed by oil producing comprise through integrated system using their transfer price. Government’s interest in  the oil industry was handled by a number of government departments including the hydro carbon section in 1963 and department of  petroleum in the ministry of mines and power in 1970. Although the Nigeria national petroleum corporation (NNPC) was formed in 1971 and was primarily to market Nigeria oil, government direct involvement in the marketing of oil  did not begin until 1973. That was when the government started having it’s own equity interest in the operation of the oil companies ( Bayero 1996:10)

It has been the policy of government to put in place proper facilities in the down stream sector like refinery, distribution and marketing of petroleum products so as to embrace the value added to our petroleum resources. Presently, Nigeria has four refineries with two at Port Harcourt while Warri and Kaduna has one each. All the refineries has the total production capacity of four hundred and forty  five thousand (445,000) barrels per. To ensure the supply of available petroleum products through out Nigeria, the  Nigerian National Petroleum Corporation ( NNPC) built about three hundred kilometers (300,000km) net work of pipeline covering all parts of the county, inter –connected to seventeen (17) petroleum product depot in Nigeria. This was aimed at eliminating the perennial storage’s of petroleum products in the country. Etefe (1997:8)

To aethalize this noble objective in Enugu, constitution of n oil depot began at Emene, and was completed and commissioned by the military administrator on 24th August, 1979. Enugu depot which was commissioned in 1979 has the storage capacity of about twelve million mi – cube (12,000,00m/3) at present. It has a stock only three bye products of petroleum products namely, premium motor spirit (PMS), otherwise called petrol, dual purpose kerosene (DPK) and Automobile Gas oil (AGO) or Diesel for onward distribution to her customers in the oil marketing companies.

The depot went to serve the states which are under it, which include the present Enugu, Anambra, Kogi, Ebonyi, and parts of Imo, Benue and Cross – River state.

Enugu depot sighted at Enugu East Local Government of Enugu state is at depot as well as a pumping station. As products and distributes same to the general public through oil marketing companies. But as a company station, it was meant to supply other depots in the Northern states which include Makurdi, Yola, Minna and Suleja directly from Port – Harcourt refinery through pipeline product distribution system.

It is the wish of the federal government to ensure steady and regular supply of petroleum products to this end, effort has been made to expand and inter connect all existing refineries. It will ensure that strategic stock of petroleum produce is well maintained in the country by allowing quick replenishment of stock in all product depot of which Enugu depot benefited. So therefore, my interest to study the problems of petroleum products distribution, allocation and marketing in Enugu.