MARKETING OF PETROLEUM PRODUCTS
MARKETING OF PETROLEUM PRODUCTS
The goal of this study is to investigate how petroleum products are marketed and the issues that arise from doing so. The goals of this effort, among others, are to investigate if petroleum goods in Benin depots are adequately distributed to sales outlets, and whether favouritism and corruption influence the distribution of these products.
To answer these contention difficulties, data were obtained via questionnaires and oral interviews, which were then analysed using chi-square. When the hypotheses were tested and analysed, it was discovered that petroleum products are inadequate for distribution at the Benin depot.
The NNPC handles the product distribution, and there is far too much favouritism and corruption in the process. Based on the foregoing facts, some proposals include the government investing more in the petroleum sector and private marketers making contentious attempts to implement the government's efforts, to name a few.
1.1 Background for the Study
Petroleum product marketing and distribution began in Nigeria at the turn of the century by Simeon Vacuum Oil Company (the producer of moils), which marketed such flower kerosene product marketing has expanded to the point where seven major companies, namely, AP, OANDO, and a number of independents, are now in the trade.
NNPC was formed on April 1st, 1977 as a manager of the Nigerian National Cooperation and Federal Ministry of and Power. The Nigerian National Petroleum Corporation (NNPC) is a joint venture between the Nigerian federal government and another foreign multinational corporation,
which includes Vagal Dutch Shell, Exxon Mobil, Agip Total Final ELF, chevron, and Texaco (through the merger with chevrons), that conducts petroleum exploration and development in collaboration with the Nigerian government. The leader of Transparency International's Nigeria wing claims that worker pay are too low to prevent corruption.
As of September 2007, Nigerian President Umaru Musa Yar'adua intends to divide the corporation into five (5) new entities. NNPC's headquarters are in Abuja at the NNPC Tower.
It is located on Herbert Macaulay Way, the business hub of Abuja. The NNPC also maintains zonal offices in Lagos, Kaduna, and Port Harcourt, as well as an overseas office in London, United States.
In May 2009, the NNPC stated that the Niger Delta turmoil had no effect on its business, despite a conflict between the government and bevels in this oil-producing region. Because of the rapid recovery from the civil war, the marketing product was completely in private hands by 1975.
The overall expansion of economic activities and unprecedented exploration in the demand for petroleum products in the 1970s allowed private companies to cope with domestic product demand and the severe shortage that ensured all over the country constituted a major bottleneck to further development. This encouraged the government to venture into petroleum product distribution and marketing.
Before 1965, all petroleum products used in Nigeria were improved. In that year, around 25,000 barrels per day were produced. The Port Harcourt refinery was built by the federal government and British Petroleum through the 1962 government, which established the Nigeria Petroleum Refinery Company.
The refinery first met the domestic need for white petroleum products and exported some grades to African countries as well as high purity fuel oil to the United States as a result of the 1970s economic boom.
Between 1947 and 1977, demand for premium petrol and petrol oil increased at an astounding 30% per year. To accommodate domestic demand, inside arrangements were made in 1975 to refine Nigeria's crude oil in Curaçao and Rotterdam before importing the product into Nigeria.
As of 1978, approximately 175,000 barrels per day were involved. This off-shore refining system persisted until two new refineries were commissioned in warn in 1978 and Kaduna in 1980. The two refineries have a combined processing capacity of 20,000 barrel per day.
Recent forecasts, however, suggest a significant increase in domestic demand for petroleum products, and the fourth National Development Plan calls for the construction of two new refineries.
Petroleum product pricing was not communicated throughout the country. The pump price was determined by the place of sale, which influenced distribution and, in some cases, national development.
Oil marketing corporations naturally concentrated their activity in areas with the lowest distribution costs and highest profit margins. The Lagos and Port-Harcourt areas were served, but the hinterland was not adequately supplied, encouraged, or distributed to the entire country.
In October 1943, the government implemented a uniform price system for all grades of products, and to address cost differentials, decree 9 was issued, establishing the petroleum equalisation find management board with the following functions.
i. Retraining surplus money recorded by oil marketing corporations.
ii. To reimburse businesses for losses incurred as a result of product sales at consistent rates throughout the country.
iii. To recuperate the difference between the landed costs of imported goods and the open market price in the country.
1.2 Statement of the Problem
It is documented that petroleum resources account for over 70% of Nigeria's total national product and almost 80% of her export earnings. Also, petroleum resources have a significant impact on national productivity.
As a result, the distribution of the important factor of productivity. Resources must be efficient not only in human terms, but also in other aspects of logistics.
To that purpose, the study attempts to answer the following question: what causes the shortage of petroleum products at different times in the country, and what sorts of markets and distribution channels are involved in the marketing activities of channel members.
What are the motivating reasons, and to what extent may they be addressed in order to assure worker attendance and increased productivity?
1.3 Research Questions.
The following research questions can help you grasp the topic under consideration.
i. Is the volume of petroleum products in Benin depot usually sufficient for equal distribution to sales outlets?
ii. Does the NNPC have appropriate control over fuel distribution?
iii. Do favouritism and corruption play a significant role in inefficient petroleum product distribution?
1.4 Objective of the Study
The study's aims are:
i. To determine whether the products at the Benin depot are adequate for distribution to sales outlets.
ii. Determine if the NNPC has adequate control over the distribution of petroleum products.
iii. Determine whether favouritism and corruption have a significant influence in the poor distribution of petroleum products.
1.5 Research Hypotheses.
HO: The volume of petroleum products in the Benin depot is always insufficient for even distribution to sales outlets.
HI.: The volume of petroleum product in the Benin depot is always sufficient for even distribution to sales outlets.
HO: The NNPC does not have appropriate control over fuel distribution.
HI: The distribution of petroleum products is adequately managed by NNPC.
HO: Excessive favouritism and corruption do not contribute significantly to poor product distribution.
HI: Excessive favouritism and corruption contribute significantly to ineffective product distribution.
1.6 Significance of the Study
The study will help Edo residents get the most out of their petroleum purchases while also guaranteeing that the commodity is always available. It will also encourage other records to seek out more specialised job in the areas of distribution pattern and management,
particularly in the organization's marketing department. These have yet to get the results of this study, but they will greatly contribute to the development of corporations and the betterment of society.
1.7 Scope of Study
This research, titled “Marketing of Petroleum Products in Edo State,” is being conducted in response to current challenges encountered by members of the Nigerian public, particularly those in Edo State.
The production and use of petroleum products entails a variety of activities, one of which is marketing. The purpose of this study is to evaluate the most significant part of marketing operations in the pipeline and product marketing company (PP.M.C).
The challenges that individuals in Edo state confront or are experiencing with relation to the consumption of petroleum products are a reflection of the market scenario in all corporate sales,
such as time and budget limits. It is only logical that a representative sample of the customer population be investigated. Whatever the findings are, they can be best generalised to the entire population. As the saying goes, Edo State is a miniature Nigeria.
The research study could be constructed to survey the opinions of middlemen as well as subsidiary management members.
The study would only cover a limited time frame. The time limit complies with the Federal Polytechnic Auchi's regulation. Other relevant information would be collected from secondary sources, both within and outside of the Polytechnics library, as well as the P.P.M.C.
1.8 Limitations of the Study
Several reasons contributed to the limitation of the breadth and extent of this research effort, including.
Time: In addition to the time required for this research, the researcher also had lectures and other academic obligations.
Exercises to deal with funding: Funds were also a limiting constraint, thus the research could not travel extensively to obtain all important data. Another element worth noting is the uncooperative attitude towards activities and responding to the research questionnaire.
Due to time and resource constraints, the researcher limited the scope of the study to marketing and distribution of petroleum products. A case study of Benin Depot in Edo State.
1.9 Operational Definitions of Terms
Certain technical terms relevant to petroleum operations or marketing are briefly described here to ensure a thorough comprehension of this study work:
Allocation: This is a programme for shorting crude oil or petroleum products that are in short supply contractually or historically.
Crude oil is any oil (except than oil recovered by destructive processes from coal, bituminous shell, or other stratified deposits) discovered in Nigeria, either naturally or after the extraction of water and/or foreign matter or substance.
Depot: An NNPC storage station located around the country from which marketers can purchase petroleum products for distribution.
Distribution is the process of moving products from the manufacturing facility to the industry or end consumption destination.
Discovery: Refers to an exploratory (Wildcat) well via which a new oil resource is discovered; it is also known as upstream.
Automotive: Gas Oil (AGO), often known as Diesel.
Filling stations are stations equipped with dispensing pumps and a sales room designed to dispense white products to customers while also providing related services.
Independent marketers: Enterprising Nigeria is urged to engage in the distribution of petroleum products such as general gas, phoremix, and niddoge gas, among others.
Marketers are individuals within an organisation that purchase petroleum products from the NNPC depot and distribute them to their filling stations or directly to clients.
Marketing is the set of business operations that control the flow of goods and services from producer to consumer or user.
Major Marketers: These are marketers with significant financial resources and complete control. The marketers are Total, National, Texaco, Chevron, Agip, African Petroleum (AP), and Mobil.
Petroleum is a type of hydrocarbon that occurs naturally in crude oil. Other than that, it is a mineral oil (rock oil), which is a liquid combination made up of several different hydrocarbons that exist naturally and come in a variety of colours ranging from yellow to black, with distinct odours.
Pipeline: A system for conveying crude oil. Trunk lines collect oil refineries.
Tank farm: This is an enclosed area where large storage tanks made of steel are created to store petroleum products for sale in the market.
Trunks: These are tanker vehicles used by retailers to deliver petroleum products by road from the deposit to the filling station and then directly to the final consumer.
White Products: These are the petroleum products under consideration in this research work. They include P.M, A.G.O, and D.P.K.