Crude Oil Refining or Petroleum Product Importation: Which Is Economical for Nigeria

Topics: Petroleum, Oil refinery, Light crude oil Pages: 14 (3995 words) Published: August 10, 2011
CRUDE OIL REFINING OR PETROLEUM PRODUCTS
IMPORTATION: WHICH IS ECONOMICAL FOR NIGERIA?

ABSTRACT: One of the most crucial challenges facing Nigeria is being able to meet the energy need of the energy hungry populace; the exponential population growth makes it even more challenging. The approach adopted to meeting this need has impacted severely on the economy of the nation as reflected in the year-on-year economic figures. This can be attributed to her choice of net importer of petroleum products status to the much more economic domestic refining option. This paper analyses the best economic option between refining crude oil and importing the products in Nigeria, at the end making probable suggestions.

TABLE OF CONTENT

ABBRECIATIONS

1. NTRODUCTION.................................................................................................4

2. CRUDE OIL REFINING AND PETROLEUM IMPORTATION

IN NIGERIA .........................................................................................................5

2.1 Overview ...............................................................................................................5

2.2 Challenges of Petroleum Product Refining in Nigeria ..........................................6

3. CRUDE OIL REFINING AND PETROLEUM PRODUCTS

ECONOMICS ........................................................................................................8

3.1 The Economics of Crude oil Refining ....................................................................8

3.2 The Economics of Petroleum Products....................................................................9

4. CRUDE OIL REFINING, PETROLEUM PRODUCTS IMPORTATION

AND THE ECONOMY.........................................................................................10

5. CONCLUSION......................................................................................................11

BIBLIOGRAPHY.................................................................................................13

ABBREVIATIONS

BPSD Barrels per Stream Day

B/D Barrels per Day

CBN Central Bank of Nigeria

GDP Gross Domestic Product

NNPC Nigerian National Petroleum Corporation

NPRC Nigerian Petroleum Refining Company

PHRC Port Harcourt Refinery Company

1. INTRODUCTION

The role of crude oil remains key among the energy sources, hence we have to still live with the consequences that are associated with it, one of which is economical. This obviously is an aspect no country, importer and exporter have been able to overcome, though its impact on some countries is less than in others. Nigeria is definitely one of those countries whose economy has been monumentally impacted, ironically though, a leading crude oil producer and exporter in the world. However, this is not to take away crude oil’s enormous contribution to the Nigerian macro-economy over the years it holds sway.

The discovery of oil in Nigeria was thought to be a big respite to the growing energy supply challenges facing her and to bring economical gains, especially as the price of oil has often been on the increase. Hence, should have made huge sums of money from it. Incidentally, this is not to be, as oil suddenly took shine off the hitherto major sources of the country’s GDP. Sectors like agriculture and manufacturing went moribund, making Nigeria a mono-economy, with oil being the mainstay of the economy. It provides 95% of foreign exchange earnings and about 80% of government budgetary revenues[1]. The Nigeria economy plays into the hands of the...

Bibliography: The Nigerian National Petroleum Corporation Act, 1977
The Petroleum Products Pricing Regulatory Act, 2003, No 8, Laws of the Federal Republic of Nigeria
Gary, J.H., Handwerk, G.E., Kaiser, M.J., Petroleum Refining Technology and Economics, (5th Edition) (United States of America, Florida, CRC Press, 2007).
Braide, K.M., The Mechanics of Fuel Scarcity in Nigeria, http://www.nigerdeltacongress.com/marticles/mechanics_dynamics_fuel_scarc.htm. (assessed 13/04/2011).
CBN, http://www.cenbank.org/Out/2011/pressrelease/gvd/CommuniqueforMPCMeetingofMarch 21 22 2011_21st Mar_.pdf (assessed 01/05/2011).
CIA, The World Factbook, http://www.cia.gov/library/Publications/the-world-factbook/geos/ni.html (assessed 18/04/2011).
Hossain, M.S., Taxation and Pricing of Petroleum Products in Developing Countries: A Framework for Analysis with Application to Nigeria, http://www.imf.org/external/Pubs/ft/wp/2003/wp0342.pdf (assessed 20/04/2011).
Iba, L., Fuel Crisis: Still waiting for private refineries, http://64.182.172/webpages/news/2010/july/12//busines-12-2010.001.htm (assessed 09/05/2011).
Nigerian Refineries: History, Problems and Possible solutions, http://www.businessdayonline.com/NG/index.php/oil/3256-nigerian-refineries-history-problems-and-possible-solutions-1 (assessed 09/05/2011).
NNPC, Annual Statistics Bulletin, http://www.nnpcgroup.com/Portals/0/MonthlyPerformance/2009ABS Web.pdf (assessed 01/05/2011).
NNPC, Subsidiaries, http://www.nnpcgroup.com/NNPCBusiness/Subsidiaries/ (assessed 09/05/2011).
PPPRA, Report on the Administration of the Petroleum Support Fund (PSF), http://www.pppra-nigeria.org/briefonadministrationofPSF.pdf (assessed 01/05/2011).
Refinery Economics, http://nrcan.gc.ca/eneene/sources/petpet/refraf-eng.php (assessed 19/04/2011).
Refining & Product Specifications – Overview, http://www.petroleumonline.com/content/overviemCont.asp?mod=8&ord=10 (assessed 19/04/2011).
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[1]CIA-The World Factbook, at http://www.cia.gov/library/Publications/the-world-factbook/geos/ni.html (assessed 18/04/2011)
[4] Nigerian Refineries: History, Problems and Possible solutions, at http://www.businessdayonline.com/NG/index.php/oil/3256-nigerian-refineries-history-problems-and-possible-solutions-1 (assessed 09/05/2011)
[5] Ibid
[8] Refinery Economics, at http://nrcan.gc.ca/eneene/sources/petpet/refraf-eng.php (assessed 19/04/2011)
[9] Ibid
[16] Ibid
[17]CBN, http://www.cenbank.org/Out/2011/pressrelease/gvd/CommuniqueforMPCMeetingofMarch21 22 2011_21stMarch_.pdf (assessed 02/05/2011).
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