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NIGERIAN CRUDE OIL AND GAS.
Frequently Asked Questions about Nigerian Crude Oil
And Gas
What is a community relation and how is
done?
Basically, Community Relations is the process of building and sustaining a
good relationship between Foreign Invested Company, NNPC and its host communities in order to provide
a conducive environment for its operations.
Regular meetings are held with the communities to identify their needs and
decide how best to assist them in actualizing their aspirations.
What is sustainable community development?
Any community relation strategy that is adopted must be sustainable enough
to meet the requirements of the present generation without compromising the
rights of future generations to available resources.
Programs and infrastructure must be such that they are self sustaining over
time and adopt a holistic approach that recognizes the need to sustain the
environment and the involvement of communities in the decision making
process.
It seeks to provide a framework that gives impetus to the communities to
drive and take ownership of the development process.
What is CSR and how does it work?
It means corporate social responsibility. CSR is just another name for good
corporate citizenship, where a corporate organization endeavors to identify
and meet the social needs of communities in its area of operation. This may
be in the form of community assistance, infrastructure development or human
capacity building.
How are the projects for any particular
community selected?
Basically, all NNPC strategic business units (SBUs) or or subsidiary
companies are required to set up a Joint Community Relations Committee
(JCRC) with their host communities. It is the responsibility of this
committee to deliberate and select viable and sustainable projects for their
communities subject to available funds.
Usually a basket of possible projects is developed and prioritized.
Selection is often based on the order of priority for the identified
projects.
Is there any legislation that compels oil and
gas companies to provide assistance for their host communities?
There is currently no legislative backing for community based programs and
projects embarked upon by oil and gas companies in Nigeria. It is purely at
the discretion of the operating companies. However the proposed oil and gas
industry reforms will address some of these issues in the Petroleum Industry
Bill (PIB) which is currently before the National Assembly
What is upstream/downstream investment?
Upstream investment is the investment in oil exploration and production
while downstream investment is the investment in every other sector of the
oil industry that has to do with LNG, refining, marketing, distribution etc
What is the relationship between National
Petroleum Investment and Management Services Division – NAPIMS and the
Commercial and Investment Division of NNPC?
National Petroleum Investment and Management Services (NAPIMS) is the
Corporate Strategic Unit (CSU) that manages the Federal Government’s
Investment in the upstream Petroleum industry while the Commercial
Investment Division manages NNPC core investments in the service and
Downstream sector.
What is renewable energy?
Renewable is energy from a source which can be managed, so that it is not
subject to depletion in a human time scale.
What is E10? How is it different from PMS?
E10 is a blend of 10% by volume Ethanol and 90% by volume Gasoline. E10
gasoline (also referred to as Gasohol) differs from PMS in that it contains
oxygen which results in more complete fuel combustion thereby reducing
harmful emissions.
What is the acceptability level of E10 as a
form of fuel from the consumer and Environment stand points?
E10 is an environmentally friendly form of fuel that has been very well
accepted in other countries, e.g. Brazil, India, Thailand, USA, Germany etc.
The key to successfully market E10 is to prevent water contamination. These
procedures will be applied all along the value chain from the export
terminal to the import terminal to the depot and service stations storage
tanks. Trucks and pipelines will also be subject to new procedures. Here,
proven quality assurance procedures developed by Petrobras will come in
handy.
How will PPMC role be affected by the
introduction of E10 to the Nigerian market?
Nothing really changes at least in the early stages except that with the
introduction of E10, PPMC now has a new supplier it needs to interact with,
i.e., the import traders. Refineries will continue to supply PPMC based on
same processes as before however, there may be the need to adapt refinery
facilities to handle ethanol especially when the program is expanded. In
terms of how supply and demand management processes are concerned, there
will be no change.
What is the color of E10?
The color of E10 is green connoting environmental friendliness.
What is Green House Gases (GHG)?
GHGs are gases such as carbon mono-oxide and carbon dioxide whose presence
in the atmosphere results in the earth’s surface being warmer than it would
otherwise be (Global warming).
Why make Ethanol from biomass?
The essence of making ethanol from biomass is to integrate the Agricultural
sector with the Petroleum sector of the economy. This would enable Nigerians
reap the benefits of job creation.
What is the yield of ethanol from Biomass?
One (1) ton of sugarcane yields approximately 95 liters of Ethanol while one
(1) ton of cassava can yield up to 150 liters but sugarcane fermentation is
easier than cassava.
What is PPMC?
The Acronym: PPMC means Pipelines and Products Marketing Company Limited. It
was incorporated in Nov. 1988 as a wholly owned subsidiary of NNPC. It
commenced operation in Jan. 1989
What is the relationship between PPMC and NNPC?
PPMC is a subsidiary of NNPC. NNPC is a Federal Government Corporation
created by the merger of Nigeria National Oil Company (NNOC and Ministry of
Petroleum Resources through decree 33 of 1977.
What are the major functions of PPMC?
PPMC supplies Crude Oil to Refineries for refining and evacuates Petroleum
Products from the Refineries for distribution to the domestic markets. It
also ensures that daily National demand for Petroleum Products are met by
augmenting local supplies from Refineries with import. In addition, PPMC
markets other special products such as HPFO, LPFO, Bitumen etc.
How can one be a Marketer of PPMC’s products?
Marketers are first licensed by DPR, armed with the license, bulk purchase
agreement is entered into with PPMC.
How can one get allocation for Petroleum
Products like, LPFO, HPFO, Bitumen etc?
LPFO is Low Pour Fuel Oil mainly used in Industries as fuel for generation
of power or for firing their heaters. Allocation is made to industries
through Marketers. HPFO is mainly exported while Bitumen is allocated to
construction Companies as well as the FMWH, SMWH etc.
How can one set up a filling Station and begin
to get Products from PPMC?
The first port of call will be the DPR which will license the prospective
marketer and then sign bulk purchase agreement with PPMC.
What is the national demand for Petrol,
Kerosene, AGO, LPG and Aviation Kerosene.
Petrol or PMS is about 30 million litres per day,
AGO = 12 million litres per day
DPK = 8 million litres per day
ATK = 2 million litres per day
LPG = 192,000 Kg per day 15,360 cylinders of 12.5kg capacity
How many depots does NNPC have and why are some
of these depots not functioning?
We have 22 depots across the Country some are not functioning due to lack of
products occasioned by pipeline vandalism and other supply challenges.
Why is Nigeria always experiencing fuel
scarcity and what could be done to find a lasting solution?
Inadequate supply of products due to frequent breakdown of the local
refineries, incessant pipeline vandalism and bureaucratic delays in
discharging imported products, strike actions by labor unions, product
hoarding and diversion by unscrupulous marketers, Government’s policy on
subsidy. Dependence on imported products and changes in market fundamentals
of Crude Oil and Refined products in the International Markets.
What is PPMC doing about the incessant pipeline
ruptures and vandalism with its attendant implications on life, property and
environment?
Integrity survey of the pipelines are being carried out to determine those
needed to be changed due to age. Government is also currently considering
coming up with a master plan on pipelines protection. Ensuring that PROW is
clearly delineated. Also, Nigerians need education and enlightenment to
appreciate the importance for the protection of the pipelines and other
public facilities.
Safety is paramount in the Oil and Gas
Industry, what obtains in Pipelines and Products Marketing Company Limited?
PPMC has a full fledged department with responsibility for enforcement of
HSE Industry Regulations with Slogan “SAFETY FIRST” supported by an annual
safety week awareness campaign.
The constant increase in the price of crude Oil
in the International Market is making some major users of the Product (Japan
and the likes) to source for an alternative source of energy, what is your
position on this?
PPMC will always be relevant in the transport energy sector since it is
already keying into the biofuel development.
Some Investors are apprehensive about the Niger
Delta crises, what do you think government can do to curb the crises?
Government is already addressing the issues with emphasis on the development
of the region through a comprehensive Niger Delta Master Plan. Besides,
Government recently established a Ministry of Niger Delta to coordinate
development of the oil producing region. This is in addition to the Niger
Delta Development Commission (NNDC) which has been in existence close to a
decade and currently making appreciable impact in the lives of the people of
the Niger Delta. Above all, Government also recently granted amnesty to the
militants in the region, a unique move that may enhance peace in the region.
Corporate Social Responsibility (CSR) has
become a vehicle to attract goodwill and attention to an organization, are
you doing anything in this regards?
PPMC is a responsible Corporate Organization which has identified with its
Host Communities through community assistance & sustainable development
projects. It also carries out special programs aimed at endearing her to her
host Communities.
What measures should be taken in the Nigerian
Oil and Gas industry to ensure that capacity building in engineering and
fabrication is increased in the Oil and Gas Industry?
Strict compliance with the Local content initiative of the Federal
Government, Deployment of the state of the art I.T infrastructure and Human
Resources Development.
What are the major challenges of PPMC?
Pipeline vandalism
Subsidy on imported products – loss in revenue
Cash crunch
Obsolete/old equipment
Continued encroachment on pipeline right of way
Lack of prerequisite number of personnel
Unscheduled shutdown of the refineries which results in disruption of
products supply.
Difficulty in establishing Letters of Credit for Offshore purchase of
critical spare parts.
Frequent invitation by members of the National Assembly
Favor seekers from powerful and influential Publics.
It is widely alleged that PPMC staff connive
and aid pipeline vandals in their nefarious act of vandalism.
Pipeline Vandalism is a criminal offence for which nobody is immune against.
Available records have shown that over 5000 (five thousand) arrests have
been made across the Country and to date, No, PPMC staff have either been
arrested or implicated. The allegation is therefore unfounded.
It is also believed that PPMC Management
especially those in Marine or Supply and Distribution aid and abet demurrage
on coastal Vessels that supply products to the Country.
Demurrage are paid directly to ship owners whom neither staff nor Management
have access to. Nigeria also charges the lowest demurrage as its demurrage
calculations are based on (AFRA) Average Freight Rate Assessment London
tanker brokers’ panel as against the Spot rate charge (Platts). The
difference between the two is about 10,000 USD. Ship owners are usually
reluctant to come to Nigeria, because of this price differential. Again a
number of agencies have roles to play before a vessel is discharged such
agencies include NPA, Customs, DPR and Navy.
Product allocation is widely believed to be a
source of quick and easy money in PPMC. How can one get this product
allocation?
There are different types of products. The white products i.e PMS - Petrol,
HHK – House Hold Kerosene, ATK - Aviation Turbine Kerosene, AGO – Diesel.
These are allocated to Major and Independent Marketers. They sell these
products in their various outlets.
However, in the past these Marketers use powerful and influential members of
the public to obtain allocation for products they do not actually require,
and turn around to sell the products to those who actually need it. There
are other products mainly for Industrial users who have operational
facilities. These products such as LPFO, SRG, Bitumen & LPG are allocated to
users directly. However, some of these industrial users prefer to sell the
allocation instead of using the product in their factory. Machinery has been
put in place to identify specific industries engaged in this bad practice
for appropriate sanction. HPFO is mainly for export.
How many Pump Stations does PPMC have in
Nigeria?
PPMC has 15 Pump Stations out of which
8 are standing alone Pump Stations
3 are tied to the Refineries and
4 are tied to the Depots
Does PPMC transport different products through
different pipelines?
PPMC transport all refined products through the same pipelines except Mosimi
– Satellite product line where you have different pipelines for different
products. A different pipeline is used for transporting Crude.
Does PPMC own and operate Product Shipping
Vessels?
PPMC only chatter Vessels to Ship products. It also owns some Vessels.
How does PPMC secure her pipelines?
PPMC secure her pipelines through the use of Community guards, Nigeria
Mobile Police Force, Nigeria Military, National Security and Civil Defence
Corp also assist.
How does PPMC distribute products to the riverine areas?
PPMC distributes products to the riverrine areas through floating Mega
Stations and some filling stations with authorized license to sell petroleum
products in the Area.
Does PPMC market LPG?
Yes, PPMC markets LPG (Liquefied Petroleum Gas)
Does PPMC also export petroleum products?
Yes, PPMC exports, HPFO and sometimes other products when they are surplus.
Does PPMC market Crude Oil?
No. PPMC does not market Crude oil.
Apart form the use of pipelines, how does PPMC
transport her products?
PPMC transports products using road tankers and coastal vessels.
How can one buy Kerosene from PPMC?
One can buy Kerosene from PPMC only if one has authorized storage facility
and is a registered marketer with PPMC.
Why does PPMC grant credit facility to some
marketers?
PPMC grants credit facility to some marketers it adjudged to be credit
worthy in terms of their capacity.
What are the efforts put in place to reduce
high demurrage in relation to importation of Petroleum Products?
Provision of N3.00 by Petroleum Product Pricing Regulatory Agency (PPPRA) to
pay for Private Depots facilities in the interim. This is to enable big
vessels discharge on time and depart.
How do we determine the Government subsidy?
The total landing cost ex-filling station minus fixed pump price by PPPRA
plats.
What is PPMC doing to encourage people to use
liquefied Petroleum gas (LPG) and what is the PPMC price?
PPMC is carrying out a campaign to encourage members of the public through
participation in Trade fairs and exhibitions. PPMC price is N55.56 per litre.
What is the volume of LPG in 12.5kg cylinder?
21.875 litres.
What is PHRC installed capacity?
PHRC, 210,000bp/d
What are the products of PHRC?
PMS, Ago, DPK, fuel Oil and LPG.
What are the factors that hamper PHRC
Portharcourt refinery smooth operation?
Mainly, aged parts, infrequent TAM and activities of the militants.
What is the production capacity of WRPC Warri
Refinery?
125,000bp/d
What is the acronym NETCO?
National Engineering and Technical Company Limited, it is a subsidiary of
NNPC
What gave birth to NETCO and in what year was
it established?
The drive for Federal Government to own and have an indigenous engineering
capability to design and build plants and facilities for the nation’s oil
and gas and other allied industries. Also, it is the premier indigenous
engineering company with strategic vision of providing basic and detailed
Engineering. NETCO was established in 1989.
What are the contributions NETCO renders to
NNPC and Nigeria?
Rendering services in the oil and gas industry;
Feasibility studies, conceptual design, basic and detailed engineering
design.
Procurement, construction, supervision and project management.
Quality assurance, quality control and environmental consulting.
Facilitation of local content.
When did NETCO commence commercial operation?
August 1990.
Who are NETCO major clients/customers?
ExxonMobil, Chevron, Shell, AMEC, KBR, Nigeria Agip Company, Saipem, Addax,
TSKJ Consortium, TechnipCoflexip, NLNG, Ecergy among others are the main
clientele of NETCO.
What is the meaning of NGC?
Nigerian Gas Company Limited. It was established in 1984. with a vision to
be the preferred Gas Company to its present and future customers.
Natural gas! Where do you get it from?
Natural gas is derived from crude oil wells and natural gas wells
underground the bowels of the earth in the reservoir.
Do you get gas from the earth structure like
crude oil?
Yes. We have natural gas in two forms. One is associated and the other is
non-associated gas.
What is the difference between the two types of
gas?
Associated gas comes from crude oil wells along with other hydrocarbon and
impurities like mud, water, sand, etc. While non-associated gas comes from
dry gas well with little or no impurities.
Do you produce gas or how do you get it?
No, we do not produce gas, we buy gas from gas producers.
Who are the producers?
The producers are the major international oil companies, e.g. SPDC (Shell),
CNL (Chevron), etc, which are involved in major oil prospecting and oil
production in Nigeria.
Which of this gas does NGC market: Propane,
Butane or Acetylene?
Methane.
How do you transport your gas to the users?
Gas is transported through the pipelines.
What are the advantages of natural gas over
liquid fuel?
Natural gas is safe, clean, cheap, and environmental friendly.
